24 August 2011
World Gold Council Say Demand to Rise
GLD, GDX, GDXJ, TIF
The World Gold Council reports that demand in Asia remains high for Gold. This was seen in Q-2 where total Global Gold demand measured 919.8 tons, almost a record demand at US$44.5-B.
The Top markets were India and China, accounting for 52% of the total Bar and Coin investment and 55% of Global jewellery demand.
The Gold council is also calling for demand to be high 2-H of Y 2011.
Indian and Chinese demand grew 38% and 25% respectively during Q-2 of Y 2011 compared to the same period in Y 2010, the growth is due to increasing levels of economic prosperity, high levels of inflation and forthcoming Key gold purchasing festivals.
The investment demand driver is the European sovereign debt crisis, the downgrading of US debt, inflationary pressures, and the fragile economic outlook in the West.
Here is the Key driver, yes, individuals and industry buys Gold, but the World’s central banks have the ability to influence the Gold markets more than any others.
And central banks are likely to remain net purchasers of Gold; purchases of 69.4 tons during Q-2 of Y 2011 demonstrated that central banks are turning to Gold to diversify their reserves.
The ETF also demand continues. SPDR Gold Shares (NYSE:GLD) just hit a new all-time high at 177.90. The SPDR site noted that its Tons are 1,271.98, Ounces held are 40,895,586.88; and the value is now $73-B +.
We are hearing “gold mine nationalization” from Venezuela, and fears of the same for the white-owned mines in South Africa, and so the miners share prices are not following the Gold price North.
Market Vectors Gold Miners ETF (NYSE:GDX) is down 0.5% at 60.45 and the 52-wk range is 49.57 to 64.62.
The more volatile and speculative Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) is down 2% at 35.18 and its 52-wk range is 28.06 to 44.86.
When considering the demand jewelry Tiffany & Co. (NYSE:TIF) comes to mind. TIF’s shares trading down 8% at 59.10 now, and the 52-wk high is 84.49, but it is a bright spots in the last earnings season. That raised guidance might need to be tempered, but if the jewelry market is growing you can count on Tiffany figuring out to win there. TIF reports this Friday.
Below are Q-2 Y 2011 statistics on Gold, as follows;1. Global Gold demand in Q-2 of Y 2011 totaled 919.8 tons, down 17% from the Strong levels of 1,107 tonnes in Q-2 of Y 2010.
2. Gold demand in value terms grew by 5% Y-Y reaching $44.5-B, the 2nd highest Quarterly value on record and only a bit behind the $44.7-B in Q-4 of Y 2010.
3. Q- 2 of Y 2011 Global investment demand was 359.4 tons, down 37% Y-Y from 574.2 tons in Q-2 of Y 2010, the 2nd highest Quarter in history.
4. ETFs saw solid net inflows of almost 51.7 tons, above the average of 41.4 tons.
5. Demand for Gold bars and Coins was 307.7 tons, up 9% from a year earlier.
6. Jewelry demand was + 6% from a year earlier at 442.5 tons. In value terms it was a 34% gain to $21.4-B with India, China and Turkey representing 59% of Global jewellery demand.
7. Technology demand was up by 2% at 117.9 tons, at a record gain to $5.7-B + 28%.
8. Gold supply was 1,058.7 tons, a 4% decline due to an increase in net purchasing by central banks.
9. Mine production rose by 7% to 708.8 tons.
10. Central banks buying up 400% + from Q-2 of Y 2010.
11. Recycling activity was down 3% at 429.3 tons.
Do not be surprised when you see the CME announce another margin requirement hike each time the Gold price bests a psych mark. Stay tuned…
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.