For precise information on gold supply and demand throughout the world, it’s tough to beat The World Gold Council – an association of the world’s leading gold mining companies. Its periodic reports are industry staples. Fabricators, refiners and shippers depend on these reports for perspective on gold production. Investors, banks and brokers depend on them for perspective on gold investment.
Last month, Red Tea News mentioned a positive report released by WGC about the world gold market. Just yesterday, August 14, 2014 the Council announced its 2nd quarter report on gold supply and demand. The report looks at these dynamics according to sector and geography.
Two things are particularly striking in this 2nd quarter report. Jewelry demand for gold, which accounted for 50% of global demand in this quarter, stayed “largely in line of its five-year average.” On the investment side, bar and coin sales slowed considerably.
Although the WGC doesn’t remark on this disparity between gold for jewelry and gold for investment, we can’t help note that gold jewelry purchases from big buyers like China and India are a form of investment. Gold jewelry in these countries is kept in families for generation as a form of wealth – in a way some Western countries might cling to real estate.
So while it’s possible that coin and bar sales may have decreased because investors chose to use a good chunk of their cash to chase a runaway stock market, the hard-asset value of gold wasn’t lost on Asian countries who’ve been in the gold-buying game for a much longer time than countries in the West.
The WGC report is also remarkable for its comprehensive reach. It even delves into the figures for gold demand in the fields of dentistry and electronics. And it accounts for changes in demand in the perspective of wild swings in the gold price.
It’s also worth noting that central-bank purchases of gold are up 28%. This rate of increase has been typical for central banks in the last several years. We always find central bank figures especially telling. Countries who deal in fiat currencies know where to look for ultimate true wealth.
The legendary comment by American bank robber Willie Sutton said it best. When his interrogators asked him why he robbed banks, he replied “because that’s where the money is.”