Gold demand up
Despite record high nominal prices and bubble claims, demand for gold continues to grow. In its most recent Gold Demand Trends report, the World Gold Council finds that third quarter gold demand volume increased 6 percent to 1,053.9 tonnes. By the end of September, the quarterly average price of gold increased 39 percent to $1,702.12, compared to $1,226.75 in last year’s third quarter.
While technology demand remained stable at 120.2 tonnes, a strong rise in investment demand attributed to a large portion of the total gold demand. Gold investment demand, which includes demand for gold bars, coins, and ETFs [exchange-traded funds], reached 468.1 tonnes in the third quarter. This represents a 33 percent increase from last year’s third quarter. Interestingly, ETFs and similar products only accounted for 77.6 tonnes of the total investment demand. This means 390.5 tonnes of investment demand came from investors buying some form of physical gold. Holders of physical gold are less likely to be speculators, and this physical demand should be considered as one more counter-point against the bubble claimers.
As the world drowns in debt, central banks continue to stock up on the yellow precious metal. Net purchases amounted to 148.4 tonnes, the highest since central banks became net buyers of gold in 2009. For comparison, central banks only purchased a net of 22.6 tonnes in the third quarter of last year. This represents an amazing increase of 556 percent!
“Central bank buying was a highlight of the quarter. Statistics this year have been remarkable,” explained Marcus Grubb, managing director of investment at the gold council. The Russian central bank purchased 15 tonnes in the third quarter, while Thailand increased its gold reserves by 25 tonnes.
