Global Gold Demand Shows Positive Trend Going Forward
Sasha Cekerevac: One of the most difficult things to do as an investor is to buy when others are selling. This is the most common mistake investors—both the retail public and some professionals—make.
The recent move in gold shows the difference between short-term and long-term thinking. While many investors were hesitant to step in and start buying gold as the price was dropping, many central banks were doing just the opposite.
Recently, Russia continued buying gold; China and India followed suit, taking advantage of the significant pullback in gold prices. While exchange-traded funds (ETFs) were busy selling gold bullion, many of the emerging market nations were buying gold and in significant quantities.
It goes beyond central banks buying gold for reserves, which they continue to do, but even jewelry demand for gold continues to increase.
Jewelry demand for gold bullion worldwide increased to 576 tons in the second quarter of 2013, up 37% from the same period last year. Jewelry demand for gold bullion in China increased 54% during the second quarter of 2013. (Source: World Gold Council web site, August 15, 2013, last accessed September 3, 2013.)
We already know about the insatiable demand for gold in India, which saw an increase of 51% for gold bullion in jewelry in the second quarter of 2013 versus the same period in 2012.
As many of you know, buying gold in India has created such a currency problem that the government is trying to clamp down on imports of gold bullion by continuing to increase taxes. It seems that regardless of the price of gold, many of these emerging market nations continue buying gold long-term.