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Frank Holmes
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Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., a boutique investment advisory firm based in San Antonio that manages domestic and offshore funds specializing in the natural resources and emerging markets sectors. The company’s no-load mutual funds include the... More
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Goldwatcher: Demystifying Gold Investing
  • Going For The Gold 0 comments
    Feb 25, 2014 3:12 PM

    Everyone wants the gold. Around the world, athletes train for years to compete for a gold medal. In Hong Kong and China, the Love Trade seeks gold coins, bars and jewelry.

    We found out last week the extent that gold is sought in the East. For the first time since 1980, Switzerland released monthly gold trade data, providing a more transparent picture of physical gold flows.

    In January alone, the Swiss report showed an incredible 80 percent of gold shipments went to Asia.

    Switzerland plays a key role in the gold market because it is home to many big gold refiners, so its report confirms what we've been saying about gold's move out of the West to the strong hands of the East.

    So even though the gold price fell in 2013, the smart money tuned into this flow of physical gold that was moving into the East. Meanwhile, naysayers were distracted by the Fear Trade's selling out of gold ETFs.

    "Gold flooding onto the market as a result [of large-scale ETF selling] was used to feed the voracious appetite for physical metal among consumers in India, China and numerous Asian and Middle Eastern markets," says the World Gold Council in its latest report. You can see in the chart that gold demand reached record levels in the jewelry, bar and coin areas of the market last year. In fact, there was a 21 percent increase in demand from consumers, which was in contrast to the outflows from gold ETFs, per the WGC.

    (click to enlarge)

    Along with this continued demand in January, Daniela Cambone from Kitco and I discussed the factors that could drive gold to $1,400 an ounce. Find out what those are now.

    By clicking the link above, you will be directed to a third-party website. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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