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Analysis Of Consumer Gold Demand Reveals A Mixed Picture

|Includes:SPDR Gold Trust ETF (GLD)

The year 2011 was yet another positive year for gold (NYSEARCA:GLD). It ended the year 9% higher in terms of U.S. dollars despite of increased price volatility. However, gold demand grew only 0,4% in the year 2011 compared tothe year before. On the other hand, consumer demand for jewellery, bars and coins grew 7,2%. These demand categories accounted for 84,8% of total demand in 2011.

To determine where this demand growth comes from I analyzed consumer demand for gold in selected countries and regions based on data recently released by World Gold Council (WGC).

Consumer Gold Demand 2011

India and Greater China (China, Hong Kong, Taiwan) accounted for over 50% of total demand for gold jewellery, coins and bars. Europe and VIST (Vietnam, Indonesia, South Korea and Thailand) are the next biggest hoarders of golden items.

Consumer gold demand 2011vs2010

Comparison of consumer demand for the precious metal in 2011 to the year before reveals a mixed picture. Consumer demand decreased in India, Middle East and USA while dramatically growing elsewhere in the world.

Changes in consumer demand have a big impact on the price of the yellow metal given the importance of consumer demand in the overall demand picture for physical gold.

Disclosure: I am long NEM, ABX.

Additional disclosure: Long physical gold via various instruments.

Stocks: GLD