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Asian demand for gold slumps in Q1

  • China purchased 18% less gold in Q1 than it did one year ago, according to the World Gold Council, including a 55% slump in gold bar and coin purchases. The world's 2nd biggest buyer, India purchased 26% less than a year ago.
  • The selling wasn't just limited to emerging markets - physical demand for gold fell 52% Y/Y to a four-year low, according to the WGC. The flip-side: Investor selling (ETFs) essentially came to a halt. It's the opposite of last year where physical buyers stepped in to pick up the metal as investors unloaded.
  • ETFs: GLD, IAU, PHYS, SGOL, UGL, DGP, GLL, UGLD, DZZ, GLDI, DGL, DGZ, DGLD, AGOL, OUNZ, TBAR, UBG, GLDE, GYEN, GEUR, GLDL, GLDS, GGBP
Comments (15)
  • DeepValueLover
    , contributor
    Comments (8208) | Send Message
     
    With global deflation in full tilt mode a gold bear market may be on the way.
    20 May, 11:00 AM Reply Like
  • Anon5311
    , contributor
    Comments (19) | Send Message
     
    Haven't we been in a bear market for the last three years?
    20 May, 11:03 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8208) | Send Message
     
    Perhaps.

     

    A TRUE bear market would put gold below $800 and that ain't gonna happen.

     

    I'd love to be able to buy that low but I'm afraid that chance may be gone for good.
    20 May, 11:06 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2729) | Send Message
     
    Deflation it is DVL...

     

    I don't think anything under $1,000 is too relevant to those buying physical gold. It will be temporary and we will bounce back higher. Unfortunately for the bulls, I do think we get there as I have written about.

     

    In my last article I made the point that a holder of physical gold won't care too much if they are up 50% versus 70% in the next few years. They'll be happy. Keep the big picture in mind bulls. Last I checked, the government isn't doing anything but making matters worse. They have a good track record eh? And how many times do their projections work out? Ever? They and the Fed habitually react "after the fact."
    20 May, 01:26 PM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (3386) | Send Message
     
    In the US, we are now on the inflation side of the trend line. Many emerging markets were there already. It's only the least healthy economies (Europe, and possibly China) where deflation is still a concern.

     

    Japan deserves to be listed among the least healthy economies too, but they've been aggressively stimulating away their deflation and will continue to do so. This makes the yen one of the weakest currencies.

     

    Europe will clearly muddle through. The ECB may have to stimulate, bringing down the value of the euro. This will not be popular in Germany, despite it being in their best interests to lower the euro, so it's not a sure bet at all.

     

    China is a real estate collapse away from actual deflation. Presumably they will stimulate their way out of it, just like the Fed did in the US when our real estate bubble burst. It won't be pretty, but there is not any doubt that the PBOC will stimulate as a response. The only question is who gets hurt and how much. They're in for a wild ride.

     

    In short, deflation is a local phenomenon, not global. And it is definitely no longer in full tilt mode.
    20 May, 02:47 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2729) | Send Message
     
    David, agree with the global analysis, but the Fed is still fighting deflation to the tune of $45 billion a month or $540 billion a year. It may be "reduced" but it is still QE. Treasuries got stronger today and all of the things you described occurring globally are dollar bullish.

     

    We have had a bounce up in commodities since December, but the overall trend is still down since 2011. The global deflation will reverse this bounce higher in my opinion and we are headed lower over the short term, give or take immediate price action.

     

    Again, just my opinion based on how I read things. Respect your opinion.
    20 May, 03:18 PM Reply Like
  • Anon5311
    , contributor
    Comments (19) | Send Message
     
    Knives are out again.
    20 May, 11:03 AM Reply Like
  • EuricoIFConsultant
    , contributor
    Comments (36) | Send Message
     
    This comparison does not mention that 1stQuarter 2013 was the time that Gold price slumped and we got a strong demand response from Asia. Keep that in mind.
    20 May, 01:24 PM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (3386) | Send Message
     
    I actually doubt the WGC figures, because SOMEBODY has been buying up all the physical gold. You can't have negative GOFO rates without somebody with an insatiable demand for physical metal somewhere. As of the latest figures here http://bit.ly/1gaYoi2 they are still negative for one and two months duration.
    20 May, 01:51 PM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (3386) | Send Message
     
    The real WGC figures are here: http://bit.ly/1jS06jp

     

    As you can plainly verify for yourselves, in tonnage terms, the market barely shrunk at all y-o-y, 1074.5 tonnes versus 1077.2 tonnes. That's nearly identical, down only 2.7 tonnes! It was in dollar terms that the market has shrunk, since the price is so much lower this year.

     

    You should also note that in the second half, the y-o-y bar lowers, while seasonal demand is likely to be increasing. The WGC numbers don't go back far enough to show it, but Q1 includes the weakest month, March, and so it should be the weakest quarter of the year in a normal year.
    20 May, 02:28 PM Reply Like
  • jamerson
    , contributor
    Comments (26) | Send Message
     
    It seems to me that the current strangle will end SOON. Hopefully down, but also seems to me that it's created by the FED to simulate inflation, just as we have with $103 oil. With that in mind, the break could be up. This may be a tool to stop a recession??
    20 May, 02:40 PM Reply Like
  • ddearborn
    , contributor
    Comments (124) | Send Message
     
    Hmmm

     

    So you are inferring that gold prices will go down because (at least according to you) because demand is down? So how come gold went down for 3 street years in face of record breaking demand for physical gold during those 3 straight years?
    It seems to me that your logic is faulty along with your estimates of consumption. As mentioned in a comment above physical gold inventories are at all time record lows. If demand truly was down 50+% as you claim, stock piles of actual physical gold would have skyrocketed --they have not.

     

    Clearly gold and silver are being manipulated to drive prices down. Once again you receive an A for effort in your ongoing propaganda war against precious metals.
    20 May, 02:41 PM Reply Like
  • james.
    , contributor
    Comments (265) | Send Message
     
    The statements at the beginning of the above article is extremely misleading. Firstly, China imported 570 tons of Gold in Q1, over half of its usage! Secondly, the recent landslide election of PM Modi in India does insure at some time in the near future, India will lift the Import Restrictions imposed by the previous Power Structure, and thus a huge increase in Gold Imports into India will very soon materialize which will make up for lost time ! Therefore, in conclusion, the usage data for the year 2014 will obviously show a HUGE INCREASE OVER 2013, especially when you factor in the effect of a rising trend in Gold now materializing in its 3rd Leg-Up Super Cycle carrying Gold to $2700 per oz circa June 2015 !! LOOK TO IT !! May 20, 2014 at 11:59 a.m. PDT.
    20 May, 03:02 PM Reply Like
  • Listner
    , contributor
    Comments (189) | Send Message
     
    You do not need to theorise(very faulty)about the demand for gold.Singapore is building at least two new storage vaults,Hong Kong is doing the same,a new gold refinery with capacity of handling more than 6000 mts per annum is under construction in Dubai,who say they are selling 20% of annual gold sales.China is a constant and large buyer so is India,whether officially or unoffically.Gold is moving from the West to the East where it is valued over paper currency whose issue is easily manipulated by the issuer.China and India account for 50-60pct of gold sold annually.The balance of Asia,the Middle East,Turkey,Russia and South America buy another 20-25%.So look at where it is physically going rather than at nebulous numbers and constructing theories which are so obviously wrong.
    20 May, 06:12 PM Reply Like
  • Brian58
    , contributor
    Comments (96) | Send Message
     
    show me an audit. The stockpiles are depleting. Where is Germany's gold?
    21 May, 01:46 PM Reply Like
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