Growing Fan Base


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"Growing Fan Base", the topic we are going to talk around the Gold Bullion market this week. Check for news!

Growing Fan Base

It would be hard to downplay the current role of gold and silver in the global marketplace. Everything that has happened since the economic downturn in 2008 has challenged traditional views for investing, but the prices for bullion have been trending higher. The first quarter of 2011 delivered some fresh highs in both markets, challenging old milestones. This action led to speculation that physical sales and investment demand for both might taper, but for all intents and purposes it looks like gold and silver are still building a fan base.

Past performance is not indicative of future results.
***chart courtesy of

The latest demand report from the World Gold Council showed some strong numbers in a few key areas. The main highlight for demand came at the beginning of their quarterly report – gold demand totaled 981.3 metric tons to kick off 2011. The report favorably highlighted the strong demand seen from the investment side of gold. Overall, the year-on-year stats for investment demand were up 26 percent to more than 310 metric tons. Some of the strongest growth is noted in the developing hotspots of India and China. Both nations have seen strong upticks in their metal jewelry sales, but investment demand is also strong.

China’s main push towards gold investment was driven by concerns over domestic inflation. While the People’s Bank of China wrestles with various approaches to monetary policy, investors looked for a place to park their assets to try to do what most people do with gold – preserve. The nation took the “top spot’ for investment demand at 90.9 metric tons for the first quarter. China also has a historically strong link between status and gold ownership. The World Gold Council noted that the increasing global liquidity pumped more capital into the East, and the recipients of that capital turned to gold to hedge against the ensuing inflation. Corporations are also among growing participants in the gold investment realm. China Investment Corporation has stake in SPDR Gold Trust Shares, “the world’s largest ETF…backed by physical gold.” The country and companies within it have acted on economists’ advice to allocate at least some of their reserves to gold as a hedge for “depreciation of foreign exchange reserves.”

US dollar weakness has likely been a strong driving factor in investment demand elsewhere around the globe. Domestically, the growth of bar and coin investment demand was 93 percent year-on-year. Germany saw the same area rise 153 percent compared to the first quarter of 2010. That data is significant when you consider the ongoing debt issues in the European Union. From where I am sitting, Germany appears to be among the few countries in the Eurozone which has shown some resilience following the credit crisis that began in 2008. The fact that residents are upping their appetite for gold investment underpins the financial uncertainty in the unified area.

These global uncertainties were far from resolved during the months that following these data. Consider the unresolved issue of....

Read more at The Bullion Report!
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