Thursday, August 28, 2014
   
Text Size

Search our Site or Google

China replacing India as premier gold-consumer

Articles & Blogs - Gold Commentary

User Rating: / 6
PoorBest 

For several decades, Indian gold demand has dominated the global gold market, to the point where it's own consumption-cycle became the “seasonal” indicator for gold. As Indian “wedding season” began in the fall, gold typically experienced a surge in the price. Then, in the spring, as wedding season drew to a close, gold would reach its seasonal peak.


In late April or May, as Indian demand dropped off, so too would the price of gold (usually) begin to swoon. The price would bottom in June or July, trade sideways for a period of weeks or months, and then begin to show strength again as Indian demand returned, to begin a new “season”.


However, over the last year, the picture of global demand for gold has changed radically – in several ways. To begin with, apart from the 3rd quarter of last year (when Wall Street's take-down of global markets resulted in even gold going briefly lower) Indian gold imports have virtually disappeared.


Indian gold-buyers are notoriously price-sensitive (as are their retail customers). With gold prices being at or near record-highs, with the exception of that one quarter, the Indian buyers have simply waited – presumably for the usual, spring sell-off – and relied upon domestic “scrap” sales to cover domestic demand. But there has been no sell-off in the gold market this year.


In the first quarter of 2009, Indian gold imports fell 83%, at a time when Indian demand normally drives the gold market. True, there was no significant rally – but no weakness either, despite Indian abstinence. Indeed, I commented on this startling change several months ago (“Is India now IRRELEVANT to the gold market?”).


There have been two other important changes in the global gold market, which have completely offset the stunning change in Indian consumption. The first change is gold's official metamorphosis from a “jewelry” market to an “investment” market. As noted several months ago, in “Gold demand driven by investment...PERIOD”, in 2008 for the first time in decades, “investment” demand exceeded “jewelry” demand.


This was primarily due to a huge jump in investment demand, rather than declining jewelry demand, as in the fourth quarter of 2008, retail investment demand was a stunning 400% higher than the same period a year ago. Overall, investment demand more than doubled last year. However, even that overstates the importance of jewelry demand to the gold market.


The majority of retail consumption in the world is based in Asia. In part, this is “cultural heritage”, but it is also a practical matter. For example, of the hundreds of millions of Indian “peasants”, only a small percentage have access to banking services. Thus, the “savings accounts” for these people is their gold (and silver). It is typically fashioned into jewelry, so that it can be worn (a convenient means of carrying it), but this “jewelry” is all about financial security rather than ornamentation.


The importance of this reality is that while Indian buyers may stay away from the gold market over the short term, over the longer term, Indian peasants must have additional gold and silver to store their wealth. Already, indications are that Indian demand is shifting somewhat into cheaper silver (yet another future drive for that market).


Two further anecdotes indicate the increasing desperation of India to find new (and preferably cheaper) sources for gold. In “Indian gold-buyers DESPERATE for new supply”, I pointed out how India had been talking-up the idea of mining its own gold “reserves” - with a recent estimate released stating that the Indian government believed there were 20,000 tons of gold and diamonds that could be mined in India. Of course, with any actual production of such resources at least a decade away, this appeared to be more an attempt to “jaw-bone” the price of gold lower rather than a realistic solution to come up with a new gold supply, without driving the price of gold even higher.


The other anecdote was a public declaration (along with China) that the IMF should sell all of its thousands of tons of gold, rather than merely the few hundred tons that has been announced (and re-announced) by the Manipulators on at least a half-dozen occasions. Presumably, China and India were both eager to lay their hands on thousands of tons of gold “in one gulp” - and without pushing up the price of gold, directly.


This brings us to the last major change in gold demand fundamentals: the rise of China as a dominant, international “player” in gold. It began with China rapidly expanding its gold production, in order to become the world's largest producer – the only large producer in the world which has been able to expand its production. Indeed, most other large, global producers are seeing steady declines in their own production, despite record nominal prices for gold (see “Peak Gold: the new paradigm”).


However, instead of Chinese gold becoming a rare, new source of supply for the globalvcgold market, it now appears that China was secretly purchasing most (if not all) of that new gold for itself. The Chinese government recently announced that in just six years, it had increased its official, national gold reserves by 76% - as of the end of 2008 (see “China now has 5th largest gold reserves”).


Meanwhile, as China became the world's largest producer of gold, while the Chinese government has been the biggest, national acquirer of gold, now individual Chinese investors appear to be following its government's example. In a recent Bloomberg article, the World Gold Council reported that China was poised to overtake India this year, as the world's largest gold-consumer.


In the first quarter of this year, Indian domestic demand was only two tons greater than that of China – little more than 2%. This means that China will likely pass India next quarter, and barring a significant reversal in India, become the new permanent leader in global gold consumption. India's bullion dealers must now begin to contemplate this new paradigm for the global gold market: that they are now competing for available supply with 1.2 billion Chinese consumers (along with other retail investors all over the world).


Once that realization sinks in, it must result in a change in the psychology of Indian buyers (at both the wholesale and retail level). As the fantasy of “cheap gold” becomes nothing but a memory from the past, Indian gold demand will change from providing primary support for the price of the gold, to becoming another major driver in higher gold prices.


Thus apart from the ever-present monetary/economic arguments for holding gold (and silver), the supply/demand fundamentals for the precious metals market continue to be among the strongest (if not the strongest) for any commodities on the planet. With China having clearly begun another strong, economic growth-cycle, and with economies such as the that of the U.S. still a grave concern, gold demand can only continue to soar.

Trackback(0)
Comments (1)Add Comment
Brian Boutilier
...
written by brian boutilier, July 27, 2009
I think you this was a good article in that it pointed out a fundamental change in the gold market. It won't be long before the world catches up to Chinas' shift in focus. They are the beginning of a currency evolution for this millenia. Boot

Write comment
You must be logged in to post a comment. Please register if you do not have an account yet.

busy

Latest Commentary

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12

Latest Comments

Disclaimer:

BullionBullsCanada.com is not a registered investment advisor - Stock information is for educational purposes ONLY. Bullion Bulls Canada does not make "buy" or "sell" recommendations for any company. Rather, we seek to find and identify Canadian companies who we see as having good growth potential. It is up to individual investors to do their own "due diligence" or to consult with their financial advisor - to determine whether any particular company is a suitable investment for themselves.

Login Form

generic acticin cost where did the story of purim take place cytotec over the counter drugs house for sale st davids wood artane does ortho tri cyclen lo have generic version innopran xl buy canada best online pharmacy mexico phone in order for lipothin why shortage of doxycycline healthy heart rate 20 year old male is benadryl sold over the counter purchase tricor pills entocort pharmacy xeloda side effects duration sale xalatan sandoz lisinopril 10 mg cafergot online coupon code bupropion generic manufacturers generic clonidine in transdermal consumer information bactrim f dosis is mirapex a prescription drug furosemide combination where to buy tadalafil pill shop discount medications broker accutane 40 mg for sale buy trileptal online no prescription united states long term side effects of levothyroxine get prescription without doctor visit eve mentat cache import cialis viagra combo pack phone number search by address tadapox generico online apcalis sx dosage recommended buy mentax online overnight what is cipro now called best pharmacy schools us 2010 how to take ephedrine caffeine and aspirin buspar shopping rumalaya gel coupons generic brand for keflex mircette daily use reviews buy dipyridamole no prescription fast delivery prograf generic cheap costs +gout medication canadian atorlip-20 usa cvs prices cheap canada buy zyprexa glucotrol xl to buy from europe order amoxil online pharmacy avodart hair loss reviews caverta discounts codes can i get artane what is rosuvastatin crestor tofranil generico italiano buy keftab boots pharmacy para que se usa el bupropion safe to buy generic atarax from uk combivent inhalers online without script purchase minocin pill rx health order bactrim antibiotics products how to purchase januvia buy shop cialis mail order carafate online recommended dose of diflucan for yeast infection low cost isoniazid how to purchase tenormin online novolog insulin pump buy septilin online reviews how to use cardura cheap apcalis sx pills bupropion prescription online phenergan lawsuit canada hydrochlorothiazide combo can lisinopril hctz cause weight gain nolvadex side effects gynecomastia hyaluronic acid dose for skin propecia side effects prednisolone medication online what is clotrimazole and betamethasone dipropionate cream usp used for buy nexium in usa order yasmin overnight finasteride usp 5 mg drug nolvadex dosage after superdrol vitamin shoppe coupon december 2012 ordering cytotec purchase toradol online half price exelon purchase rumalaya forte online antabuse medicine children what is alavert tablets fml forte prescription only can you buy septilin lowest sinequan on line no script viagra sublingual shoppers drug mart tadalafil 40 mg uk seroquel 50 mg tablets bactrim mg canada nizoral 100mg what does ataraxia mean olanzapine barato buy requip australia how to order voveran sr lamisil 250mg tablets side effects low price kamagra uk paxil cost walgreens order antabuse 250 mg order wellbutrin sr on line india primatene mist without cfc what is ic citalopram hbr 20 mg buy nitroglycerin explosive medications online uk buy torsemide lowest price let me watch this channel 1 geordie shore prilosec and weight gain now buy chloroquine with visa best price cipro what is v-gel made of speman medicine children liposafe canada no prescription amantadine in the uk now where to buy clomid online usa lesofat where can i buy sulfamethoxazole trimethoprim low acivir pills drugstore canadian geriforte syrup online in us buy cheap levlen pills metoclopramide tablets 5mg risperdal consta injection price penegra prices at costco cardura without script risperdal for sale uk buy accutane without prescription 40 mg buy premarin online safely buy lanoxin in ireland can you get thrush from keflex what is diclofenac pot 50mg used for nexium 20 mg dosage avapro australia price pilex 100mg cheep promethazine no prescription needed losartan 100 mg hydrochlorothiazide 25 mg chloramphenicol 250 mg is levothyroxine free on nhs gnc health shop on line mens viagra my alli side effects buy malegra fxt inhaler canada buy vantin online amazon cialis reviews forum cheap where can i buy brahmin handbags best generic levothroid sites avodart mg tablet can you get high off antabuse buy etodolac online pharmacy generic pyridium canada western drug serpina amitriptyline withdrawal symptoms period buy acai 20 manfaat obat lasix 40 mg ordering mevacor usa bupron sr mail order buy ortho tri-cyclen visa buy live fish bait extreme acai berry melt-away tablets review para que se usa el medicamento tegretol cheap extendaquin no prescription uesp oblivion meridia how much does paroxetine cost without insurance how to get the most out of cialis buy acai with paypal broad spectrum antibiotics cheap zyrtec sale uk cipla fieldcall report generic viagra 100mg pills ranitidine 20 mg what is hydrochlorothiazide generic for what is a groggers for purim getting tenormin in australia worldwide pharmacy metformin buy lady era 15mg online lexapro tablets 5mg buy florinef 1 mg allopurinol without a perscription non prescription urispas abilify pills online in the india discount coupon drugstore code is there a generic for requip buy reductil sibutramine online digoxin side effects rxlist buy betnovate n skin cream viagra professional uses medication nitrofurantoin from usa pharmacy glucophage pas cher italie bactroban buy online ireland order flonase on line usa where can i get yasmin pill order orlistat on line usa what is the usual dosage for abilify cheaperviagra generic medicine for asacol can you smoke dilaudid hydromorphone generic lanoxin switzerland cipralex side effects memory loss zanaflex birth control online canada original aleve online generic metformin overnite shipping metformin brand name generic name mens health generic viagra ampicillin delivery uk prednisone dosepak 5mg online pharmacy india chennai cipro recommended dosage for uti canadian medications cheap allegra price cvs better than rumalaya special care pharmacy san juan puerto rico avapro in buy generic 150mg levitra cost can you buy inhalers for asthma over the counter zoloft prescription drug buy viagra australia online no prescription buying zantac using paypal purchasing reglan online uk ultra low dose doxazosin cost of roxithromycin cheap crestor 20mg best online pharmacy generic astelin arjuna order cheap olanzapine india grifulvin v 10 mg cost venlor dosage too high retail price of maxalt mlt cost of mirapex without insurance cheap finpecia uk antibiotics online no prescription usa avodart medication prostate cancer is synthroid t4 order viagra uk canadian hydrochlorothiazide esidrix hydrodiuril microzide buy cialis from canada lisinopril maximum recommended dose buy erection packs 3 online without prescription where do i buy prednisone allegra online what is benzac cream crestor 20mg tablets can you get pregnant while taking topamax non prescription drugs for anxiety what is diovan prescribed for elavil reviews for pain cordarone without prescription canada free viagra coupon what is the maximum dosage for keppra canadian lotensin buy viagra with paypal prescription haldol druppels toedienen levitra professional online from uk buy over the counter retin-a ge online shallaki sold over counter buy alli diet pills philippines canadian dramamine from canada how to order uroxatral online rayrx reviews pulmicort over counter uk can you buy adalat cc prescription why has sinequan been discontinued best price for real vytorin where to buy benzac wash zocor heart pro buy online legal buy ortho tri-cyclen online canada prednisolone on line most reliable place to buy luvox online paroxetine overnight shipping online estrace mexico can you order fucidin cheap trental 100mg generic from amitriptyline generic reviews forum discount viagra online sales 2009 diovan patent alesse birth control prices soft sale buy cialis tabs where can i purchase lasix non prescription aldactone pharmacy glycomet 10 mg what does a zoloft high feel like no prescription omnicef sale orlistat tablets from buy does valtrex stop transmission herpes allopurinol in india where to buy thyroid meds buy fml forte online amazon avalide without food diovan 160mg tablet the doctor has ordered tetracycline 5g alesse birth control pills review ventolin albuterol of salbutamol lov cost avalide morning after pill effectiveness 48 hours what is the best drug for erectile dysfunction acheter livebox play gout allopurinol colchicine cephalexin mims australia la voz de maria massa del padre chelo betamethasone valerate cream bp betnovate buy nizoral 10 maximum dosage of benfotiamine azithromycin generic teva ciprofloxacin dosage suprax low cost can you get chlamydia test boots renagel pills sweat alphagan canada overnight delivery deltasone online meds zebeta 50mg tablets buy over the counter purchase viagra can you drink alcohol on roxithromycin order duetact mg erection pills canada where to purchase casodex comprar chloramphenicol pela internet vermox 20 mg ml sospensione orale posologia micardis fast canada kamagra uk fast delivery elocon on line for sale no script detrol uk next day delivery can cleocin get you high long term side effects doxycycline hyclate comprar tenormin online birth control pills clonidine high dose of prednisone for cats cuvarlix malaysia viagra plus price india lasix next day chloroquine phosphate 250 mg tablets anti seizure medication keppra side effects amlodipine valsartan hydrochlorothiazide tablets cordarone x tablets heart nexium 40 mg side effects prescription propecia online half price skelaxin what is the medication doxazosin mesylate buy alli bactroban pharmacy side effects of crestor rosuvastatin 20 mg citalopram maximum dosage buy zyban with visa asthma inhalers types buy aldactone uk canadian how to purchase brand levitra online is metronidazole cream available over the counter what is dramamine roxithromycin cheap canada pharmacy cheap canadian zyloprim no prescription what does seroquel 25 mg look like viagra plus dosage recommended comprar tamoxifeno claritin tablets from buy where do i buy brand cialis amoxicillin or bactrim for uti augmentin 875 mg-125 mg tablet best place to buy amantadine in usa buy cleocin with e check isoptin australia price xenical canadian pharmacy what is atenolol comprar uroxatral original international pharmacies no prescription order suprax lowest price nootropil suppliers overseas cvs pharmacy puerto rico san juan what are meclizine 25 mg rx tablets used for buy ditropan tablets online what is biaxin filmtab 500 mg used for haldol generic wikipedia drugs discounts for sildenafil how long does it take for lamisil pills to work antabuse from usa order cialis online safe buy forzest in uk aciphex cost per pill cytoxan to buy in england buy himcolin boots pharmacy seroflo no prescription compare prices what is paroxetine made of genuine pravachol 100mg buy metronidazole canada pharmacies alliance ohio how much does bactrim cost at walmart med cab colospa what is seroquel for sleeping kamagra oral jelly online order cardizem dosage tachycardia buy exelon hong kong cheapest pharmacy what does the drug baclofen do saw palmetto over counter uk clomid ovulation calculator tool comprar flonase original en madrid where to buy anacin how long does zetia take to work cheapest celadrin french pharmacies in london cyklokapron injection price safe nexium buy cialis generico brasil toprol where to get what is endep used to treat order pain meds online cheap genuine florinef online use aleve coupon online blopress plus 8 mg to buy forzest in uk where can i buy permethrin 5 cream over the counter chep viagra cost of accutane 2013 hydrea reviews for men what is levitra professional made of purchasing arava online uk what is aspirin delayed release tablets dilantin 40 mg dose acai palm trees for sale dapoxetine peak sales vente de diflucan au quebec serevent uses medication hfa ventolin coupons zenegra overnight delivery where to purchase zyrtec triamterene-h-sobhan vermox 100mg tabletki 6 szt ulotka buy dipyridamole in australia buy dulcolax inhaler canada prescription online allopurinol without buy over the counter diabecon online benicar italiano como comprar cymbalta com desconto accutane reviews 2009 liposafe canada sale what does a coumadin pill look like medrol generic wikipedia drugs where can i order lotensin capoten online in canada does alli work discount code motilium 10mg mcneil periactin fast uk diflucan shelf life cephalexin side effects long term use nexium coupons 2011 how much does zithromax z-pak cost which uk site to buy cialis professional requip xl manufacturer coupons where to buy accutane online topix cheap actos meds 5 mg abilify bipolar buy actoplus mg online fast flovent deleviery unisom cheap price online sale of minipress capoten sublinguale buy benadryl pills piroxicam side effects ciplox 100mg cheap prednisone tapering dose copd what is mobic 15 mg used for order premarin from mexican pharmacy toradol purchase in canada no prescription lowest priced yasmin generic cipro switzerland low cost overnight viagra sublingual seroflo comprar where to alesse ovral l generic estrace cream dosage what is the mode of action for ampicillin atorlip-20 delivery uk do i need a prescription for cytoxan starlix sale does paxil cause weight gain women nizoral shampoo online bestellen viagra professional prices cvs buy xeloda generic levothroid switzerland fluoxetine discontinued tadalafil 20 mg reviews how to order shuddha guggulu i pill avandamet website discount coupon acai burn combivent in the uk now info on alli weight loss program what does dramamine do to dogs pravachol pills sweat buy remeron fast shipping diltiazem dose atrial fibrillation lanoxin results forum imuran order by phone to buy eulexin vermox where to purchase can you buy cialis over the counter in france post cycle therapy roxithromycin over counter brand levitra alli weight loss aid capsules where to buy carbozyne ointment generic tamoxifen us ed rush optical sample pack best place buy zoloft pct buy leukeran online to buy norvasc in uk cheap kytril no prescription what can you buy with paypal balance buy 21 online brand alesse order metoclopramide from rhinocort tablets side effects best website to buy neurontin without a prescription female viagra where to get cheap accutane delivered overnight cialis black 800 mg proventil generic cheap costs list of prescription drugs available in mexico buy bactroban over counter get minipress las vegas suppliers of rumalaya gel in us use reglan coupon online benzac online pay paypal yasmin boland capricorn micardis cheap price order celebrex cheap legal to buy proscar optimmune ophthalmic ointment why has himcocid been discontinued metronidazole 500mg without prescription in. us drugs similar to vermox ethionamide drug schedule albenza overseas is abilify over the counter prescription drugs online viagra metoclopramide dose pediatric eurax canada head office buy rumalaya forte 80 mg online non persciption revatio what are the side effects of fucidin cream arimidex next day lowest price on real viagra number pharmacies latin america buy minipress quick emsam cost comparison tofranil pm price acheter pas cher biaxin generic name for cytoxan ampicillin medication overnight delivery cialis professional mist canada paroxetine cost without insurance buspar 10 mg tablet remeron shortage prazosin medicinenet compare prices estrace chlamydia antibiotics can you drink