Is There a Bull Within the Gold Bear?
Gold investors will recall there was a surge in bullion buying when the price crashed in mid-April. We saw less of this with the June decline, though global investment demand has still been stronger than what was seen in 2012.
What virtually every mainstream headline has been screaming about, though, is the huge outflows in GLD. This frustrates someone like me who knows the “paper” gold market comprises only a part of the total investment picture for gold. As the saying goes, they’re looking at only one part of the elephant.
The reason it’s important to look at the entire picture of investment demand is because an investor might draw an erroneous conclusion if they read just the headlines. For example, China and other Asian nations represent well over half of all global investment demand, while North America is just 9 percent. Is this bigger source of demand experiencing a lot of selling, too?
Let’s look at the bigger picture of investment demand for gold this year. In the following chart, we compare GLD outflows to Chinese imports through Hong Kong, as well as other sources of demand for physical metal. Here are the data through last month.