Demand for gold bullion remains strong and suggests gold prices have a huge “for sale” sign on the precious metal.
In Profit Confidential, I have talked about how demand for gold is very strong from consumers in India and China. Demand is now getting stronger in other parts of the world.
Gold Buying at Well-Known Mints Surging
In the first nine months of 2015, the U.S. Mint sold 670,000 ounces of gold in American Eagle coins. This figure is already 28% higher than the previous year’s gold coin sales of 524,500 ounces. (Source: U.S. Mint, last accessed October 20, 2015.)
At Australia’s Perth Mint, gold demand figures are astonishing. In September, the Mint sold 63,791 ounces of gold; this was the highest amount sold in any month in 2015. Looking at relative change, month-over-month, in September, the Perth Mint sold 91% more gold bullion than it did in August. (Source: Coinnews.net, October 12, 2015.)
The U.K. Royal Mint is reporting significant demand since it recently introduced a one-kilogram bar for “serious investors.” (Source: The Guardian, October 7, 2015.)
ETFs Buying Gold
Paying attention to gold holdings of exchange-traded funds (ETFs) like the SPDR Gold Shares (NYSE:GLD), demand figures look solid. As of October 15, GLD had 22.5 million ounces of gold; this was the highest amount of gold held by the ETF since July. (Source: SPDR GLD Shares, last accessed October 20, 2015). At the very core, this says investors are buying gold through the gold ETFs as well—something they ditched back in 2013.
Why a Bullish Stance on Gold Could Pay-Off Big?
In 2011, gold bullion prices reached a record-high and as euphoria followed skyrocketing prices, the metal started to decline in price. In my view, in the past four years, gold has experienced a healthy correction.
We are now starting to see a fundamental shift in the gold market but gold prices aren’t saying it quite yet; give it some time. The supply/demand equation for gold bullion has dramatically improved in respect to a reduction in gold production and a surge in demand. This always leads to higher prices.
The depressed prices of quality mining shares continue to offer contrarian investors a great opportunity.