These Headlines Say Gold is Building a Base for Something Big

by Jeff Clark, GoldSilver:

It may be frustrating to watch the gold price remain dormant as stock markets continue to push higher. But while cryptos and Trump grab a lot of the headlines, you might be surprised to know there are significant forces behind the scenes that signal the gold market is not only strong but suggest something big is coming.

Check out these reports from the last 30 days and see what conclusion you’d draw…

Global Physical Demand

Demand for coins and bars in North America may be low, but that’s not the whole market. Check out what occurred around the world last quarter…

Chinese coin and bar demand hit the second highest volume on record. In the third quarter, demand for physical metal rose an incredible 57% over the same period last year.

Gold bar and coin purchases in Turkey are almost three times higher than last year.

Bar and coin demand in Europe rose 36% vs. 2016. German demand surged 45%.

South Korea demand jumped 42%. It’s admittedly a small market, but this shows once again that investors turn to gold when geopolitical tensions rise.

It’s clear that demand for physical metal is surging in many areas around the globe.

Central Bank Demand

Global central banks added 111 tonnes to their gold reserves last quarter, 25% more than the same period in 2016…

The Central Bank of Russia bought 63 tonnes, pushing their gold reserves to 1,778.9 tonnes. I like this quote from Russian newspaper Kommersant: “If US sanctions are expanded to block Russia’s assets invested in US Treasuries, gold will be a magic wand.” The trend is expected to continue, says Alexander Losev of Sputnik Asset Management: “The regulator will continue to amass gold in its reserves, decreasing the share of US Treasuries.”

The Central Bank of Turkey has gone bonkers for gold, its reserves now more than 50 tonnes higher than April 2016. Here’s what Turkey’s gold imports look like so far, from our friend Nick Laird of goldchartsrus.com:

You can see that a new record will almost certainly be set by the end of the year.

Other central banks increased their gold reserves last quarter, too…

• Kazakhstan purchased 10.3 tonnes last quarter, and has increased its gold reserves every month for the last five years.
   
• Qatar bought 3.1 tonnes
   
• Kyrgyz Republic added 1.3 tonnes
   
• Indonesia bought 1.2 tonnes
   
• Mongolia added 0.4 tonnes
   

While these increases are small in the big picture, it demonstrates that central bankers in emerging markets continue to see the need to add gold to their reserves.

Why are so many central bankers buying so much gold? They clearly see the need to denominate their reserves in physical metal.

Technology Demand Grows

Technology demand for gold rose 2% over the same period of 2016, reports the World Gold Council in its Q3 report:

• Gold used in wireless applications grew 8% over last year.
   
• Demand for 3D sensors, used in facial recognition, were higher than projected.
   
• Applications in gaming, vehicles, and healthcare are projected to see growing demand.
   

Government Expansions and Institutional Interest

Kuwait Plans to Build a $112.5 Billion ‘Gold City.’ The Ministry of Commerce and Industry asked Kuwait Municipality to allocate a plot to build a special “gold and jewelry city” over a 100,000 square meter area, which would make it the largest of its kind in the region.

The new “Gold Connect” exchange links the gold markets of Hong Kong and Shenzhen, and on the first day over nine hundred kilos of gold traded, worth 300 billion yuan, or $38.45 billion in US dollars. That’s not exactly chump change.

Hedge funds and money managers cut their long positions the past couple months, but their net positions are still higher than the start of the year.

According to Zero Hedge, Ray Dalio went on a gold buying spree last quarter: he increased his GLD holdings by a whopping 575% and became the 8th largest holder.

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