Global #gold demand in Q1 2012 was 1,097.6 tonnes (t), down 5% - China, central banks and ETFs underpin demand for gold World Gold Council

Global gold demand in Q1 2012 was 1,097.6 tonnes (t), down 5% from the high demand levels seen in Q1 2011 (1,150.7t) 

World Gold Council

China, central banks and ETFs underpin demand for gold

17 May, 2012

Global gold demand in Q1 2012 was 1,097.6 tonnes (t), down 5% from the high demand levels seen in Q1 2011 (1,150.7t), according to the World Gold Council’s Gold Demand Trends report. This decrease was largely to be expected given the introduction of import taxes in India and high gold prices. Gold demand value however, showed a 16% increase year on year to an estimated US$59.7 billion. The average price of gold for the quarter was US$1,690.57, 22% higher than the average for Q1 2011. Demand for the quarter was underpinned by increased demand in China, continued central bank purchasing and inflows into exchange-traded funds (ETFs).


The main highlights from the report are as follows:
China’s investment and jewellery demand reached 255.2t up 10% on the previous year’s levels. Investment demand recorded strong growth with a quarterly record of 98.6t, up 13% from Q1 2011, demonstrating investors’ continued need to preserve wealth amidst ongoing concerns over inflation. Jewellery demand in China also increased significantly to 156.6t, accounting for 30% of global jewellery demand making China the largest jewellery market for the third consecutive quarter.
Gold demand in India was affected in Q1 2012 by a number of factors; a new tax on gold jewellery, two increases in the import duty for gold and weakness and volatility in the rupee. Jewellery demand fell 19% to 152.0t from Q1 2011. Investment demand was down 46% from the previous year at 55.6t. In May, the government withdrew the new tax on jewellery and the market is already responding positively.
Central banks across the globe continued the now established trend of net purchasing with demand in Q1 2012 reaching 80.8t. Demand was driven by Eastern Europe with Russia and Kazakhstan adding to their holdings and accounting for a substantial amount of the purchasing. Mexico’s central bank made the largest single purchase of 16.8t. The main driver for this demand by emerging market central banks is the need to diversify their holdings.
First quarter demand for ETFs and similar products totalled 51.4t, equivalent to a value of US$2.8bn; in stark contrast to the first quarter of 2011, when the sector witnessed net outflows.


Marcus Grubb, Managing Director, Investment at the World Gold Council said,


“China and India have seen continuing economic growth and whilst China’s economy is expected to slow, it will nonetheless surpass the rates of growth in the West. As we previously forecast it is likely China will become the largest source of demand for gold in 2012.


This growth story also extends to other emerging market economies and is reinforced by central banks’ continued buying of gold, as a diversifier and a preserver of national wealth. The current picture of the gold market is diverse and not withstanding a flight into US dollars and treasuries near term, we believe the fundamental reasons for investing in gold today remain very strong and compelling.”
Gold demand and supply statistics for Q1 2012:
First quarter gold demand of 1,097.6t was down 5% in comparison to Q1 2011 though in line with the average of the preceding eight quarters.
The value measure of gold demand was 16% higher year-on-year at US$59.7bn.
Demand in the jewellery sector of 519.8t was down 6% year-on-year, which when considered against a rise in prices of 22% shows resilience in jewellery demand. Increasing prices are leading to a re-premiumisation of gold, as it becomes even more exclusive. In US$ terms, the value of jewellery demand grew by 14% to a record US$28.3 billion.
The average gold price of US$1,690.57 was 22% higher than the average of Q1 2011. As a result, in value terms, virtually all sectors of gold demand posted year-on-year increases, with the exception of physical bar demand, which was broadly flat, and the official sector, where purchasing activity was below Q1 2011’s exceptional levels.
First quarter gold investment demand (including gold bars, coins, ETFs and similar products) grew by 13% year-on-year to 389.3t. In US$ terms, this equated to a demand value of US$21.2bn, 38% higher year-on-year. Increases in demand for ETFs and medals/imitation coins meant that demand reached 389.3t, 45.8t above Q1 2011 despite declines in demand for physical bars and coins.
At 107.7t, demand for gold used in the technology and industrial sectors was down by 7% compared with year-earlier levels.


The Q1 2012 Gold Demand Trends report, which includes comprehensive data provided by Thomson Reuters GFMS, can be viewed here.

17 May, 2012, China, central banks and ETFs underpin demand for gold Media World Gold Council

Gold investors forgetting the lessons of 2008 - INDEPENDENT VIEWPOINT - Mineweb.com

INDEPENDENT VIEWPOINT


Gold investors forgetting the lessons of 2008

Gold is currently trading at levels last seen before its big move up last summer and, Adrian Ash asks how much worse do things need to get before the lessons of 2007-2009 are revived.

Author: By Adrian Ash
Posted:  Thursday , 17 May 2012
BullionVault - 

Gold just gave back the last of its big surge from summer 2011's big crisis...

SO THE PRICE of gold keeps falling, and it keeps falling despite the imminent failure of Greece's Euro membership, the looming collapse of Europe's banking system, and the fast-looming debt-ceiling repeat and fiscal cliff in the US.

Hey-ho. Some €700m per day is being pulled from Greek banks. Global stock markets have fallen over 7% already this month, the broad commodity markets have fallen for 10 out of 11 days, and crude oil is trading at a 6-month low, down 15% from February.

Yet the distinct attributes of gold - un-inflatable, economically useless (relatively speaking) incorruptible gold, with its zero credit risk and 5,000 years of monetary use - count for nothing. In Dollar and Sterling terms, it's now back where it started last summer's big move.

It's like summer 2011 never happened...



That's precisely what happened in late 2008, when the collapse of Lehman Bros. - and the missed opportunity to let every other over-leveraged investment fraud go bust as well - drove equities, commodities and gold sharply lower.

By mid-October 2008, gold had re-traced the entire surge that started with Bear Stearns' hedge-fund failures of mid-2007, running to the peak above $1000 per ounce when Bear Stearns itself failed into the loving embrace of J.P.Morgan the following March.

Here again in 2011-2012, the crisis proved good for gold at first, but the whole move has been unwound as global credit deflation sucked the air out of gold futures and options, and wipe-out losses in other assets forced even true believers to quit their positions.



Gold prices have the potential to recover, reckons a UBS analyst on Bloomberg TV. No doubt he's right. But how strong is gold's immediate potential given the overwhelming bullishness of every other tomfool able to voice his opinion in public.

"Last time we talked, last September or October, you asked what I thought, and I was bullish at $1800," said one MBA with the certainty of a 12-year old to Business Insider a week ago.

"Now it's $1660, and I'm still bullish. I'm more bullish than ever."

Good grief. Just think how bullish he must be now gold has sunk another $120.

"When all the experts and forecasts agree, something else is going to happen," says David Rosenberg, previously chief economist at Merrill Lynch, now chief economist and investment strategist at Gluskin Sheff and - ummm - an expert by any measure. But what happens when all the fools agree with the experts? It most likely ain't pretty.

Put another way, gold has been getting "a thorough, undeserved smacking," as our friend Ross Norman at Sharps Pixley wrote last week. But what's so undeserved about it?

Gold has risen for 11 years straight, gaining through boom and bust and boom and bust again, beating all other tradable assets (now including silver) hands down and even being recognized by 1-in-4 Americans as the best place to keep your money (formerly 1-in-3, but who's counting besides us?).

The best place up until now, that is. Survey monkeys really don't know the best place from here. No one does. Hence the fun we're all having meantime.

Longer-term, of course, gold's low of Oct. 2008 proved a stand-out buying opportunity. Difference was that physical gold demand - at the lows of the 33% price drop top-to-bottom in 2008 - was massive. Lines formed outside coin shops, gold ETF holdings surged, BullionVault users couldn't pile the stuff into Swiss storage fast enough at just $4 per month, and financial journalists worldwide realized why people buy gold in crisis.

Today, in contrast, demand is fair but unspectacular. Hell, the financial press in Spain is telling people "gold is a risky asset" that has "lost its luster"! Maybe the crisis isn't clear enough. Maybe those people who would buy gold in a crisis already did, four years ago if not last summer, when the Eurozone crisis ran into the US debt downgrade ran into the torching of England's towns and city centers.

Or maybe things have to get very much worse again to revive the lesson of 2007-2009. The lesson that banks do go bankrupt. Debt investments do evaporate. Central banks will stop at nothing to stem a credit deflation.

Adrian Ash is head of research at BullionVault

Read the article online here:Gold investors forgetting the lessons of 2008 - INDEPENDENT VIEWPOINT - Mineweb.com | The world's premier mining and mining investment website Mineweb

Paulson keeps gold ETF exposure in Q1 - #GOLD NEWS - Mineweb.com

Paulson keeps gold ETF exposure in Q1

Hedge fund manager John Paulson held on to his ETF bullion holdings in the first quarter of this year, gaining from an early surge in gold prices before the market tanked.

Author: By Barani Krishnan
Posted:  Wednesday , 16 May 2012
NEW YORK (Reuters)  - 

Prominent hedge fund manager John Paulson held on to his ETF bullion holdings in the first quarter of this year, profiting from an early surge in gold prices before the market tanked, a regulatory filing by his company showed on Tuesday.
It was the first time Paulson had retained his position in the SPDR Gold Trust since the second quarter of 2011. He slashed his holdings in the world's largest gold ETF in two earlier quarters due to what analysts suspected were client redemptions.
Other major fund managers with positions in SPDR Gold, including billionaire financier George Soros, also turned positive on the ETF during the first quarter, some raising their holdings sharply.
Paulson & Co owned 17.3 million shares in SPDR Gold at the end of March 31, virtually unchanged from Dec. 31, a regulatory filing to the U.S. Securities & Exchange Commission showed.
The gamble resulted in a paper gain of nearly $180 million for the company as the value of its ETF holdings rose to $2.81 billion from $2.63 billion amid rising bullion prices.
The spot price of gold, which tracks trades in bullion, jumped 11 percent in January as the market appeared on course to test September's record highs above $1,920 an ounce.
The rally, however, lost steam abruptly, with gold falling a cumulative 4 percent in February and March before finishing the quarter up nearly 7 percent. The sell-off has deepened since, taking gold to below $1,545 an ounce by Friday's close, down more than 1 percent for the year.
Analysts read the first quarter filing by Paulson as a sign that the hedge fund manager, a well-known gold bull, has not lost his faith in the precious metal as a long hedge against inflation.
Paulson has to date been the biggest holder of SPDR shares, using them to hedge currency exposure, while other managers such as David Einhorn and Daniel Loeb have favored more-discrete investments in physical bullion.
Still some expected him to join the herd and cut some of his holdings in gold before the second quarter was through.
"There's absolutely no question in my mind that large institutions have been net sellers in gold over the past two weeks," said Adam Sarhan at New York's Sarhan Capital. "The fact that Paulson has been coming under a lot of pressure on his other holdings may force him to liquidate as well."
During the first quarter, Paulson was also bullish in outlook in his outlook for gold-miners such as Barrick Gold Corp and IAMGold Corp, accumulating more shares in the companies.
SOROS, OTHERS, ADD TO GOLD ETFs
Billionaire financier George Soros increased his position in SPDR Gold to nearly $52 million in the first quarter from $13 million previously.
Last year, Soros, who had called gold "the ultimate bubble", had largely dumped his stake in the ETF before the metal ran up to a record peak of $1,920.30 per ounce in September.
Other major institutional investors, including PIMCO and the Teacher Retirement System of Texas, also boosted their GLD holdings during the quarter. Eric Mindich's Eton Park Capital, which held only SPDR gold options during the fourth quarter, was back to holding to common shares as well.
Overall holdings in the SPDR Trust rose just over 8 percent in the first quarter, after a 2 percent gain in the fourth, according to data obtained from SPDR's website. Gold ETF holdings increased as the price of bullion rose more than 6 percent in the first quarter.

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Read the story online here: Paulson keeps gold ETF exposure in Q1 - GOLD NEWS - Mineweb.com | The world's premier mining and mining investment website Mineweb

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