The Bullion Report for January 18, 2012: Gold Trends in the Euro Zone (Part 2)

[bullionfk]

Part 1

The Bullion Report for January 18, 2012: Gold Trends in the Euro Zone (Part 1)

The data also showed investment demand picking up among other nations as “French investors became net purchasers of gold for the first time in around 25 years.” There are other examples too, that support the position that gold demand in Europe was shifting during that time. For instance, also in 2008, Germany and Switzerland were seen leading the pack in the rise in demand for European gold investment. Demand got so strong that at one point, according to the WGC, “The Rand Refinery in South Africa was reported to have run out of Kruggerands.”

It was demand like that for “bars and coins,” considered investment gold, that prompted this quote from the WGC: “In Switzerland, demand surged from 3.5 tonnes in Q3 2007 to 21.0 tonnes in Q3 2008.” In retrospect, it shouldn’t come as a surprise that jewelry sales were down, as much of Europe was heading into a recession back then. However, what is important and jumps out when involved in even a quick review of their published data regarding European demand in 2008, is that obvious shift in demand from jewelry to investment for gold.

In a review of last year, 2011 investment demand out of Europe shows where the real gold strength has been. Investment demand for gold in Europe reached a record of 118.1 metric tons. Numerous sources peg that at a staggering increase of 135% over the same period the previous year. And what stands out is that this demand has come at the same time when gold prices are so high. So while higher gold prices may have dropped the desire for buying jewelry, those same high prices haven’t deterred investors from acquiring gold in other mediums.

Summary

The shift in global investment demand for gold can be seen elsewhere, too. There are likely other economies where, while the shifting may not as dramatic as Europe, has still been impressive. The Euro zone is just one example of a spot where the cumulative issues seem to have fueled the gold bugs despite especially volatile times for gold prices. While the issues in the area may eventually recover, there are currently no promises and no certainty. It seems fair to conclude that those elements could be likely catalysts for continued investment demand for gold, both in Europe and abroad.

Disclaimer: The prices of precious metals and physical commodities are unpredictable and volatile. There is a substantial degree of a risk of loss in all trading. Past performance is not indicative of future results.