Where Did The U.S. Go In Gold Jewelry Demand?

The Market Gage - Dillon Gage's Precious Metals Newsletter

The World Gold Council reported that gold demand in the 2nd quarter followed trends from the prior quarter: Huge ETF inflows counterbalanced by anemic jewelry demand amid rising prices. Investment was the largest component of gold demand for two consecutive quarters, the first time this has ever happened.

The World Gold Council goes on to say that this has been in no small part due to demand from Western investors across the spectrum, from retail to institutional and for bars, coins and ETFs.

Do you think that negative interest rates in some parts of the world are making an impact in the gold market?

All the headlines in the gold and silver market this year have been the increase in the ETF market. But what has happened to the love affair with jewelry?

A new Thompson Reuters report compares jewelry consumption from 2015 to 2016. Please look at the charts below.

Gold Jewelry Consumption 2015
Rank Country Tonnes
1 India 674.5
2 China 563.7
3 United States 140.5
4 Saudi Arabia 57.5
5 UAE 55.3
6 Turkey 49.3
7 Russian Federation 42.5
8 Egypt 40.9
9 Iran 35.4
10 Hong Kong 34.3

Source: GFMS Gold Survey 2016

Now I want you to view this next chart and tell me what is missing?

Gold Jewelry Consumption Q2 2016
Rank Country Tonnes
1 China 83.8
2 India 69.2
3 Saudi Arabia 16.9
4 UAE 11.5
5 Turkey 10.9
6 Iran 9.3
7 Russian Federation 8.3
8 South Korea 7
9 France 6.4
10 Hong Kong 6.1

Source: GFMS Gold Survey 2016

Where did we go? The U.S. is nowhere in sight.

Jewelry demand in the past five years accounted for 50 percent of the world’s gold demand, but it now seems the tide is turning. Gold consumption is turning into an investment product. World economic issues are playing a major part in how the yellow metal is viewed.

For some, gold no longer is a must have fashion statement. It seems that the retail investor views gold as an investment as a strong component to a balanced portfolio. No one knows if this pattern will continue. I’m sure we will have a better picture after the election and after the FED decision in December.

One thing for sure is, our society has never been in such a unpredictable state and living in that type of environment, the yellow metal as an investment shines brighter than ever.

Have a wonderful Friday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.