7) Gold ETF Demand is Down
Articles about gold in the financial press invariably focus on declining gold ETF sales or short interest in the futures market. These paper gold investments can indeed wag the dog, but the vast majority of gold demand is for physical metals. Over 60% of gold demand comes from Asia (primarily China and India), but even in the U.S., physical demand is rising. The U.S. Mint recently announced that 2013 sales of U.S. American eagle gold coins surpassed total 2012 sales as of November 1, so they have sold more gold eagle coins in the first 10 months of 2013 than in all 12 months of 2012.
Due to a flat supply curve – with under 2500 tons of newly-mined gold coming on market each year – this battle between short-term paper gold traders and long-term physical gold accumulators will likely continue, miring gold in a $1200 to $1500 trading range – but giving investors time to build a position.
Is there a role for gold in a portfolio? Look a little further..