Phil > Gold: You stated a few times that individuals are not buying it.
I also frequently refer to this website.
technicalindicators.com
>>>Demand rose a little in the second quarter of 2003, but so did supply - the latest rise in demand is minor and insignificant, still at low levels. For a look at the latest (2nd quarter, 2003) demand figures click on Gold Field Mineral Services, Ltd., an excellent source for information on the gold market. (This may require Adobe Acrobat - otherwise click here) for their home page.)
There has been no rush to buy gold in the physical gold market. Although investment demand had a rise in the 1st quarter of last year it was down in subsequent quarters as was the decrease in demand for jewelry (the largest use for gold) and industrial use, while supply remains at such high levels that 15 European countries had to agree to withhold their surplus gold from the market, selling it in smaller quantities and over a longer of period of time in order not to flood the market.
Gold fabrication demand for the past year was at the lowest level in 5 years, attributed mostly to the slowdown in world economic growth. Jewelry fabrication (which represents about 2/3rds of gold use in the U.S.) fell 5% last year due to weak consumption not only here in the U.S. but in many East Asian markets and the Middle East. Industrial fabrication (mostly electronics) fell 14%.
When the gold price did in fact break out and soared in 1979-1980, there was actually a demand for physical gold and a rise in price was justified. There were often long lines at gold dealers as many people rushed to buy Krugerrands and other gold investments. Nothing like that is happening now - gold demand is down, not up.
As a indication of the public's interest in gold now, following are the figures published by the U.S. Mint showing the amount of gold sold by the U.S. Mint in the form of "American Eagle" coins bullion sales (in no. of ounces):
....... No. of Ounces
1997 771,250
1998 1,839,500
1999 2,055,500
2000 164,500
2001 325,000
2002 315,000
2003 (to date) 381,500
Judging from these figures, it appears there is no rush to buy gold coins in the U.S. - in fact it appears that more gold coins were sold when the stock market was rising, not falling as it has been lately. This helps to make the point that more gold is bought during good economic times when people have more money to buy gold, not during slow times when people have less money to spend.<<< |
