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Asian Gold Demand Continues to Rise

By – Mike Fuljenz

The rising U.S. dollar has dampened the gold price and created negative sentiment in the U.S., but gold has not fallen much in most other currencies, and demand continues to rise in most Asian gold markets:

In China, the Shanghai Gold Exchange (SGE) was scheduled to launch next Monday, September 29, but it opened 11 days early, on Thursday, September 18.  To supply gold for that exchange, the SGE imported almost $16 billion worth of gold this year, through August 31.  Since June, gold imports through Shanghai’s new international airport in Pudong have risen 200%.  Now, international financial giants like UBS, Goldman Sachs, JPMorgan Chase and other large banks are trading gold contracts in Shanghai.

In India, gold imports rose 176% in August (vs. August, 2013), partly due to some artificially low import totals in the summer of 2013, right after India established its gold import duties. India only imported $739 billion in August 2013, but they imported over $2 billion in gold in August of 2014, partly due to some compromises by the government, which now allows some Indian banks and traders to buy gold overseas.

Other Asian markets are following China’s lead: Singapore will offer new gold contracts next month.  Thailand is also considering setting up a spot gold exchange. The CME Group says it will launch a new gold contract in Hong Kong before the end of this year, and Dubai is also launching a new gold contract.  These and other new gold markets in and around Asia should help to lift the gold price by year’s end.

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JOHN BANYOTS

I BELIEVE CHINA IS MOVING IN A DIRECTION TO BASE ITS CURRENCY ON A GOLD STANDARD, AND TRYING TO BECOME THE WORLD CURRENCY. THIS WILL DEVASTATE THE US DOLLAR AND THE COUNTRY AS WELL!

crawdad

Excellent articles. My only dis-agreement would be the purchase of bars over silver coins. Where I purchase mine, there is only less than 5% difference in the price and the coins are better accepted if I were trading them to a farmer for some hamburger.

Ivan Berry

Some points that the comments nor the article covered: we used to say that if it’s happened once it can happen again. Well now, it doesn’t even have to have happened once, so… FDR set an arbitrary value and took Gold in the 30’s from the people. After confiscation, he set a new and higher price. Laws were passed to outlaw hoarding that included food stuff. In the event of world wide financial collapse, however likely or unlikely, traders are not going to be interested in commissions from trading metals that had become by default exceptionally valuable. Conditions so dire will lend trades to be made by an alternate method and alternate money from the paper, plastic and digits of today. That’s when small denomination silver coins or oz or oz+1/2 bars become barter coins for purchases. If the period lasts long enough, there may be a time that exchange… Read more »

Jerrold

For the uninformed, how does one buy gold or silver at the “COMEX” and take delivery?

Joe McHugh

Paule, please allow me to address your question about worldwide gold prices. Gold has a universal value. In fact the average value of gold is determined by all of the developed world economies. No country can devalue, or increase that value arbitrarily. If they tried to do so, the gold traders would jump in and drive the spot price right back to its normal value in a short time. Gold dealers live or die by the commissions they make in buying and especially selling gold. Countries can artificially curb the gold trade by imposing duties on such trade, but the pressures to deal in gold always defeats such duties, either by legal means or illegal means. That’s why governments hate the idea of gold as a standard of value, it restricts their ability to manipulate their sovereign currencies. Never the less, gold has become the defacto currency of the world… Read more »

grania

I don’t think I’m alone in this sentiment: I do think there’s a slight chance of global breakdown and economic collapse. If that happened, because of the reliance on technology, it could get difficult to access financial resources. What would make sense as hedge for this would be something that has clearly defined value as a metal, and would be accepted for exchange. It would best be something with little downside risk and no chance of fraud. It would have to be in ones possession. Having mutual funds, gold stored for me, or mining stocks wouldn’t be accessible in a real emergency. “Rare coins” wouldn’t have agreed upon value in a real crisis, and just as with when people sold grandma’s heirloom jewelry for cash, would only get the value of the metal (and probably not full value). Except for gold bullion coins, what gold meets those criteria? And a… Read more »

Patsy

Excellent suggestion Paule!! Was thinking the same thing myself. I am grateful for AMAC and the great work you are doing for traditional Americans. You give us a voice and I thank you. More helpful, as Paule suggests, please give us hard data to work with for us retirees who are trying to tie together the tattered ends of what we worked so hard to save for retirement. Give us real information to work with or make sense of the pie in the sky stuff the media gives us vs. reality. This article was a great springboard for future columns.

PaulE

What’s missing from your article is an explanation of why the average Jane or Joe should care about the Asian gold trade and its increased activity. While there are some of us who understand what is driving much of this activity, you have to remember that the average AMAC member may not have a deep understanding of global monetary markets and the increasing political realities that are justifying this expansion in precious metals interest. So the information you’ve outlined in this article won’t mean much to them. Just a suggestion.