The China Gold Association recently stated that gold imports will swell further, even after more than doubling to an all-time high in March (again before the price selloff).
In India in the first quarter, bar and coin purchases hit 97 tons (up 52%) and jewelry demand rose to 160 tons in the first quarter.
Not surprisingly, India and China account for more than 50% of global consumer demand for gold bullion - the Love Trade, indeed.
The demand for the precious metal in Asia can also be seen in the premiums Asian buyers are willing to pay above the spot price for gold. Premiums hit an all-time record of between $5-$7 per ounce in Hong Kong, Singapore and elsewhere in Asia as buyers waited in long lines to buy their gold at Wall Street sale prices. Premiums are at record highs because of a shortage of physical gold in Asia.
US Gold Coin Sales Hit Three-Year High
Of course, the Love Trade is not just limited to Asians. Some investors here in the U.S. are not following Wall Street's lead.
These investors, as Frank Holmes indicated, are buying gold coins from the U.S. Mint.
After the gold price tumbled in April, sales of gold coins from the Mint rose to the highest level since December 2009. Sales came in at 209,500 ounces, well above March sales of only 62,000 ounces.
Investors are also going to coin dealers.
Todd Dutkevich, a senior account executive at American Bullion Inc., told Bloomberg earlier this month, "People are flocking to buy physical gold. The price drop has made it possible for many retail buyers to add gold."
But the real story continues to lie in Asia with its traditional love of gold now mixing with increasing prosperity of the population.
Marcus Grubb of the World Gold Council summed up the current situation in the gold market nicely.
He believes all of the gold sold through sales of gold ETFs by U.S. investors will find a home in Asia.
He said, "Even if ETF outflows continue in the United States, it is quite likely that the gold previously held in ETFs will find a ready market among Indian, Chinese and Middle Eastern consumers who are taking a long-term view on the prospects for gold."
For more on investing in gold, check out what the recent gold crash has done to gold prices: Has the Great Gold Crash Divorced Bullion from Futures Prices?
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Tony Daltorio 31 May, 2013
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Source: http://feeds.moneymorning.com/~r/moneymorning/jOLe/~3/BvFrJ-8R8Zk/
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