Putting a Number on West-to-East Gold

Sure, we knew gold flows from the developed West to emerging Asia...

 

EVERYONE wants the gold, writes Frank Holmes at US Global Investors.

 

Around the world, athletes train for years to compete for a gold medal. In Hong Kong and China, the "Love Trade" seeks gold coins, bars and jewelry.

 

We found out the extent that gold is sought in the East. For the first time since 1980, Switzerland released monthly gold trade data, providing a more transparent picture of physical gold flows.

 

In January alone, the Swiss report showed an incredible 80% of gold shipments went to Asia. Switzerland plays a key role in the gold market because it is home to many big gold refiners, so its report confirms what we've been saying about gold's move out of the West to the strong hands of the East.

 

So even though the gold price fell in 2013, the smart money tuned into this flow of physical gold that was moving into the East. Meanwhile, naysayers were distracted by the Fear Trade's selling out of gold ETFs.

 

 

"Gold flooding onto the market as a result [of large-scale ETF selling] was used to feed the voracious appetite for physical metal among consumers in India, China and numerous Asian and Middle Eastern markets," says the World Gold Council in its latest report.

 

You can see in the chart that gold demand reached record levels in the jewelry, bar and coin areas of the market last year. In fact, there was a 21% increase in demand from consumers, which was in contrast to the outflows from gold ETFs, per the WGC.