Asian Gold Investment Driving Today's Bull Market

Western Gold Investment demand remains far below levels seen in gold's last bull market...

BELOW IS a useful chart from investment management firm GMO, showing Gold Bullion demand from Emerging Asia over the past decade, writes Gregor Macdonald.

I would comment that here in the West, both Gold Trading and Gold Investment demand remain over-focused on quantitative easing, and track more closely the policy decisions of the Federal Reserve. To this point, it bears mentioning that OECD investment demand for gold still remains far, far below historical highs from 30 years ago. 

But the broader view suggests, in contrast, that reserve-accumulating economies in Asia are the larger drivers of demand, as they must offset their long exposure to OECD currencies. Indeed, according to the GMO chart, emerging Asia has now crossed the 50% threshold as a portion of global demand. 

This underscores again that the current bull market in gold has few similarities to the previous example, and analysts should use caution when drawing on the experience of the late 1970s. 

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