Accumulation of gold bullion from central banks was the bright spot in demand last quarter, as total demand fell 7% globally, which was driven by a 38% fall in consumer demand from India. The report shows how while record levels of demand from western markets, China and particularly India have been followed by a decline – the seismic shift that is central banks going from being bet sellers to net buyers has provided a new fundamental pillar of support for the gold market. The macroeconomic backdrop remains highly supportive with the Eurozone debt crisis far from resolved and the risk of debt crisis in Japan, the UK, India, China and the U.S.
The World Gold Council released its quarterly report today, Q2 2012 Gold Demand Trends Report and can be read in full on the World Gold Council website here. Price sensitive Indians have been shunning gold and many have been opting for far cheaper poor man’s gold – silver. 2Q total central bank gold purchases were double the level reported a year ago as emerging market sovereign nations sought to diversify away from the dollar and euro and heightened economic insecurity.
Gold purchases among central banks hit its highest quarterly levels (157.5 metric tons) since the sector became a net buyer of the yellow metal in 2Q 2009. If central banks continued to purchase gold at the current rate the official sector gold take would total nearly 500 tons this year, topping the 458 tons purchased in 2011 by the sector.


Central banks of Russia, Saudi Arabia, Mexico, Turkey, Kazakhstan, Thailand, Ukraine and the Philippines have been recently active buyers of gold. Kazakhstan’s central bank purchased gold for its 7th month in a row this June, rapidly growing its reserves which are now 1 million troy ounces higher than last year, according to International Monetary Fund data. The global banking, financial and monetary system is, to put it frankly, a mess and will take years to rectify – in the meantime gold looks set to continue gradually eking out safe haven gains.
Global gold demand is back at levels seen in 2009 which shows that the assertion that there is a gold bubble mania with ‘Joe and Jane public’, the investment and non investment world “piling into” gold is far from the case.
As a percentage of pension and investment portfolios and of central bank currency reserves gold allocations remain miniscule from a historical basis and miniscule when compared to allocations to more risky equities and bonds. Given the appalling fiscal and monetary backdrop, demand for gold, particularly from investors and store of wealth buyers will likely increase significantly in the coming years – as gold gradually goes from a its status as a fringe investment back to being  a mainstream asset common in all investment portfolios and owned by the majority of investors and savers. We all know how gold gets passed down generations and has proved to be a good investment over decades. Historically, gold prices have shown better stability even during periods of crisis, as compared to other investment types.


THE DOC IS NOT AN INVESTMENT ADVISER AND INFORMATION OBTAINED HERE SHOULD NOT BE TAKEN FOR PROFESSIONAL INVESTMENT ADVICE. For centuries, gold has remained an auspicious gift, whether it's for a new born baby or for a newly married couple. Most experts advise investing in gold as a "must", since gold creates a robust portfolio that withstands market fluctuations. Gold's most enduring benefit is its ability to stabilize a portfolio and protect it against market fluctuations. YOUR OWN DUE DILIGENCE IS RECOMMENDED BEFORE BUYING OR SELLING ANY INVESTMENTS, SECURITIES, OR PRECIOUS METALS.



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