Gold Demand: On the Rise in China

The Singapore Gold Exchange (SGE) released its May numbers, and they’re impressive.  Gold withdrawals in May rose 9% over last year, meaning people (or banks, or governments…) still want gold. If you factor in Hong Kong, which is accounted for separately, you’ll see even more gold demand from China.  And not only do they want it, they’re wanting more of it. Quietly, persistently.

Some analysts believe Chinese gov’t holdings may be twice what most analysts believe, which is more than China reports. Yesterday we mentioned the wisdom about smart money; we’ll repeat and expand on it in case you didn’t quite catch it.  

Smart money moves in quietly at first and buys what it wants at low prices.  THEN they tell you they’re in it and it’s desirable. Which of course makes the average trader and investor get all glassy-eyed and delirious, and they obediently come running to buy it at increasing prices – from the smart money folks who bought it cheap.

The first part of this cycle is is exactly what this Gold Enthusiast thinks is happening with gold right now.  Prices are pretty stable, sticking with 15 USD of 1300, yet we see plenty of signs that gold demand is still in good shape.  It’s not running up wildly – yet – but it is clearly holding it’s own in this era of increasing competition from things like Bitcoin.

We’d like to see stronger demand out of India, but if we were seeing that prices would likely be higher.  So if you don’t have your starting stock of gold yet – whether physical (bullion, coins) or electronic (ETFs, mining stocks) – now isn’t a bad time to lay in your starting position.  Just be sure you can sit on it a while, as we may need to wait a year or more before it starts to really climb.

What do you think?  Is smart money quietly accumulating gold now?  When will gold prices finally start to rise? Let us know in the comments below.

Signed, The Gold Enthusiast

DISCLAIMER: The author has no positions in any mentioned security.  The author is long NUGT and JNUG, and may trade some these positions in the next 48 hours.

 Related: eBay is Starting to Buy Up Gold. Here’s What You Need to Know. 

About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals.

Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach.

Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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