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.