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Going for the Gold

February 24, 2014

Everyone wants the gold. 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 this week 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 percent 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 percent increase in demand from consumers, which was in contrast to the outflows from gold ETFs, per the WGC.

Gold Jewelry, Bar and Coin Demand Resilient in 2013
click to enlarge

Along with this continued demand in January, Daniela Cambone from Kitco and I discussed the factors that could drive gold to $1,400 an ounce. Find out what those are now.

Join us for our live webcast on March 5
We’re getting ready for our upcoming webcast on the “5 Reasons the Naysayers are Wrong about the Markets,” happening on March 5. Director of Research John Derrick and resources expert Brian Hicks will join me to share with you key strategies in following the smart money in gold, resources, emerging markets, the domestic market and bonds.

I invite you to register today and join us live. If you want to make sure we cover a specific topic, feel free to email us today at editor@usfunds.com.

5 Reasons the Naysayers are Wrong About the Markets

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Net Asset Value
as of 07/23/2014

Global Resources Fund PSPFX $10.26 0.01 Gold and Precious Metals Fund USERX $7.69 -0.06 World Precious Minerals Fund UNWPX $7.25 -0.03 China Region Fund USCOX $8.27 0.01 Emerging Europe Fund EUROX $8.29 0.06 All American Equity Fund GBTFX $33.21 0.22 Holmes Macro Trends Fund MEGAX $24.08 0.18 Near-Term Tax Free Fund NEARX $2.26 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change