Want to Know Where Gold Prices Could Be Headed Next? Follow These 3 Gold Buyers
There’s a gold rush and no one is talking about it—a rush that could send gold prices soaring. If you are not watching gold, you could be making a big mistake.
Don’t let the mainstream media convince you that gold is a useless asset for your portfolio. It has definitely underperformed over the past few years, but the next few could be completely different.
Gold buyers are here, and they’re purchasing large amounts. And they could send gold prices to above $2,000.
Central Banks Continue to Dominate the Gold Market
Central banks are hungry for gold. And right now, their actions regarding the precious metal speak louder than words.
In 2018, central banks bought the most they have since the 1970s. And then, in 2019, they topped the record again.
Russia, China, India, and several other countries have dominated the gold buying over the past few years. However, we’re seeing new buyers joining in.
One such country is the Philippines, which is expected to ramp up its gold buying from just 20,000 to 30,000 ounces per year to about one million. That’s an increase of over 3,000%. (Source: “Gold Rush by Central Banks Gets Boost as Philippines Joins Push,” Bloomberg, May 29, 2019.)
India and China Want Lots of Gold
As for the big buyers I mentioned earlier, they still want gold. Lots of it.
In April 2019, India imported INR$3.97 billion word of gold. This is 53.99% higher than the same period a year ago, though we have been seeing double-digit growth in Indian gold imports for some time now. (Source: “Quick Estimates For Selected Major Commodities For April 2019,” India Department of Commerce, accessed June 4, 2019.)
Chinese gold demand is exuberant, to say the least. The country itself doesn’t really provide trade statistics on gold, but one could get an idea of current demand by looking at gold exports from Hong Kong into mainland China. In April, said exports jumped to the highest level since July 2018. (Source: “China’s April net gold imports via Hong Kong rise to 9-month peak,” Nasdaq, May 27, 2019.)
Investors Favoring Gold
Lastly, investors are starting to favor gold.
In the first quarter of 2019, gold backed exchange-traded funds witnessed inflows of 40.3 tonnes. This was 49% higher than the same period a year ago. (Source: “Gold Demand Trends Q1 2019,” World Gold Council, May 2, 2019.)
Mint sales around the world are solid as well. And as stock markets show no returns, don’t be shocked if investors buy gold as a hedge.
What’s Ahead For Gold Prices?
Gold is presenting one of the best risk-to-reward ratios. It looks cheap, considering what’s happening in the gold market, the stock market, and both the U.S. and global economies.
The longer the yellow precious metal remains hated and ignored, the bigger the upside there’s going to be during the next bull run.
I am still not ruling out a $2,000 price tag for gold in the next few years just yet.