Gold Prices to Soar as Demand Remains Strong
Gold prices have come down over the last few months, but the demand for the precious metal hasn’t dissipated. Don’t ignore this. It suggests that much higher gold prices could be ahead.
You have to get worried when buyers run away from buying. Despite gold prices being suppressed, we aren’t seeing this.
Advertisement
Consider gold sales at the United States Mint as one example. Year-to-date, the U.S. Mint has sold 985,000 ounces of gold in American Eagle coins alone. In the entire year of 2015, the mint sold 801,500 ounces of gold in American Eagle coins. (Source: “Bullion Sales,” United States Mint, last accessed December 20, 2016.)
Doing simple math here: demand for gold at the U.S. Mint is running almost 23% higher in 2016 when compared to 2015. Impressive.
Mind you, the U.S. Mint is just 15,000 ounces away from posting gold sales that would be that same as those in 2011, the year when gold prices hit as high as $1,900.
If you are thinking that the U.S. Mint is experiencing a uniquely higher demand for the precious metal, you could be making a big mistake.
Look at the Royal Canadian Mint as well. In its second quarter of fiscal year 2016 ending on July 2, Canada’s mint sold 251,400 ounces of Gold Maple Leaf coins. In the same period a year ago, it sold 163,800 Gold Maple Leaf coins.
Year-over-year, gold sales at the Royal Canadian Mint increased over 53%!
Here’s what the Royal Canadian Mint said regarding the sales: “The Mint experienced significantly higher-than-planned consolidated revenues, for the 13 weeks and 26 weeks ended July 2, 2016, due to the significant strength in Bullion revenue. The Mint is tracking to budgeted consolidated profit.” (Source: “Second Quarter Financial Report,” Royal Canadian Mint, last accessed December 20, 2016.)
Unexpectedly higher bullion sales have helped turn around the Canadian mint’s operations.
Australia’s Perth Mint is registering solid sales figures as well, despite gold prices declining. In the first 11 months of 2016, the Perth Mint sold 456,875 ounce of gold. In the same period a year ago, this figure was 415,534. (Source: “Perth Mint Gold and Silver Sales Soften in November,” CoinNews.net, December 15, 2016.)
In other words, gold sales increased by 10% year-over-year.
But it doesn’t end here…
Pay attention to Britain’s Royal Mint. It recently launched a digital gold offering service called “Royal Mint Gold,” or RMG for short.
Through this, investors can store their gold at the mint. The RMG could have up to $1.0 billion worth of gold initially. (Source: “The Royal Mint and CME Group to Launch Royal Mint Gold,” The Royal Mint, November 29, 2016.)
Here’s something that must be understood: mints run as businesses. For The Royal Mint to offer a service that could have up to $1.0 billion of gold, it tells us that there’s demand for it. Or else, why would the mint start this business?
Gold Prices Outlook 2017: Demand Could Send Precious Metal Soaring
Dear reader, losing sight of the demand could be a big mistake. Despite gold prices declining for the past few months, I remain bullish.
The yellow precious metal is under scrutiny for all the wrong reasons. Know that the fundamentals of the gold market are getting better, and eventually they will come into play. And, when fundamentals matter, expect a super spike in gold prices.
With all this, pay close attention to gold mining stocks. They are selling at very cheap valuations.
