Thursday, November 9, 2017

Gold price holding in consolidation despite the fact that demand is now at an 8 year low

Last evening we showed a chart where gold has been trading in a range over the past three weeks, consolidating between $1265 and $1290.  But perhaps what is most interesting about this is that the price has been able to bounce and stay above its 100 and 200 day moving averages despite the fact that demand for the precious metal is at an 8 year low.

Gold isn’t so shiny anymore. Globally, demand for the precious metal has fallen to its lowest level since late 2009, according to the World Gold Council. In the third quarter of 2017, demand for the haven asset was 915 metric tons, 9% lower than a year earlier. - QZ

While Bitcoin and other cryptocurrencies have siphoned away much of the cash that would have previously gone into gold and precious metals prior to 2016, the fact that central banks are becoming net buyers rather than net sellers, and where new consumers (like Germany) are purchasing gold for the first time in decades, means that desire for the metal will only require a significant financial event to re-stimulate dormant demand, similar to what took place in 2008 where the gold price nearly tripled before falling to the wiles of central bank money printing.


Death of the USD as Reserve currency and rise of gold:

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