WGC – Gold Demand Trends 2015

Before we get into today’s news, if you missed it, gold last night smashed through the key technical ceiling of US$1200, right up to US$1260.  This is a very bullish sign as we discussed yesterday.  Most commentary is around the markets losing faith in the central banks’ ability to reflate the system – a system in a bubble from that very same central bank stimulus since the GFC.  Make sure you check out today’s podcast for more.

Yesterday the World Gold Council released their annual full year Demand Trends report for 2015.  We summarise are follows:

Jewellery Demand – It was a tale of 2 halves.  Whilst H1 was weak, H2 saw the strongest half since 2004 increasing 2% to 1300t taking the total year to 2415t, down 3% on 2014.

Investment Demand – Investment demand increased 8% to 878t driven by bar and coin bullion demand with ETF’s seeing a year of outflows, down 133t.  Needless to say 2016 is already looking very different…

Central Banks – Ironically amongst the economic uncertainty they themselves engineered, central banks continued to add gold to their reserves at a prodigious rate, up another 588t.  

Technology – Industrial uses continued to fall, down 5% as substitution for the expensive metal continues.  Industrial use however remains a small component of demand and reinforces our view gold is money not a commodity.

Supply – in line with our previous articles (here, here and here) 2015, as predicted, appears to be the year of ‘peak gold’ with the slowest growth in mine production (at just 1%) in several years.  When combined with recycling falling to multi year lows there was a total supply fall of 4% over 2014 to a total supply of 4,258t.