Terrence Duffy, CEO of CME Group Inc. (CME), the world’s largest futures market, said the rush toward buying physical gold was an expected consequence of the recent markets drops, which saw share prices of the world’s five leading gold producers falling much faster than the precious metal price.
In a recent interview with Bloomberg TV, Duffy stated most people don’t want to invest on anything but “tangible, real” gold.
“What’s interesting about gold, when we had that big break about two weeks ago, we saw all the gold stocks trade down significantly, we saw all the gold products trade down significantly, but one thing that did not trade down was gold coins, tangible, real gold,” he said.
“People don’t want certificates; they don’t want anything else. They want the real product. … I think the coins probably have more value than anything else.”
China, Hong Kong, India and other Asian countries have been pushing the continent into the strongest waves of physical gold buying in over 30 years in the past few weeks.
According to FT.com (subs. required) the increasing acquisition of jewellery and gold bars has as left many of Hong Kong’s banks, accessories stores and even the Shanghai gold exchange without enough yellow metal to meet such high demand.
The latest statistics from the World Gold Council indicate the trend is likely to increase this year as China’s economy recovers. Last year, the nation’s investment in gold reached 265.5 tons, which is considered a healthy level of demand.
“Looking forward, the signs of economic improvement bode well for gold demand in China, although the indications are for a steady firming of demand rather than for strong growth. This will remain the case while the gold price continues to hold within the broad sideways range of the last five to six months,” the WGC said this week.
A couple of days ago, US lawmakers in Arizona voted in favour of legally accepting gold and silver coins as well as bullion as a currency in the state. Although the state’s governor vetoed the legislation yesterday, analysts say the move was yet another sign of investor’s worries about the strength of the world’s monetary system.
Gold suffered a $200-plus decline that began on Friday April 13, and accelerated into Monday when the metal dropped to multi-year lows of $1,326 an ounce.
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