The demand for gold has been particularly high during December. The demand was especially high in rural India thanks to high crop prices. According to newspaper reports, the demand for gold in rural India grew by 15% in December from November. The trend is expected to continue into January. The rise of the price of soybeans and cotton boosted the purchasing power that Indian farmers had. Farmers also got a boost from the monsoon rains. The recovery of crop prices means more money in their pockets and some disposable income to spend on gold which is highly regarded in Indian culture.
Indians use gold as a wealth storage, especially for people in rural areas where people live outside the official tax system. The vast majority of Indians in rural India trust gold more than they trust anything else. The demand for gold is always expected to rise around December. In December 2017, gold imports in India rose by 67%.
The World Gold Council’s Chief Market Strategist, John Reade reported that he expected gold sales to go up in 2018. One of the primary reasons is the rising income growth. The World Economic League reported that India will become the fifth latest economy in 2018 outperforming France as well as England.
To support the signs of a strong gold demand in Perth Mint has also experienced a surge in gold sales to India and other Eastern countries. Perth Mint recorded a 13% rise in sales by the end of December to about 27,009 ounces. Silver sales also rose by 61% from 544,436 in November to 874,437 in December. The Perth Mint is an important supplier of bullion. Australia is the second largest producer of gold in the world. The mint refines more than 90% of all the gold found in Australia. Most of the gold is sold to other countries, India is the biggest buyer of gold from Australia along with China, Russia and Germany.
As demand for gold rises, The U.S which happens to be the biggest global economy is not buying gold in large quantities like other countries are doing. The consensus is that Americans who would be typical gold investors have been lulled into a false sense of security when Donald Trump was elected President. Suddenly, everyone had hope that the economy would be better, that more jobs will be created and that the dollar will be stronger than ever. They diverted their attention to other investment vehicles like stocks which rose after the election. Everyone thought the stock market was a bubble, even Trump himself, but now that he is president, everyone talks of a bull market. The truth is: it’s still a bubble that has grown bigger since the elections. Employment rates went up but then the trade war complicated things. Whether you choose to call the U.S Stock market a bubble or bull sooner or later this bubble will burst and the bull run will have to stop. In the not-so-distant future those that did not buy into gold when it was cheaper to do so will wish they had.