2011: The Right Time to Buy Gold Coins

The latest Gold Demand Trends issue (Q1 2011) has just been published by the World Gold Council. The report is rather bullish and concluded that the attitude of global gold demand is going to remain robust all through 2011. This makes it probably the best time to buy gold coins. The global demand for gold during 2011’s first quarter totaled to 981.3 tonnes which is up 11 percent year-on-year from 881.0 tonnes during 2010’s first quarter. In terms of value, this amounts to US$ 43.7 billion compared to US$ 31.4 billion during 2010’s first quarter, which is a growth of almost 40 percent.

Buy Gold Coins: Trends Support Gold

In the first quarter of 2011, investment demands of gold increased by 26 percent to 310.5 tonnes from 2010’s 245.6 tonnes during the first quarter. In terms of value, investment demand stood at US$ 13.8 billion. This main growth was because of the following reasons-

• Demand of gold bars and coins: The demand for gold coins and bars increased to 366.4 tonnes which is a growth of 52 percent year-on-year. In terms of value this demonstrates near doubling of the demand from US$8.6 billion during 2010’s first quarter to US$16.3 billion.
• ETFs and other similar products: ETFs and other similar products witnessed a net outflow amounting to US$ 2.5 billion (i.e. 56 tonnes). Even with the outflows, gold’s collective volume held by global ETFs at the quarter’s end was more than 2,100 tonnes which translates to over US$ 95 billion.
• Jewelry Demand: Jewelry demand grew by 7 percent during 2011’s first quarter from previous year’s 521.3 tonnes to touch 556.9 tonnes. This translates into a record quarterly amount of US$ 24.8 billion. The two largest gold jewelry markets, India and China collectively accounted for 63 percent of the total i.e. 349.1 tonnes which amounts to US$ 16 billion. China’s jewelry demand touched a new quarterly high of 142.9 tonnes (i.e. US$ 6.4 billion) which was up 21 percent from 2010’s 118.2 tonnes during the first quarter.

Although the past trends do not guarantee future outcomes, they still support gold as an investment option. The last decade has been a remarkable success for those who owned gold. Over the last decade while the DOW Industrials went down 8.9 percent and the S&P 500 slipped by 29 percent, people who purchased gold worth US$ 100,000 on January 2, 2000, saw their investments reach US$ 374,677 on December 31, 2009.

Gold Still Glitters: Why Buy Gold Coins Right Now?
The World Gold Council expects the following factors to drive gold through the remaining period of 2011.

• Global socio economic conditions: The present global socio economic condition will continue to drive the demand for gold investment. These will include the ongoing sovereign debt concerns in Europe, the continued uncertainty of the US economy and the tensions in North Africa and the Middle East.
• Momentum in Asian markets: Indian and Chinese jewelry demand will strengthen the growth of the jewelry sector all through 2011.

Also, as there has been a significant decline in the global supply of gold, this can prove to be the right time to buy gold coins. During the first quarter of 2011, the supply of gold fell to 872.2 tonnes which is a decline of 4 percent year-on-year as compared to 912.1 tonnes during 2010’s first quarter. The decline occurred as a result of a sharp increase in the net purchases made by the official sector. Another reason for the decline was the drop in recycled gold supply which fell by 6 percent from 369.3 tonnes during 2010’s first quarter to 347.5 tonnes.