November 27, 2022

Physical Gold Inventories Plunge As Gold Market Crashes – How Can That Happen?

worldKyle Bass recently summed up the thoughts of many gold investors when he said “the largest central banks in the world, they have all moved to unlimited printing ideology.  Monetary policy happens to be the only game in town.  I am perplexed as to why gold is as low as it is.  I don’t have a great answer for you other than you should maintain a position.”

Gold investors can easily be forgiven for being perplexed, especially when considering that gold prices are plunging at a time when stocks of physical gold are being rapidly depleted at the COMEX warehouses.  Is this just one of life’s unsolvable mysteries or is the gold market being manipulated?  Bill Downey at Gold Trends lays out a solid case on how market manipulation caused last week’s gold collapse and why it makes more sense than ever to increase holdings in physical gold and silver.

 

There’s been a recent huge draw down of physical gold at the New York COMEX and at the JP Morgan Chase depository. Look at the physical market draw down on the charts below. It has taken a drastic plunge.HOUSTON — we have a problem.Physical inventory drawdown at JPM
Charts by Nick Laird of www.sharelynx.com

GoldInventoryJPMAPril2013
Physical Drawdown at COMEX
Charts by Nick Laird of www.sharelynx.com
GoldInventoryComexApr2013
You can imagine the dilemma this is causing for the market interests behind these inventories. If the inventory runs out and one cannot meet deliveries then it has to be bought on the open market. Not only that but it could cause a run up in prices that would hurt the shorts in the market.So what to do?There is only one way out of this for the market controllers would be to devise a plan that would collapse the market and trip up all the stops at the correction lows in gold of 1525 thereby setting off the stop loss orders under this important market low. And what if the plan included a way to stop the physical market from purchasing gold under 1525 while that correction was underway?

And how can that happen?

They have to hatch out a plan and carefully orchestrate it in a series of events that takes the gold market by surprise and force the players out of their positions.

Read on for today’s lesson in market manipulation and allow me to relay my speculation about what transpired last week.

A successful ambush usually involves surprise.

One of the main new weapons in the FEDS arsenal is TRANSPARENCY.

After a lifetime of silence the FED all of a sudden has come out of the closet and has decided that the best thing for the market is to be transparent and to that end they now have televised communication meetings with the general public so chairman Bernanke can explain the FED policy and answer any questions that the market has on its mind as well as the usual minutes that get released to the markets that review the policy decisions and discussion of prior meetings.

Why does the Fed need to explain what they are doing now?

Well it isn’t because everything is going just fine. Put it this way. They must figure when you have 50 million people on food stamps and the Dow Jones is going up a few hundred points a week and making all time highs and you have 16 trillion dollars in debt and interest rates are zero, its best to have a communiqué every month before someone asks you to explain what is going on. It’s called staying ahead of the curve if you will. If you tell them what’s going on it makes it look like you know what you’re doing. Otherwise all we have is the statistics and by themselves they tell you something is wrong, something is terribly wrong. So they have become transparent.

During the last communiqué the chairman made it abundantly clear that QE was here to stay until the unemployment rate reached acceptable levels. This communiqué whether by personal appearance or by releasing the FOMC minutes of the prior meeting is something the FED relies on so market participants can remain comfortable and abreast of Fed monetary policy.

Three strikes and you’re out

The FOMC minutes from the last meeting were due for release during last week. But a funny thing happened. They got released EARLIER than expected. It was all a big mistake and the FED let the SEC and the CFTC know right away that the error had occurred. And lo and behold even with all its transparency there happened to be some language we didn’t get updated on until the FOMC minutes were released. The notes say that several members have been discussing cutting back on the stimulus. That was strike one. It got the gold market thinking that stimulus cuts might be coming.

Strike one

Surprise number two

Then a bombshell was released from news sources. It was reported that Cyprus would have to sell 400 million Euro’s of gold as part of the bailout package of raising money for their failed banking system. Gold prices came down to 1550 on the news and the day passed by. Even though Cyprus bankers tell us the next day that they didn’t discuss selling any gold, market jitters seemed to remain and Friday was just around the corner. This was strike two.

Now we need a strike three and you’re out. Gold is a nervous market to begin with as a lot of people have already lost a lot of money in the last six months.
With Gold at 1550, all that is needed for the market to drop is to get one more push where all the stops are (just below the 2 year low of 1525).

The selling began in the Friday sessions overseas. By time we got to the New York COMEX gold open, the price was down to 1542. Now all the players are there and the volume and liquidity is there to create the final blow to the market.

And then the attack began. Wave after wave of selling until gold got to 1525. Then they break down the price below the two year low and all the stops that have been accumulating there start getting tripped up and the selling accelerates as it begins to feed on itself. The physical market for gold sees this as a gift and gets ready to make their move and buy up the gold.

Now comes the part that is pure genius or a total coincidental thing that just so happens to be a gift to those who are short the market and those who would be responsible to deliver gold should the inventory deplete.

ALL OF A SUDDEN THE LONDON PHYSICAL PLATFORM THAT BUYS AND SELLS PHYSICAL GOLD GETS LOCKED UP. THE SYSTEM FREEZES.

continue reading here.

 

How To Avoid Financial Fraud In The Gold Market

By Vin Maru

Financial Alchemy and Fraud In Gold

The gold bull market is alive and well as the summer doldrums come to a close and gold accumulation and trading starts to heat up going into the fall.  As the gold bull market matures and it draws more attention from investors all around the world, it does open up the doors for fraud.  By now we have heard many stories and accusations about manipulations by central planners, bullion banks, short-sellers and futures traders.  The regulators in the West have largely ignored these accusations and have looked the other way when it comes to oversight and creating a fair and legal market place for precious metals.

Financial Fraud in the Gold Market

When it comes to opportunity for fraud, the East is not innocent either.  Last month, police in Central China rounded up 33 people suspected of illegal gold-futures trading.  The case involved 5,000 investors and at least 380 billion Yuan ($59.62 billion) in which the suspects claimed to be agents of overseas companies dealing in London gold with the promise of huge returns.  They promoted investments in Loco London gold and charged exorbitant consulting fees without warning investors of the risks of these transactions or having a signed detailed contract.  This had been going on since October 2008 in a low key operation using private bank accounts, mobile phones and online messaging services.  Several suspects were caught and detained since March 2, 2012 while more arrests are expected to be made across China as the investigation continues.

As observers of the precious metals market, we know that many Eastern central banks are accumulating physical gold.  It is in their best interest to accumulate the physical metal and diversify out of toxic Western paper assets that were sold to them by the western financial puppet masters.   It is obvious that Western cartels like Goldman Sacs and JP Morgan are great at creating and selling financial instruments of mass destruction.

One only has to look at the CDO market or the mortgage backed securities sold in the past decade.  These paper products were backed by mortgages from over inflated real estate bought by people who could not afford to buy property and were thus set up to fail.  Another example is the derivative market which is reportedly over $600T worth of contracts used for “hedging” all the toilet paper assets sold by Western institutions.  This includes derivatives and “insurance” products to protect from default or significant changes in valuation on assets such as government bonds, interest rates & credit default swaps and most other paper assets.  There is no way these contracts are backed by any real asset and when they are called to perform, the system will collapse.  This is most likely why they changed the name and structure of the recent Greek default on bonds; they cannot afford to trigger the derivative time bomb.

Any observer of the financial markets can see that the derivative market is just an insurance scam being sold as a hedging tool for paper products.  They cannot and will not every pay out on derivatives because the cascading effect would bring down the system.  Yet the paper pushers are still selling these “contract assurances” in volumes in order to create a “financial hedge” of the entire system.    When push comes to shove, planners may not let Goldman or JPM collapse because they are TOO connected to fail and they are the ringleaders in pushing paper products for the world to buy in their pump and dump scams.

Masters of Alchemy – Turning Paper in to GOLD

This past week, it was reported that George Soros was unloading investments in major financial stocks and started investing back in gold by way of GLD.  We always question the choice of investment vehicles used by large fund managers.  As a investor in the gold sector, why wouldn’t anyone stick with the physical metal vs. an ETF such as GLD which is supposedly backed by gold?  There have been lots of questions around GLD and its physical holdings, which was primarily sold by JP Morgan, one of the many bullion banks with a questionable short position in the precious metals market (Silver in particular).  If the past decade is any indication of paper manipulation (and they are known to have a track record for selling paper products which turn out to be fraudulent), why would anyone buy an ETF like GLD from these Masters of Financial Alchemy when they have the proven ability to turn paper into gold?

When looking at GLD and the many other “un-backed” gold trading vehicles being sold into the market, these products are very questionable on how much gold they have held on storage or available for delivery.  Even if there was significant amounts of gold, with the lack of good auditing practices, who knows how much is really owned by the fund.  Much of it could be used as collateral, hypothecated, leased out or swapped in contracts by the issuers of these products.  When called to perform and deliver the gold, expect questions of ownership and scandals much like MF Global or PFGBest.  This is the nature of products created by the Wall Street paper pushers; everything should be questioned eventually.  But for now and most of this bull market, GLD will not be questioned or audited.  It will be used as another tool for selling an ETF in a particular asset class, one that will become more and more in demand as the bull market for gold evolves.  This ETF will be used by the likes of all major trading houses, funds, sovereigns and investors because it is a trading vehicle and a proxy for gold, and it could be used for hedging purposes much like the derivative market.

Going back to why Soros would invents in such a fund:  Our suspicion is that Soros is reducing exposure in financials because they have structural problems and have many questions surrounding the assets they hold.  While a $50M withdrawal is not much for a fund his size, a purchase of $130M in GLD is significant.  His strategy is probably to take these funds and go long on GLD as a hedging tool for the exposure he still has remaining in financials.  Soros is just being smart and realizing that he must hedge using gold, even if it has to be with GLD.  He knows the paper pushers need GDL as a tool for hedging, so do not expect it to collapse anytime soon.   This means more than likely that the “Masters of Financial Alchemy” such as JPM Morgan and Goldman Sacs will continue to sell paper with promises of gold backing and it will get accepted by the market as “Good as Gold”. We at TDV, however, know better.

At this point, it is a very wise move for anyone who doesn’t have any exposure to gold to start getting exposure immediately.  If you have not taken this necessary step to protect your assets and hedge against any potential financial storm that may be brewing, you are placing yourself and any remaining assets at risk.  Owning the physical is always suggested as a private investor, but if need be look at GLD as a trading and hedging vehicle.

In a strange and ironic way, we need GLD to continue its paper scams as it still legitimizes gold as an investible asset class.  The more GLD grows and continues to gain attention, the stronger and longer this bull market will last in precious metal.   As much as we realize that GLD could be a scam and owning the physical is the prudent thing to do, we cannot discount the need for GLD as a tool for hedging.  There is no way the physical market for gold can absorb demand coming from central banks, pension funds, sovereigns and the general investing public all at the same time.  It would make gold reach sky high prices in very short order which would not be healthy for a strong and long gold bull market.  Unfortunately, we need GLD and more gold ETFs around the world.  There is way too much fiat paper floating around and much more coming, the physical market couldn’t absorb this amount of funny money coming into the physical sector.  As much as I hate to say this, GLD is a necessary evil for the longevity of this bull market.   There is many more reason why we need more gold backed ETFs and products such as GLD mentioned above, however using this ETF as a hedging tool is a very important one.

In the near future we will look at additional reasons for owning gold through the various ETFs as a tool for trading and hedging.  We will also explore the various options available for owning paper or physical gold in the numerous ETFs around the world.  This information will be made available on our blog to everyone interested in evaluating gold specific ETFs. If you enjoyed reading this article and are interested in protecting your wealth with precious metals, you can receive our free blog by visiting TDV Golden Trader.

Investor Gold Demand Hits All Time Record – China and India Grab 61% Of Total Gold Mine Production

Investor demand for gold during 2011 hit an all time high, fueled by soaring demand in China and India.  Total gold demand by China and India during 2011 amounted to a staggering 61% of all gold mine production last year.

The 2011 Gold Demand Trends report issued by the World Gold Council show a huge increase in gold demand and a small increase in global gold mine production.  This continues a trend that has been in place since 2001.  Despite an almost 600% increase in the price of gold since 2001, global gold mine production has increased by only 7.7%.

Typically, a large increase in price will bring forth additional supplies as producers rush to take advantage of higher prices.   This has not happened with gold due to the depletion of existing gold reserves and the inability of miners to discover and develop new gold deposits.  The continuing increase in gold demand and the lack of new supply will eventually result in gold prices higher than most people can imagine today.

Highlights of the Gold Demand Trends report are summarized below.

  1. For the first time ever, on a dollar basis, gold demand hit all time record highs at $205.5 billion, representing 4,067.1 tonnes of gold.
  2. Investor demand for gold hit all time record of 1,640.7 tonnes, up 5% from the previous year.
  3. Demand for gold by China soared 20% last year to 769.8 tonnes and demand by India, despite currency weakness, was 933.4 tonnes.  It is expected that China will become the largest gold market in the world during 2012 based on continued record setting demand.
  4. Global gold production increased by only 4% last year to 2,809.5 tonnes.  The combined gold demand of 1,703.2 tonnes by China and India consumed 60.6% of all new gold mine production.  It is projected that the supply of new gold will remained “restrained” for the foreseeable future.
  5. The desire to protect wealth accounted for surging gold demand in Europe as the European Central Bank engages in a massive money printing campaign to prop up the insolvent banking system.
  6. Central banks continued to buy gold during 2011, increasing total purchases to 440 tonnes, up by 77 tonnes from last year.
  7. The amount of gold available to meet demand is being restrained not only by low mine production but also by reduced supplies of gold from recycling.   Despite a 28% increase in gold prices last year, the supply of recycled gold declined by 2% to 1,611.9 tonnes.  According to the Gold Council, this implies that “market supplies are drying up and that consumers may be holding on to their gold in the expectation of higher prices.”
  8. Investors are showing a strong preference for physical gold as seen by the investment flows into bar and coin compared to ETF demand.   Demand for gold bar and coin during 2011 totaled 1,486.7 tonnes compared to ETF demand of only 154.0 tonnes.
  9. Gold demand by ETFs increased in the 2011 fourth quarter over the comparable period last year, but total demand during 2011 of 154.0 tonnes was far below ETF gold demand of 367.7 tonnes during 2010.

The Gold Council bullishly notes that the gold market is unique in that it is driven by a “diverse set of factors” and multiple sources of demand.

Lowering Gold Stock Portfolio Risk Through Diversification

There are numerous investment strategies available to capitalize on the gold bull market.  Gold investors have the option of investing in gold bullion, gold coins, gold ETFs, gold mutual funds and individual gold mining stocks.

Although many gold investors prefer to exclusively hold physical gold, diversifying into selected gold stocks can dramatically increase total returns.  Although gold stocks as a group have recently underperformed bullion, selected gold stocks have outperformed gold bullion.

Well managed gold mining companies with large ore reserves and increasing mine production have provided investment returns far in excess of the gain in gold bullion as seen below with the examples of Randgold Resources (GOLD) and Gold Resource Corp (GORO).  Both of these gold mining companies have vastly outperformed gold bullion when compared to the SPDR Gold Trust (GLD) which tracks the price of gold bullion.

GORO, GOLD vs GLD - Courtesy yahoo.com

Selecting the gold stock that will outperform bullion is difficult, however, as seen by the lagging performance of the PHLX Gold/Silver Sector (XAU) when compared to the GLD.  The XAU Gold/Silver Sector is a broad based index of sixteen large precious metal mining companies.  The GLD has outperformed the XAU by three times since 2009.

GLD vs XAU - courtesy yahoo.com

 

As with any stock portfolio, diversification is required into order to avoid the risk of under performance.  An example of the risk of holding a gold portfolio with only a small number of stocks was seen today when the price of Nevsun Resources (NSU) collapsed by almost 31% after the company unexpectedly announced that gold production will plunge by nearly half in 2012 due to a reduction in estimated gold reserves.

Since selecting individual gold stocks can be a daunting task for investors, a better alternative would be to invest in an actively managed gold stock mutual fund with a proven record of superior investment returns.  Past performance has shown that an actively managed gold stock mutual fund has outperformed passively managed gold index funds.

One gold fund that should top the list for investors to consider is the Tocqueville Gold Fund (TGLDX), run by legendary gold investor John Hathaway.  The Tocqueville Gold Fund has a remarkable average annual return over the past ten years of 23.3%, almost double the gain in the Philadelphia Gold/Silver Index.

courtesy yahoo.com

Although gold bullion has outperformed gold stocks since 2008, Mr. Hathaway’s outlook for gold remains extremely bullish and he expects that as gold continues to increase in price, gold stocks should once again outperform the returns of gold bullion.  In his latest Investment Update, here is what Mr. Hathaway had to say.

Gold and gold stocks appear to be bottoming in the wake of a four month correction which began in mid -August when the metal peaked at $1900/oz. Bearish sentiment is at extremes not seen in many years. This and a number of other indicators, such as stocks that have been hit by negative sentiment, the downtrend in gold prices since August, and tax loss selling, support our view that a rally lies ahead. This very bullish market set-up, in our opinion, mirrors the extraordinary investment opportunity of the despondent year end in 2007. Even though gold prices have been declining for several months, they finished the year with substantial gains. This suggests that the value represented by gold mining equities held in our portfolio could be extraordinary.

Disarray in Europe is, in our opinion, a slow motion version of the global market meltdown in 2007. It appears to us that the U.S. Fed is once again acting as the lender of last resort to European central banks in their efforts to save the euro. As in 2007, U.S. sovereign credit will be substituted for failing credits, in this case, peripheral European states. The fig leaf to justify such action on the Fed’s part is sado-fiscalism, or extreme austerity packages administered by technocrats. Tough restraints on profligate public spending, which has become a way of life in all Western democracies, will not go down easily. These measures are deflationary and will be ultimately met by howls of protests from mobs demanding renewed money printing and deficit spending. In our opinion, the fundamentals for gold are stronger than ever because the outlook for paper currencies is dire. The difficult correction of the last four months has shaken out all but the strongest holders, a perfect set-up for advances to new all-time highs in 2012.

Why Gold Stocks Are A Better Value Than Physical Gold Or Gold ETFs

Many investors in gold mining companies are probably asking “where did I go wrong”?   While the price of gold bullion has moved relentlessly higher,  many large cap gold stocks have seen little or no price appreciation in recent years.

In a previous post, we examined the poor returns of two major gold stock mutual funds compared to the return on owning physical gold.  While the price of gold has soared 80% over the past three years, the three year return on the Vanguard Precious Metals Fund (VGPMX) was -.46% and the three year return on the Fidelity Select Gold Portfolio (FSAGX) was only 16.2%.

Why gold stocks have so badly lagged the run up in the price of gold remains subject to conjecture.  Some analysts speculate that investors prefer to avoid the risks associated with gold mining stocks and as a result have turned to physical gold and gold ETFs.  Since their introduction in 2004, gold ETFs have become very popular with investors, and now hold a total of almost $98 billion in assets.  By way of comparison, the market value of three of the largest gold mining companies, Barrick Gold (ABX), Gold Corp (GG) and Newmont Mining (NEM) total $108 billion.

If the gold ETFs did not exist, it is likely that some of the funds that flowed to gold ETFs would have instead flowed into gold mining companies.  However, the historical correlation between gold bullion and gold mining stocks has not always been perfectly linked.  There have been times when gold stocks outperformed or simply matched the price gains of gold bullion.

The recent under performance of gold stocks relative to gold bullion will probably not continue.  Many large cap gold mining companies are positioned to see significant increases in earnings that will eventually propel their stock prices higher.  Going forward, it is likely that gold investors will see higher returns on quality gold mining stocks than on holdings of physical gold or gold ETFs.

Two high quality gold mining companies previously featured in the GoldandSilverBlog that should see significant price gains are Newmont Gold (NEM) and Kinross Gold (KGC).

Newmont Gold is one of the world’s largest gold producers.  The Company has been increasing profits and production for several years and is forecasting an increase in gold production of 35% over the next six years.  Newmont has gold and copper reserves valued at $363 per share and pays a cash dividend of $0.50 per share which will be increased by $0.20 for every $100 increase in the price of gold.  Newmont shares closed on Friday at $52.10.

Kinross Gold had very strong first quarter results with revenue up 42% and earnings up 81%.  The Company’s cost of production is $543 per ounce and Kinross is forecasting an increase in gold production of 77% by 2015.  At the current price of $15.50 per share, an investor is effectively buying gold at around $250 per ounce.  Kinross Gold pays a dividend of $.10 per share.

The current pricing disparity between quality gold mining stocks and gold bullion has presented investors with an opportunity to purchase gold shares at deeply discounted prices.

Besides being able to effectively buy gold at a steep discount, gold mining companies pay dividends which are likely to increase substantially.   Another significant benefit of owning gold mining companies is the much more favorable tax treatment on gains.  Gold bullion and gold ETFs are taxed as collectibles at 28%, while the long term capital gains tax rate on gold stocks is only 15%.

Physical Gold Outperforms Vanguard And Fidelity Gold Mutual Funds

Investors in gold mutual funds have dramatically underperformed the return from holding physical gold over the past three years.  For a variety of reasons, many gold mining companies have been unable to turn higher gold prices into increased earnings.   As a result, gold stock mutual funds have dramatically underperformed the price gains of gold bullion.

Over the past three years, gold has increased by 80%, from a monthly low of $853 in May 2008 to $1,535 at today’s closing price.  Holders of the physical metal have done extremely well while investors in gold mutual funds run by two of the countries largest investment companies (Vanguard and Fidelity) have dramatically underperformed.

According to the Vanguard web site, the Vanguard Precious Metals and Mining Fund (VGPMX) has a three year average annual performance of -.46%, while the price of gold has soared 80%.  Vanguard states that although this fund is not a “pure gold or precious metals fund”, it invests in companies that are ” involved in the mining or of exploration for precious and rare metals and minerals”.  The Vanguard precious metals fund invests in 50 different stocks in 14 different countries and foreign holdings total 92% of assets.  The fund has net assets of $5.8 billion.

In early May 2008, the VGPMX reached $39 per share compared to today’s closing price of $27.20.  The fund has paid out dividends which added to the overall returns of the fund.

VGPMX - COURTESY YAHOO FINANCE

The ten year return on the Vanguard gold fund, however, would have outperformed holding physical gold.  A $10,000 investment in the Vanguard Precious Metals Fund made in May 2001, would now be worth approximately $76,300.  In May 2001, an investor could have purchased almost 38 ounces of gold for $10,000 which today would be valued at $58,330.  As noted above, the dividend payments by VGPMX added to the fund’s return.

The Fidelity Select Gold Portfolio (FSAGX) has outperformed the Vanguard fund, but still trails the three year return on gold bullion.  According to the Fidelity web site, the Fidelity gold portfolio had a 3 year return of 16.2%, compared to an 80% increase in the price of gold.

The Fidelity Fund invests at least 80% of its assets in companies involved in gold mining, exploration or processing.  The Fund also invests in gold bullion or coins and to a lesser degree, platinum, silver and diamonds.  The FSAGX has net assets of $4.5 billion.  The top ten holdings of the Fund at March 31, 2011 were Goldcorp, Barrick Gold, Newcrest Mining, Anglogold Ashanti, Newmont Mining, Kinross Gold, Agnico-Eagle Mines, Yamana Gold, Rangold Resources and Eldorado Gold Corp.  The total number of holdings of the Fund is 131.

FSAGX - COURTESY YAHOO FINANCE

The long term results of the Fidelity gold fund slightly trail the Vanguard gold fund.  Fidelity had a 10 year average annual performance of 22.54% compared to a return of 24.02% for Vanguard.   Both the Vanguard and Fidelity fund had returns that exceeded the increase in the value of gold over the past ten years.

Will physical gold or gold mutual funds deliver the best return going forward?

A continued rise in gold prices should eventually translate into higher leveraged profits for gold mining companies, unless the substantial costs of gold mining exceed the increase in gold prices.  Inflation is rapidly rising as central banks continue to flood the global economy with cheap money.  A continued rise in energy costs and general inflation could negate the benefit of increased gold prices for gold mining companies.  Investors who hold physical gold or invest in gold trust ETFs, rather than gold mutual funds, should expect to see continued superior investment performance.

2010 First Quarter Gold Demand

The World Gold Council has released Gold Demand Trends for the First Quarter of 2010. The report indicates a drop in gold demand for the covered period, but suggests that demand will be strong for the rest of the year.

Identifiable gold demand during the first quarter of 2010 was 760.2 tonnes, representing a drop of 25% compared to levels seen for the first quarter of 2009. The change was driven by a 69% decline in investment demand, offset by a 43% increase in jewelry demand and 31% increase in demand from industrial sectors.

The drop in investment demand was driven by a sharp decline in demand from ETFs and similar products. Total demand was only 3.8 tonnes for the quarter compared to 465.1 tonnes for the year ago period. Comparisons are also influenced by an unusually strong year ago period.

Investment demand did pick up right after the close of the first quarter, when concerns about Greece and debt contagion fears led to a significant pick up in demand for physical gold. In a previous post, I explored how physical gold demand had surged compared to the muted levels of the first quarter. More significantly, there has also been a resurgence in demand from the GLD ETF in the past month.

In their forecast for strong demand for the remainder of 2010, the WGC cites jewelry demand in India and China, as well as investment demand for the United States and Europe as the drivers.