The last four months of the calendar year are historically the busiest time of the year for Gold sales. If you look at the last eleven years, the increased demand for Gold has on average driven Gold prices up by 11%. If you look at the last eleven years, the increased demand for Gold has on average driven Gold prices up by 11%. There are many contributing factors to increased Gold demand, not the least of which is the Holiday season.
Two of the largest contributors to the increase in Gold demand are China and India. According to the World Gold Council, their purchases represent 52% of all Gold purchases. Inflation has made prices more desirable for them; those countries push their citizens to buy Gold for investment purposes. For example, the Indian rupee appreciated 20% against the dollar in 2010. China’s inflation rate is 10% while their banks pay only 2-3%; therefore, Chinese citizens lose purchasing power if they keep their money in banks. Gold serves as a useful hedge against inflation and thus, its popularity grows within these countries.
We need to remember that seasons are different in other hemispheres; August is the end of harvest in India. In the past, over 70% of the Gold demand stemmed from the agricultural sector. Most of the Indian citizens deal in cash; they believe the best source of investment protections are real estate and Gold. They also celebrate the Festival of Lights during this time of year. This is also the beginning of their marriage season starts where 24 karat Gold is given as a traditional marriage dowry. India nor China have plans like Social Security so their citizens must provide their own financial security during retirement.
by Stephanie Chandler, APMEX Account Manager
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