Gold Demand Soared in 2011

In 2011, we saw countries that were having a hard time managing their debt.  The United States had trouble raising the debt ceiling in August and was on the verge of default.  The crisis in Europe continued to carry on with little progress made.  Analysts were speculating that China’s economy could be heading for a “hard landing” and possibly double dip.  There was a lot of uncertainty in the markets but it didn’t look good for investors, unless you had bought gold.

Gold demand saw its largest increase last year of all-time at the hands of European, Indian and Chinese increasing gold stockpiles.  In Europe, Germany and Switzerland were the main buyers of gold as they try to find a safe haven among dealing with the debt crisis of other nations around them.

India continued to be the country where the most gold is sold.  India has already sold 500 metric tons worth of gold jewelry this year alone.  That just gives you an idea of how much gold India is able to sell with such a high demand behind it.

This Tiger Cub Giant Is Betting On Banks And Tech Stocks In The Recovery

D1 CapitalThe first two months of the third quarter were the best months for D1 Capital Partners' public portfolio since inception, that's according to a copy of the firm's August update, which ValueWalk has been able to review. Q2 2020 hedge fund letters, conferences and more According to the update, D1's public portfolio returned 20.1% gross Read More

However, India may be were the most gold is sold but according to the World Gold Council, if China continued to buy gold at the same rate as last year, they would be the largest buyer of gold in the world this year.

Central banks also got in on the gold rush.  In 2010, central banks only had about 77 metric tons of gold.  By the end of 2011, they had 440 metric tons of gold.

Gold for jewelry stayed about the same demand wise but gold as an investment was up 5% last year.  In fact, the demand for gold was up to 4,067 metric tons, worth about $206 billion.  This is the first time that gold demand was above $200 billion.  As for the price of gold, you can imagine what kind of price gold was going for with that kind of demand.  Gold hit a record spot price in September coming in at $1,895 an ounce.

As we look back we can see that the world was scared.  The world feared a European escalation of the debt crisis combined with other economic factors that would throw the world back into a recession.  Even though everyone generally stayed calm and denounced a double dip, they were preparing for it anyways.  I think we will see gold demand continue this year, maybe not on as large of a scale but until the European crisis can be taken care of and other economic factors are under control, gold will be there.