‘Eastern’ Gold Demand Outstrips Production

Yesterday we discussed the outflows from the NY Fed gold depository.  Whilst most of that is reportedly going back to Europe it’s not the only gold leaving the ‘West’ in droves.  Indeed the much spoken of move of physical gold from ‘West to East’ is alive and well.  The chart below encompasses the ‘new’ Silk Road countries of Russia, China, India and Turkey.  There are a few things to note from this chart.  Look down the bottom and you will see the grey horizontal line representing global production of gold.  You will note quite clearly that since 2013 these 4 countries alone are consuming more than total global production.  With outflows from the speculative gold investments like the ETF GLD it is clear where the shortfall is coming from.  And there is no sign of this letting up.  In 2 weeks China is on target to consume more gold than in any year before and with an expect 2000t by year end is set to surpass the previous record year of 2013 by over 400t.  Russia’s press has just quoted a Government official as stating they believe gold is the best form of money and will form the basis of the next monetary system.  They are on record as aiming to double their current gold holdings.  As reported in a recent weekly Ainslie Podcast India is still on target for around 1000t this year despite their draconian restrictions.  They are set to launch their gold monetisation scheme to unlock internal supply but few analysts expect this to curb demand.