WGC Gold Demand Trends 2016 Full Year

Those in or following the gold market last year will know it was a year of 2 halves.  Strong gains for the first (roughly) half were largely given away by years end, especially post Trump.

The World Gold Council just released their annual Demand Trends for the full year 2016.  Here is a summary:

  • The gold price ended the year 8% up after peaking in September (we think it was July that it peaked highest) 25% up in USD spot terms.
  • Investment demand as a whole (ETFs, bars and coins) was up strongly on 2015, with a 70% increase to 1561 tonne.
  • 2016 saw the second biggest year for gold backed ETF’s on record with demand of 531.9 tonne despite outflows in Q4.  It was the highest since the 2009 GFC rally.
  • Bar and coin demand was down slightly (2%) on 2015 with subdued demand for the first 3 quarters but demand spiked in Q4 on the softer price, particularly from China who ended the year up 25% on 2015.  India was down a hefty 17% for the same reasons as jewellery as follows.
  • Jewellery demand saw a 7 year low off the back of ‘regulatory and fiscal hurdles’ in India and China’s softening economy.
  • Central bank purchases saw their 7th consecutive year of net purchases at 383.6 tonne, however with the squeeze on FX reserves and troubles in Venezuela, Jordan, Argentina etc, some were forced to sell or suspend purchases (reinforcing the personal attribute too as a highly liquid asset to get you out of trouble in times of economic distress).  Central bank purchases were therefore down 33% from 2015.  Russia and China were notable exceptions, adding heavily to their reserves.
  • Technology uses continued their gradual decline, down 3% on last year and accounting for 322.5 tonne.
  • On the supply side of things mine production was essentially stagnant, up just 3 tonne to 3,236 tonne.  Recycled gold saw a somewhat predictable rise with the surge in price last year, up 17% to 1308.5 tonne.