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22/07/14
12:49
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Originally posted by Daytr
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Hi Timber, if you can't see the difference between the mass ETF selling that was seen when gold was crushed & the Asian demand for that same gold, then you really are a long way from understanding the gold market. A product like an ETF offers investors liquidity & easy access to buy & sell & sell they did & quick smart. However an ETF is only a limited supply & in fact its unlikely all of the held ETF gold would be sold anyway & it appears relatively stable now. The Chinese demand we are seeing is satisfying an appetite that for generations have not been allowed to own gold & it is also satisfying a growing massive middle class with disposable income they have never had before & they want things like a smart phone but they also want jewelry & to invest in gold as its in the Chinese psychology. So with ETF selling pretty much dried up & I suspect the remaining holders are pretty much in for the long haul i.e. sticky & China's demand not going away & Indian demand rebounding where does that supply now come from to satisfy demand? Production isn't enough & as said in a previous post average production grades are down 75%. So to attract new sellers the price IMO must go up over time. The funny thing is, if something does start moving up it attracts investors & this for mine is when gold will start to rise faster than what most are anticipating. When the ETFs turn net buyer again & they will.
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Daytr,
I agree with you here.
From memory the ETF's sold some 700T of gold last year due to liquidation. (dont hold me to the exact figure but it is somewhere around there from memory.) The ETF holding has increased 22T this year according to Eric Sprott which means that this year should the ETF holding stay as it is or slightly increase thats over 720T of gold that was available last year that potentially isnt this year especially if it all went to China.