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Gold Demand Fundamentals

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The World Gold Council’s report on gold demand in the third quarter of this year (July-August-September) is out.  It highlights growing gold demand from Exchange Traded Funds:  “Holdings in gold-backed ETFs hit a new all-time high of 2,855.3 tons in Q3. Holdings grew by 258.2 tons during the quarter, the highest level of quarterly inflows since Q1 2016.”

The trade association says central bank gold buying remains “healthy.”  Although this year’s third quarter fell short of the blistering pace of the third quarter last year, in the first nine months of this year central banks have purchased 547.5 tons, an increase of 12 percent over the same period last year.

More on Deutsche Bank

We aren’t fixated on Deutsche Bank and its problems except to the extent that they could be the straw that breaks the over-leveraged and indebted financial system as did Lehman and Bear Stearns a little over 11 years ago.  See more here and here.

But it doesn’t have to be Deutsche Bank.  There are other candidates for a triggering event that can disclose deep and systemic global solvency issues far and wide.  As Warren Buffett put it, “when the tide goes out you find out who has been swimming naked.”

Deutsche Bank

The tide could be receding in China as well.  China’s banks are awash in bad loans, yet the central planners keep policies in place that assure more and more building of apartments for which there is no demand, shopping districts without shoppers, and mega-transportation projects with too few users.  Those aren’t brand new malinvestment problems in China, but with growth slowing there, serious problems may become visible.  Meanwhile, Hong Kong has slipped into a recession which doesn’t help Beijing.

Still, Deutsche Bank is worth keeping a close eye on.  If you are interested in knowing more, here’s a link to an article by Michael Snyder called “The Deutsche Bank Death Watch Has Taken A Very Interesting Turn.”  Snyder has followed the bank closely and suggests that “the final collapse could happen sooner rather than later.”

Buy the Break!

Central bank gold buying and solvency issues in sovereign nations and global banks, not to mention highly “accommodative” monetary policies from the Fed, are the kind of fundamentals that drive gold higher.  Because we share the view that we are in a primary gold bull market, we advocate aggressively buying any break in gold prices.   Speak with an RME Gold professional today about the latest developments and opportunities.