Are the metals markets ending a price correction in unison and preparing for a massive price advance? This is the question we asked our research team to investigate and their findings may help skilled traders identify great opportunities in the future. This multi-part research article will share our most recent opinion about the metals markets as well as share some critical new data that can shed some light into what we believe will become a massive upside price rally in the metals markets. Let’s get into the data.
When one considers the global demand for Gold as a hedge against economic crisis events and the continued advancement in gold reserves for China and Russia, one has to consider the supply side issues that are a result of central banks global demand. Even though global production of Gold is near an all-time high, the demand from foreign nations and central banks are also near all-time highs. This correlation creates a demand-side consumption that offsets supply and, in some ways limits, consumer, retail and technology suppliers.
Our researchers focused on this aspect of the supply/demand equation when trying to analyze recent metals price action in correlation to disruptions that could occur in the markets. For example, increased central bank buying/hoarding of gold could dramatically result in prices spiking. Foreign market disruptions in supply could also send prices spiking. Global conflicts and or continued trade issues could send metals prices skyrocketing. Anything to do with the supply side for Gold could send prices higher. At least this is the conclusion of our research team at this time.
Russia has continued to build its gold reserves throughout the past 10+ years. Should Russia and other nations continue to absorb supply at these levels, one could easily argue that price declines in the metals markets are unusual.
Demand for gold is varied and includes Jewelry, Technology, Investment, and Central Banks. We can see from this data that Jewelry and Investment make up nearly 65~70% of total demand every quarter. Jewelry, in many nations, is a secondary form of investment for many people. Unlike in the US, gold is typically sold at 22K levels in much of Asia and at 24K levels throughout much of the Arab world. Individuals can purchase these high-quality jewelry items not only to wear but also as a capital investment. People in these countries are able to resell this high-quality gold to jewelers and others at near spot price whenever they need extra cash.
