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Demand of gold in the first trimester of 2009

Thursday, 13 of August of 2009 Joaquin 09:03
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 Demand of gold in the first trimester of 2009

5 /09/2009. Gold and finances

Madrid 5 of August 2009 (Aben Jaldún) - If to you they said to him that in the Moral, zone of rich (in Madrid), there is many Rolls Royces, and that the solution to avoid the phenomenon of the poverty is to seed the districts of Lima of Rolls Royces (at the expense of the general budgets of the State) it would think that something unsquares to him in that analysis. As we are educated we would limit to comment that who such assertion did it confuses the consequences with the causes: we would say that the wealth brings the Rolls Royce instead of to say that the Rolls Royce brings the wealth. I got to hear of presumed economists the asseveration of which was the State of Swedish Well-being the one that brought the prosperity to that country.

 

 One would have thought that it was the previous prosperity the one that allowed to the Swedish politicians the establishment of a State of the Well-being, and not on the contrary. This affirmation is not essentially different from first, but already you will notice that is much more respectable intellectually speaking. It is even possible that some friend his progressive The Hague formulated sometimes with a certain doctoral attitude.

In this same sense, also he will hear affirmations equal of respectable and that enjoy much credit: that the German economic miracle of the world-wide postwar period had to the high degree of destruction that took place in Germany, which thus forced a total reconstruction. Or that was the entrance in World War II the cause of the economic relaunching of the United States.

But this is not a tribune for the ideological debate, and with those examples it only tried to alert to them that the same historical facts can be counted of very different form, and that history is an art, not a science. And that like in the art, fits the silly thing with greater facility than in science.

This comes to story from which in very recent ours and less fundamental history of precious metals I have read, with certain worthy insistence of better cause, than “the foundations” of the market of gold and of the silver they have been deteriorated enormously. The cause: that in the consumption of both metals a descendant tendency has begun. The descendant tendency of the consumption is certain (net of recycling), that in the case of the silver had a maximum of 19,340 tons in 2003 (the 2008 consumption was of 18,382 tons). As far as gold, the maximum annual consumption was registered in 2002 (2,205 tons), being the minimum since then the one of 2008 (1,407 tons).

As I have already said to them in some previous occasion, these facts are not a sample of the deterioration of the foundations of both markets: before an annual supply of both metals relatively fixed or little variable, the increase of the demand of investment of a metal only can become at the cost of the reduction of the other source of demand: the one of consumption. The supply always will be equal to the demand and if the component of the demand of investment raises, it must become at the cost of which it lowers the component of demand of consumption (supposing a same supply). It is a deterioration of the market of the precious metals that the rich ones of the world begin to value them in their paper of value deposit, and that bidding up to take control of a somewhat greater part of the annual production jewelry shop or other industrial applications force to the restriction of their consumption in?

Then, paraphrasing to some of these alarmed commentators, we must say that the most brutal deterioration of the market of gold took place in the first trimester of 2009, according to the data published by the World-wide Council of Gold day 20 of May of 2009. They do not think that commenting data published more ago than two months responded to the desire buried of being able to sell my little gold existence and silver without causing their alarm, dear readers. I promise to them that if something I have done during these more than two months it has been to buy. The reasons of my delay have been several, but the main ones have been those of not mixing the quarterly analysis (of more conjunctural character) with the annual one of other articles, which show better the tendencies basic. And on the other hand, it seems to me interesting to comment the first trimester of 2009 when the publication of the data of the second trimester is already very near (I consider that around the 20 of August), since the data that are observed are so extraordinary, that it agrees to have them fresh when soon we have the numbers of the second trimesters. We see the numbers of production and gold consumption that shows the World-wide Council to us of Gold:


There are two facts on which I draw attention to them, extremely excellent:

1. The demand of gold investment during the fourth trimester of 2008 was very strong: 406 tons, almost the double of the average of the four previous trimesters (207 tons). But the truly extraordinary number has been the demand of investment of the first trimester, 711 tons! , that supposes the 127% of the production of that trimester.

2. Naturally, according to our version of the facts, this has forced to the gold consumers something more than to follow a gold diet: Its consumption has been negative! , tons of gold have consumed -126. The consumption can be negative because we are speaking of “net consumption”, which includes the recycling game. For example: the gold that recovers in the industrial processes comprises of gold recycling, and computes negatively in the consumption. The same happens if on a gold refinery jewels done with this metal are based and they become ingots: they compute as a negative consumption and like a demand of positive investment.

In summary: the highest demand of gold investment (711 tons) has pressed of brutal form on the consumption, in such a way that the strong slope of the consumption in jewelry shop and the fort begin to appear in the recycling activity have caused that world-wide the net gold consumption during the first trimester of 2009 has been negative. The detail of the consumption is the one that is next: 

 
That is to say: the shaken times, financial the economic crisis and the turbulence it seems that they alter to the demand of gold, increasing his component of investment and reducing the consumption component.

You will ask yourselves on these referred data the silver, but lamentably I do not have sources provide that them quarterly. However, the strong correlation between the demand of silver investment and the one of gold it seems that it is rather well established.

Far from alarm us by these data of “low gold consumption”, we see as a hopeful sign it of which in this market they begin to enter with force the investors, moving to the luxury product consumers, since it constitutes the unequivocal signal of a maintained bullish market of precious metals.

A wanderer not for spring, and of equal way we have been having to hope (impatiently in my case) to see the data of the second trimester of 2009 to see if the tendencies of both last trimesters are maintained. But this outside thus, those would be the best news than we can have those we invested and we advised to the investment in silver and gold.

Aben Jaldun, 3 of August of 2009
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