Gold is suddenly just about the only asset that is working in financial markets. This fact will likely ignite a positive feedback loop that will send gold parabolic in a matter of time. In “India Gold Imports May Reach a Record“, Bloomberg provides some great statistics from various sources that seem to add weight to my expectations. Here is my summary:
- Indian imports may be between 950 metric tons and 1,000 tons this year.
- Consumption in India rose to a record 963.1 tons last year, driving bullion imports to the highest ever at 958 tons.
- Purchases by India, the world’s biggest user, surged 60 percent to 267 tons in the three months ended June 30, from 167 tons a year earlier.
- Indian investment demand jumped 78 percent to 108.5 tons, the second-highest quarter on record.
- Holdings in exchange-traded products touched a record on Aug. 8.
- Central banks are adding to their reserves for the first time in a generation.
- Central banks added 155 tons valued at about $8.18 billion to reserves in the first five months of the year and will be net buyers next year.
Here is the latest chart of the S&P 500 versus gold to further emphasize the point that gold is looking increasingly attractive, especially to those who chase performance:
Source: stockcharts.com
Here is the longer-term chart I created in February in “Priced In Gold, the Stock Market Continues to Struggle“:
Next up, more commentary from Ben Bernanke on loose monetary policy at the Jackson Hole Economic Symposium later this week! Bernanke is certainly now under a lot of pressure to “do something” now that the stimulus from QE2 is fading fast and furious. Look out below of he disappoints.
Be careful out there!
Full disclosure: long GLD, GG