BREAKING AWAY FROM THE WEST: Gold Investment In Germany & The U.K. Surged


by Steve St. Angelo, SRSrocco:

While gold demand in the West continues to languish, something has recently motivated renewed interest in the yellow precious metal in Germany and the United Kingdom.  Now, when I say “renewed interest”, I am referring to a surge in gold investment by Germans and British that we haven’t seen for quite some time.

This big increase in gold investment in Germany and the U.K. over the past year and a half is not from the diehard physical bar and coin investors, rather it is from a source that is even more interesting… it’s coming from investors in the retail Gold ETF Market.  You see, this is a much different segment of the population who move into the Gold ETF Market versus the 1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} that buy physical bar and coins.  When there is a surge of Gold ETF buying, it means the institutional or regular mainstream investor is worried about the overall market.

And why shouldn’t Europeans be worried as the ECB – European Central Bank’s President, Mario Draghi, stated in June that they would continue its bond buying program (QE – Quantitative Easing) until 2019, even though they believe that the “regions growth” looks broadly balanced.  This is like a doctor telling his patient, “we are going to continue with broad-based Chemo-Therapy”, even though your cancer has gone into remission.

Unfortunately, most of the public in the European Union doesn’t realize something is seriously wrong if the ECB believes it has to continue printing money to buy bonds… even though the economy seems to be okay.  Come one… the economy isn’t okay, it’s a HUGE BALLOON looking for a PIN.

Regardless, something has spooked both the Germans and the British as flows into their Gold ETF’s have surged since the beginning of 2016.  In just the past five quarters, European Gold ETF flows have surged by 42{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} from 690 metric tons (mt) in Q1 2016 to 978 mt in Q2 2017 (World Gold Council Demand Trends):

This is a big increase for this region because flows into U.S. based Gold ETF’s only increased 6{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} during the same period.  Thus, the percentage increase into European Gold ETF’s was 7 times greater than flows into U.S. Gold ETF’s.

This next chart shows the increase in European Gold ETF inventories since the first quarter of 2016:

While inventories in European Gold ETF’s declined a bit during Q4 2016, the overall trend continues higher.  I believe the decline of gold ETF inventories during the fourth quarter of 2016 may have been due to a decrease in the price of gold in both the Euro and British Pound… but I will get into more details about that in a minute.

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