Statistics out of the World Gold Council released this week show that gold demand for the third quarter came in at the lowest level since Q3, 2009. The final demand reading for the quarter was 915 metric tonnes:

Gold demand low

The most significant factor for this anemic worldwide demand?

There are weak figures out of India. Although slightly higher than in 2016, they will still finish the year significantly below the six-year average. That is just over 700 tonnes:

gold demand low

As precious metals investors, we must at all times remember that we are still in the minority when it comes to the physical demand side of the equation. Of the 4,000+ tonnes consumed annually worldwide, over half of this is new jewelry alone.

And of that jewelry, over half is sold to only two countries: India and China.

Thus, over a quarter of the world’s global physical gold demand comes from jewelry purchases from India /China. It, therefore, makes sense that when we see depressed demand out of one of those countries. The global market should continue to stagnate for some time.

North American Gold Demand Barely Registers

Interestingly, here in North America, with gold remaining relatively low compared to it’s 2011 – 2012 peaks, we see that jewelry purchasers are using the low prices to their advantage in scooping up adornment bargains:

jewelry demand reaches seven-year high gold demand

At 77 tonnes, US jewelry still pales in comparison to the nearly 700 tonnes demanded thus far out of India for the same purpose. Yes, in India, many “jewelry” buyers are engaging in investment demand in the form of dowry and investments to be worn on their physical bodies. So then let us turn to US physical investment demand – how does it compare?

gold demand us bar and coin investors

Investment demand for gold in the United States is indeed at seven-year lows. Based on quarterly projections it appears that total demand will register at less than 30 tonnes for the year in the world’s largest economy. Most investors are preoccupied with chasing the stock market higher even at all-time highs.

Germany Shines

So where is the one shining point in gold’s global demand? It comes from Germany. Note how investment demand from the European country is now approaching 200 metric tonnes. The bulk of that comes from physical coin and bar form.

Additionally, a notable uptick in ETF demand seen in 2016:

gold demand germany's gold investment

(No doubt, the fact that many investors alive today in Germany would have had grandparents who passed stories down to their children of the post-WWI-hyperinflation during the 1920s must play a role in this orientation toward gold.)

To summarize recent physical demand trends:

  • Total global gold demand is at decade lows.
  • Jewelry demand out of India is at 7-year lows, and India is the second-largest contributor to a global market.
  • In the US, investors are shunning the metal, but jewelry purchasers are scooping up bargains.
  • And in Germany, low prices in the wake of negative interest rates out of the European Central Bank seem to be attracting a sustained bid.

What Do We Make of This Data?

We must be careful at this juncture, as it is easy to get caught in a negative sentiment spiral from statistics such as these. For example, if global physical demand is its lowest since 2009 – should we thus abandon the sector?

Would we instead be making purchases during a time when global demand was recording new all-time highs? Would we rather see new records in US coin and bar demand? As our neighbors and co-workers discuss topics such as their favorite gold dealers or types of bullion?

It might seem like a welcome company – but ultimately the answer to these questions is no.

If the mainstream population discussed gold, it would mean that the majority would have already bought. And if the majority had already purchased, few buyers would thus remain. And if few buyers stayed, who would necessarily be left?


And if sellers remained, what would happen to the gold price?

It would decline.

And so, ironically, the time to be most fearful of a market is when we observe the most company joining us in our investment thesis.

This is the opposite of how we are programmed to feel as human beings. Our societal structure rewards us for peer support in most decisions. Surely, in our development as a species over the millennia, knowing that our peers agreed with our choices must have been essential for survival.

No person can act in complete isolation.

In Markets, We Must Move Contrary to the Masses

In the markets, if we continually seek approval from more full social circles, we will be finding the one sign that a price top is imminent: a majority of recent buyers.

Let us remember – if the majority are bullish – it means that they have already bought. And that is precisely the time at which prices must fall.

If you are in the precious metals space presently, we can say one thing for sure. You generally do not have the support of the majority. Worldwide gold demand is at decade lows. Investment gold demand in the United States is at 7-year lows. Gold miners are priced as low versus the rest of the US stock market as they have ever been in the history of record keeping.

Add all these factors together, and we can state: the precious metals are nowhere near long-term tops.

Let us enjoy being relatively alone in this sector. If you are in this market now, you are a contrarian. These statistics prove it.

Short-term volatility aside, the price patterns that we study most weeks and market participation indicators presented herein lead us to firmly believe that these are markets in the process of putting in significant bottoms, not tops.


Christopher Aaron,
Bullion Exchanges Market Analyst

Christopher Aaron has been trading in the commodity and financial markets since the early 2000s. He began his career as an intelligence analyst for the Central Intelligence Agency. He specialized in the creation and interpretation of pattern-of-life mapping in Afghanistan and Iraq.

Technical analysis shares many similarities with mapping: both based on the observations of repeating and embedded patterns in human nature.

His strategy of blending behavioral and technical analysis has helped him and his clients to identify both long-term market cycles and short-term opportunities for profit.

This article is provided as a third party analysis and does not necessarily matches views of Bullion Exchanges and should not be considered as financial advice in any way.


  1. The WGC states (with a straight face) that “gold demand is down 9%” even though demand for physical coins and bars was up 17%. Why the difference? A dropoff in demand for the scam GLD?

    • Hello PJ,

      Investors and central banks have seen different directions, and there have been different trends in demand for gold bullion and gold jewelry. While overall “gold demand” is down, the demand for coins and bars has seen another quarter of positive inflows, driven by Chinese investors. However, as mentioned in this article, in the US, investors are shunning the metal but jewelry purchasers are scooping up bargains.

  2. Elbert Sowerwine

    I want to buy gold, but I feel it is over priced. Using inflation as a guide, and starting the last time gold was 270 ish, it is way too high. I’ll be a buyer again when it gets down a little. I also think the premiums are too high.

    • Hello Elbert Sowerwine,

      All gold investors should have their own strategies and be aware that there is a lot of unnecessary buzzes over there. There is a good statement: ” Price is what you pay, value is what you get”

  3. William R. Lang

    Brilliant ironic treatise.

  4. When people get greedy, I get scared. When people get scared, I get greedy.

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