Chinese Physical Gold Investment Demand Surges While Americans Pile Into Stock & Crypto Bubbles

Chinese demand for physical gold investment surged in the first three-quarters of 2017 while Americans ditched the shiny yellow metal for increased bets in the crypto mania and stock market bubble market.  Even though China’s Hang Seng Stock Market outperformed the Dow Jones Index last year, Chinese citizens purchased the most gold bar and coin products Q1-Q3 2017 since the same period in 2013, when they took advantage of huge gold market price selloff.

According to the World Gold Council, Chinese gold bar and coin demand increased to 233 metric tons (mt) in the first three-quarters of 2017 compared to 162 mt in the same period last year.  Furthermore, if we include Indian gold bar and coin demand, China and India consumed nearly half of the world’s total:

As we can see, China and India consumed 338 mt of gold bar and coin products which accounted for 47% of the total 715 mt Q1-Q3 2017.  German gold bar and coin demand of 81 mt took the third highest spot followed by Thailand (49 mt), Turkey (47 mt), Switzerland (31 mt) and the United States (30 mt).  Chinese gold bar and coin demand of 233 mt nearly equaled the total demand by German, Thailand, Turkey, Switzerland and the United States of 238 mt.

If we compare gold bar and coin demand by these countries in the same period last year, we can see some interesting changes:

While the increase in Chinese gold bar and coin demand was the big winner (162 mt to 233 mt), Turkish demand nearly doubled from 24 mt in 2016 to 47 mt this year.  However, the biggest loser in the group was in the United States.  U.S. Gold bar and coin demand fell substantially to 30 mt Q1-Q3 2017 from 66 mt during the same period last year.

As I mentioned at the beginning of the article, Americans shunned gold to make it RICH in the rapidly rising Stock and Crypto Markets.  We can see this quite clearly as investors choose to bet on the Dow Jones Index as it surged by 30% last year versus a mere 13.5% for gold:

So, as the Dow Jones Index increased nearly 6,000 points, or 30% since the beginning of 2017, U.S. demand for gold bar and coins fell 55% (Q1-Q3 2017).  Also, it makes perfect sense that American investors ditched gold for much larger 1,000+% gains in cryptocurrencies.

The stunning performance in the stock and crypto markets has frustrated precious metals investors to no end.  Not only do I see this all over the internet, but I also receive a lot of emails and comments on my blog.  And, it doesn’t help that some precious metals investors, now turned crypto specialists and aficionados, are only happy discussing assets that make 10-20 baggers.  Forget about old fashion work and taking the time and money to build something real, we have now moved into a new investment strategy that to be successful, one must make 6-7 figure returns by clicking on a mouse.

All I can say is this… enjoy the Crypto fun while it lasts, because the forces of Gravity will once again bring us back down to earth where making a real living takes a lot of sweat and labor.  While some followers sense that I am negative about the cryptocurrencies, I am.  However, it is for a good reason.  Even though the Blockchain technology offers interesting solutions, the speculative mania is a different story entirely.  And, yes.. let’s not forget the tremendous amount of fraud and corruption in the crypto markets.  If you don’t believe me, just wait around a while… LOL.

Regardless, while the Dow Jones Index jumped by 30% last year, the Chinese Hang Seng market did one better by surging 43%:

Even with their Hang Seng Index up higher than the Dow Jones, Chinese gold bar and coin demand increased by 44% while U.S. physical gold investment demand fell by 55%.  Now, some may believe that the increase in Chinese gold and bar and coin purchases were partly due to the Chinese government banning the trading on cryptocurrency exchanges in the country.  However, the crypto exchange ban did not take place until the last quarter of 2017.  So, the 44% increase in Chinese gold bar and coin demand occurred before the banning of their cryptocurrency exchanges.   Because of the crypto exchange ban, we may see a spike in Chinese gold bar and coin demand during Q4 2017 when the statistics are released.

For whatever reason, Chinese physical gold investment demand increased significantly Q1-Q3 2017 while U.S. demand dropped like a rock.  It will be interesting to see how 2018 unfolds and if the extreme leverage in the stock and crypto markets finally unravels.  You see, it’s not a matter of if, it’s only a matter of time.  And, while many believe the Dow Jones will continue higher forever, all markets have to correct.  However, the next correction may turn out to be one heck of a crash.


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44 Comments on "Chinese Physical Gold Investment Demand Surges While Americans Pile Into Stock & Crypto Bubbles"

  1. The Chinese are smart because they have strong family stricture and vivid memories of war, famine and pestilence less than one generation back. Americans as a whole have never, in active memory, suffered through such deprivations so feel no need to always be prepared. Americans will learn this lesson the hard way, at least those that survive.

  2. DisappearingCulture | January 15, 2018 at 3:27 pm |

    Corrections in all markets are normal and healthy. Recessions [in the long run] even serve a purpose. Just amazing to read comments from people that think becasue of this or that [this time it will be different] there will not be a recession or even a significant correction for many years, and PM’s priced in fiat won’t go up for many years.
    Corrections can be to the downside, or upside if the asset is under-priced or underappreciated.

  3. Michael Kohlhaas | January 15, 2018 at 3:48 pm |

    The Chinese invest in everything, equity, real estate, precious metals, hookers, you name it!

  4. Would be great to see the comparison of the size of each economy with the investment demand. IE… what % of Chinese investment is going into PM vs the US…. was surprised to see Thailand in the list. What% of their total investment is going into Gold?

    Country GDP ($Bil) Gold Purchases %
    China $34,338 233 0.7%
    United States $32,996 66 0.2%
    India $10,133 100 1.0%
    Germany $4,720 69 1.5%
    Turkey $1,620 24 1.5%
    Switzerland $1,025 31 3.0%
    Thailand $767 52 6.8%

  5. mixed up the numbers … here it is

    Country GDP ($Bil) Gold Purchases %
    China 34338 233 0.7%
    United States 32996 30 0.1%
    India 10133 105 1.0%
    Germany 4720 81 1.7%
    Turkey 1620 47 2.9%
    Switzerland 1025 31 3.0%
    Thailand 767 49 6.4%

    • Thailand because it is so small is a surprise until you realize that they have had 18 coups and 18 constitutions since 1932. The Thais obviously know something that we don’t.

      • They have never been “Colonised”; they remain an independent nation true to itself and the west hates them for it especially the White House. I wonder how many of those coups where instigated by the west?

  6. The bankers thought they had the game wrapped up in 1913, then along came the crypto’s. The White House thought the game was wrapped up with the introduction of the petro dollar and now we see the revival of gold in the east.

    So if I ask the question; “How much gold does North America now hold in its reserves”? and I am told 8000 odd tons. Excuse me for laughing ….. Hahahahah

    ARROGANCE is not a strong enough word.

  7. SkeptiSchism | January 15, 2018 at 5:19 pm |

    Just for fun (hope it comes out right)

    Nation Gold Demand Population Gold Demand per Person
    Grams Persons Grams per Person
    China 234,236,997 1,378,665,000 0.170
    India 105,557,445 1,324,171,350 0.080
    Germany 81,430,029 82,667,680 0.985
    Thailand 49,260,141 68,863,510 0.715
    Turkey 47,249,523 79,512,430 0.594
    Switzer 31,164,579 8,372,100 3.722
    USA 30,159,270 323,127,510 0.093

  8. I think the following essay is relevant to Steve’s article…

    A 1 minute read.

    “The Fascinating Psychology of Blowoff Tops

    January 15, 2018

    Central banks have guaranteed a bubble collapse is the only possible output of the system they’ve created.

    The psychology of blowoff tops in asset bubbles is fascinating: let’s start with the first requirement of a move qualifying as a blowoff top, which is the vast majority of participants deny the move is a blowoff top.

  9. Steve,
    thank you for your tireless effort for the facts!
    what I believe is that history is a series of cycles and repeats itself or at least rhymes.
    We are experiencing a repeat of the period before the civil war in the US. When the railroad changed civilization from transportation and communication traveling from 4 miles per hour to 25 miles per hour. The great shift forced the development of the time zones and the growth of the fiat currencies! Gold and silver could not be manufactured fast enough to meet the demand of transactions happening nation wide. Which resulted in over 800 paper currencies! The financial crash of 1857 was because the financial distortions caused by the railroads. The amount of coal used in the locomotives world wide caused a shortage of coal (energy) which resulted in the the financial crash of 1929 and the move from coal to oil! The fascinating thing about this is that we are seeing the same thing NOW except it is the internet and not the railroad and the speed increase is not from 4 mile per hour to 25 but now communication is near the speed of light! We have to be careful that we do not follow the same play book as they did, now.
    With gold from all the sources I can find each country will sell their gold when they hit the skids that’s 195 countries! if 1/2 of them sell their gold I believe that will cause the price of gold to drop considerably!
    Sooo I have taken from the past and hold silver and for the future bitcoin.

    • Two local coin shops have confirmed to me that cryptos – mainly Bitcoin – have “sucked all of the oxygen out of the room” for retail physical gold.

      Buy what is not popular. Buy what is undervalued.

      If you have very little or no gold (silver or platinum), buy soon!

      Bob Moriarty at thinks silver and platinum will have nice gains this year.

      • Back in 1999, the dot com’s sucked all the air out of the room for the PMs, couldn’t find any silver to speak of. Always the way at a market bottom.

    • Thank you for the history lesson. Love it. So you say a shortage of gold will be analogous to a shortage of coal. Could be. Time will tell. If we are going to outer space, we will need crypto and blockchain type instruments.

  10. Until the stock market goes down and the precious metals go up, you are wasting your life.

    Tick tock, tick tock, tick tock. That’s the sound of inevitability. You are getting older every single second of every minute of every hour of every day of every year. You are inching closer and closer to the death that awaits us all.

    Meanwhile, people are making millions and millions and enjoying life. Ask yourself if it is worth stacking the precious metals. If you still feel it is, go ahead, see where it gets you.

    • Knowshitsurelock | January 15, 2018 at 7:25 pm |

      I just read “Three Billy Goats Gruff” And I know a great ugly troll when I see one!

      Snip, snap, snout.This tale’s told out.

    • LTC 700% XRP 900% BTS 1100% those are some of my profits lolol

      • Hope you cashed and bought PMs. If you haven’t or don’t, the more fool you.

        If you can’t hold it in your grubby little hand you don’t F**ing own it.

        • The money is , and has been made in stocks (and recently cryptos) for a very long time – not pm’s. That’s fact. If you can’t handle it, and the best you can come up with is parroting the old “but it will end any time now”, I feel for you. What did you make on your metals ? Nothing. It’s why you freak out at an opposing view.
          Even the most successful g/s investors like Sprott, Morgan – who make a living investing – etc advocate a max 15% investment in metals. Yes, we would all like to live in a just, honest world/economic system. It hasn’t ever happened, and I wouldn’t bet on it.

    • DisappearingCulture | January 16, 2018 at 7:03 am |

      See where it gets anyone in the longer term to gloat and boast about how well they are doing financially, and moralize that others should be doing what they are doing right now. That’s “the greater fool” theme on display.
      The fact is the majority will be losing a lot when they are caught in an asset class correction. That was the case with the 2008 stock market; it will be the same when this market breaks, and it will happen with cryptos. Most people think they can time their exit. Good luck.

  11. YOU FOOL !!
    You could have been a millionaire trading the cryptos! Instead you beg for donations. Admit it! You and the likes of Schiff were WRONG.

    • After witnessing the collapses of Argentina and USSR and studying the results of the collapses of Libya, Iraq and Afghanistan. I firmly believe in holding precious metals. Even the recent Puerto Rico disaster illustrates the absolute necessity of precious metals. Ounce of silver for 5 gallons of water!!!
      There is no place in history where what we are presently experiencing has lasted this long.
      It’s like falling off a 200 story building and after passing each floor declaring SO FAR NO PROBLEMS!!

      • R. Frank : It’s like falling off a 200 story building and after passing each floor declaring SO FAR NO PROBLEMS!!
        Your imagination is o so fine for me !
        Never in history was the wealth bild on huge, I say HUGE dept. So problems will be ” never seen”.

  12. Hmm, I think I read somewhere Pride goeth before the Fall. There will be no Joey in that…….

  13. Hang Seng is NOT China’s stock market. It’s the Hong Kong stock exchange.

    In mainland China, the 2 main markets/exchanges are Shanghai stock exchange & Shenzhen stock exchange. To the best of my knowledge, it’s NOT a seamless transparent process for someone in mainland China i.e. a citizen of PRC to open an account for trading on Hang Seng. MANY restrictive hoops need to be jumped through & the Chinese govt is VERY intrusive about it. (Although caveat: I’ve no 1st hand knowledge/experience about such issues. Anyone more knowledgable about it is free to chime in & correct me/fill in details, if I’m off in any way.)

    • I see that you’ve correctly labeled one 1 of the charts in big letters: “HONG KONG HANG SENG INDEX”. But in rest of the article you’re loosely mixing things up using terms such as “Chinese Hang Seng Index”.

      You might potentially be exposing yourself to a canard w/ such mixups. To be consistent, either or both of following should be considered IMHO:

      1. Conclusively establish if investing in Hang Seng index is even a transparent option for Chinese citizen who reside inside mainland China.
      2. Instead of posting charts of Hang Seng (which truly ridiculously absurdly overheated in 2017 BTW), examine performance of indexes on Shanghai & Shenzen stock exchanges.

  14. Good for Germany. Deustchland Uber Alles.

    I’ll be sure to buy more PM’s in a few years when my small crypto investment makes me a millionaire.

  15. I have read a lot about cryptos over the past few years and I still think many people do not get it.
    Netscape is no longer but it opened up the internet to ordinary users.
    I am reading this on the internet. The author of the article obviously believes in the internet as a value as he is using it to publish his thoughts.
    The internet was as big as the Gutenberg press. The internet enables the fast and open dissemination of information but was censorable and centralised.
    Crypto’s add a number of twists that may take a decade or more to play out. Firstly it will decentralise control. This creates a far more robust censorship resistant network. It enables the secure transfer and storage of value and agreements, contracts etc. that once recorded are immutable.
    For example, instead of issuing paper money backed by gold, cryptos can facilitate the issuance of a crypto backed by gold. And divisible to 8 or more decimal places so doesn’t matter if gold hits $20,000 an ounce. Just means the buying power of the crypto backed by gold becomes greater.
    There are smart people who want to make the world better for everyone.
    This is part of what Dan Larimar wrote 2 years ago:

    Start with Currency
    I recognized that money is the root of government power and that use of money is entirely voluntary. No one forces you to be paid in dollars. The initial solution was to adopt gold and silver. I researched it and discovered that others had tried that approach and been shut down by governments. Governments have the power to seize property anywhere in the world. It became clear that the free market would require a form of money that is not backed by physical property.
    I was attempting to engineer a digital currency when I discovered Bitcoin in early 2009. I instantly got involved with attempting to promote Bitcoin.

    Since then Dan has moved on to working on EOS – a platform for developers to create their own apps. Like the one we are using on here.

    Sure a lot of the money in cryptos is speculation. Isn’t that what the gold miners were doing during all those Gold rushes way back? Speculating. When a bubble bursts it tends to go to zero. Watch the cryptos. They burst but not to zero. Catch their breathe and carry on rising. This is not the behaviour of bubbles. Sure there are scam coins and nefarious goings on. But fundamentally just like gold and silver – yes fundamentally, cryptos will help to change the world for the better “I believe”.

    So please. Do your due diligence. Just like gold and silver which I wished I had more of, do your due diligence on crypto’s. Initially not indivdiual coins or tokens but on the underlying thinking behind this new technology.

    Gold/silver/cryptos is the safest bet to take.

    • I agree. Cryptos should be viewed as a compliment to PMs not the competition.
      IMO in the future cryptos will fill the utility void found in PMs. How will the avg guy cheaply send 200 oz value of silver from west coast to east coast for business purposes? We will not return to past with pm payments being escorted all over the place by armed guards.

      This country was built on hard work resulting in production, and if we are to survive we must return to same. But we cannot conduct proper commerce while using the bubble currency dollar. Everyone seeks honesty, which is offered by cryptos when one only takes the time to educate ones self about the crypto space.

      I foresee regional storage facilities for pm wealth while using the trustless truthfulness of crypto exchange of this wealth to conduct commerce.

    • DisappearingCulture | January 16, 2018 at 7:20 am |

      A thoughtful post on cryptos. However:

      “Sure a lot of the money in cryptos is speculation. Isn’t that what the gold miners were doing during all those Gold rushes way back? Speculating. When a bubble bursts it tends to go to zero. Watch the cryptos. They burst but not to zero….”
      When stocks markets burst in stock market crashes they don’t go to zero [of course a few company bankruptcies]. In 2012 when the PM prices dropped they didn’t go to zero. Nothing that is treasured or useful will go to zero. But the higher the speculative bubble, they harder it will fall towards a more realistic valuation.

  16. Steve, you said “Forget about old fashion work and taking the time and money to build something real, we have now moved into a new investment strategy that to be successful, one must make 6-7 figure returns by clicking on a mouse.”

    You are directing your anger at the wrong crowd. I believe in honest money: PMs & crypto. The governments and banks create curreny out of nothing. That is where the lack of work or energy as we call it – is the real fraud. Please explain to me how PMs would become adopted as a monetary instrument in the digital age? I’m genuinely interested to hear how you think it will be done. Will I ship a half ounce of gold to Amazon for my online purchase? It’s laughable. Crypto is honest money based on math and consensus, and isn’t subject to a lying politician or banker. And it can be used in our digital economy. Will many alt-coins fail? Absolutely. So stick with proven things. If you readers took 10% of their wealth and put it across BTC, ETH, NEO & QRL they would be in the safest, most secure, and most innovative cryptos. And they would do far better than the PMs. But of course, they won’t, and will continue to denigrate those who seek better solutions.

    • DisappearingCulture | January 16, 2018 at 7:58 am |

      I like this post of yours [your thought process].
      “If you readers took 10% of their wealth and put it across BTC, ETH, NEO & QRL they would be in the safest, most secure, and most innovative cryptos.”

      I’m just not sure right now is the time until there is some correction. For the same reason I would be reluctant to buy stocks right now.

      • DC,
        Would you buy stocks after a 50% correction? Bitcoin’s bubble burst at 20,000 and now at near 11,000. Close to the reinflate point. LTC from 400 to near 200.

        Folks are talking 10% in cryptos, IMO that’s way too much. Many here probably have networth near 1,000,000 so 10% would be 100,000, no need, too much!
        If cryptos return after this correction same magnitude they have in past corrections we could see 100x returns. $1,000 today could be $100,000 in yr.
        and be ever mindful that most online bullion cos will accept Bitcoin as payment for PMs. 😳

  17. Don’t forget food and defense, otherwise all your precious metals are either used up far too quickly or taken. Why trade PM for food at an inflated price when a years worth of food is $100 ( 400 pounds of wheat ). And ammo is 100 rounds per ounce of silver. Buy at the current firesale depression prices, not at future panic prices.

  18. Block chain technology is brilliant. I can see an elegant solution to the government fiat currency problem with a PM backed crypto currency that would, in fact, qualify as real money. It would, however, require a global system of physical depositories to hold and disperse the PMs. All of these depositories would would support a singular chain which could even be truncated each time a specific pm is deposited or transferred within the depository system. The problem is who or what is going to set up the system? Government/IMF? I think not, it would defeat the very purpose of doing it in the first place. Who can be trusted? Who would control and audit it?

    This strikes me as the same as a social dream I grew up with, namely, flying cars. Where are they? We have the technology, the roads system and the desire but no flying cars.

    There is another fact that everyone, particularly the crypto croud, seems to ignore – energy. We are on the downhill slide of the energy Seneca curve. Everyone wants to believe, as do I, that there is some technology right around the corner that is going to save us from the end of the oilcene era. It just ain’t so. When the house of cards we have built collapses, cryptos will go the way of the dodo bird.

    If you don’t hold it you don’t own it.

    • SteveW you have a good point, if one looks back in history we see banks set up as PMs depositories and all went well until the banks dipped their fingers into fractional reserve lending.
      The blockchain would prevent this because a Bitcoin cannot be duplicated so all that is needed is regular pm audit.

  19. Crypto bubble, crypto bubble, crypto bubble…..etc…

    Translation: We gold guys led our followers like the pied piper down the path to financial destruction but now cannot admit we were wrong. When will you gold guys open your eyes and see that a large portion of the crypto investors ALSO hold precious metals. This inability to see how precious metals and good crypto assets ( yes here are a lot of bad ones out there just like there are a lot of bad pm stocks out there ) make for a great balanced portfolio. I have been a PM bull since the 90s and saw the light in 2013 and dumped my PM stocks. Well, I do have a few “good” ones still. The more the gold guys hammer the cryptos the more and more isolated and foolish they look.

  20. To consolidate holdings, I just transferred some physical from NY to Canada. Internally, one company. Over the internet, vault to vault. Takes a couple of days to settle, but can be done now.
    I do wonder, except for India, just what proportion of pop. of the gold holding countries actually has the gold. Probably a few big holders. I am always thinking how China would love to go over the hill and grab that Indian farmland and that 5,000 years accumulation of temple gold. Maybe that’s the big war.

  21. Asian big savers, Indian cultural. Interest rate doesn’t pay, oh they buy equities, gold is how you get rid of fiat.

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