By Kim Iskyan
In the second quarter, gold demand from nearly all sources fell, except for one, which is now the greatest source of demand.
Half of all consumer demand comes from one continent, and the biggest growth in demand came from three surprising countries.
Gold is on a lot of investors' minds. But here are three things about gold that most investors might not know.
1. Everyone, except investors, wants less gold.
There are four main sources of gold demand: central banks and other big institutions; investment, jewelry and technology, mostly for electronics.
During the second quarter, demand for gold from three of these sources declined, by volume, not value. Central banks wanted 40% less gold than a year earlier, jewelry demand was 14% lower and demand from the tech sector fell 3%.
This isn't too surprising, as gold prices have been climbing, and when prices rise, demand declines.
But investment demand soared 141% from a year earlier. The majority of this came from demand for gold exchange-traded funds.
During the fourth quarter last year, just before the latest gold rally began, ETFs were a net negative on gold demand. But in the second quarter this year, investment was responsible for 43% of all gold demand.
What this also shows is that gold has a built-in hedge. If prices drop, investor interest will likely wane, but jewelry demand and demand from the tech sector, will probably increase, which would help stabilize gold prices.
2. The Japanese, British and Americans are buying way more gold.
From April to June, Japan, the U.S. and the U.K. showed the strongest growth in consumer demand. And there is a good reason for this.