The rest of the world buys gold

A recent World Gold Council (WGC) report on gold supply and demand around the world resulted in some fascinating summary statistics as reported by the Middle East-North Africa Financial Network.

During the second quarter, gold demand soared in some parts of the world - in other parts of the world it did not.

• Saudi Arabia: +30 percent
• UAE: +15 percent
• Egypt: +9 percent
• Turkey: +15 percent
• China: +32 percent
• Russia: +27 percent
• U.S.: -4 percent

These figures are all based on year-ago levels when the price of gold was rising dramatically. Overall demand in 2006 didn't really fall off until after the price surge in the spring, so the year-over-year comparisons for the third quarter may be even more impressive.

Gold Demand Surges 30% in Saudi Arabia
Strong economies and stable prices in the Middle East region (Saudi Arabia, UAE, Kuwait, Bahrain, Oman, Qatar & Egypt) increased gold demand by 20 percent to 97.5 tons in the second quarter of this year, the World Gold Council (WGC) report released on Wednesday said.

In Saudi Arabia, Umrah pilgrims and tourists pushed up gold demand by 30 percent in the second quarter of this year compared to same period in 2006.
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The WGC report said global demand for gold jewelry jumped 37 percent in the second quarter to reach a record $14.5 billion.

The figures, compiled independently for WGC by Gold Fields Mineral Services Limited (GFMS), showed total identifiable demand made a substantial recovery in the second quarter of this year, rising 19 percent in tonnage terms compared to the same period last year reaching $19.8 billion or a 27 percent increase in value terms year-on-year. Total demand reached 922 tons.
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Moaz Barakat, WGC's managing director in the Middle East, Turkey & Pakistan, said in a press statement: "We are pleased to report a very strong second quarter with demand for gold reaching unprecedented levels in a number of markets. A reduction in price volatility in 2007 has resulted in increased consumer confidence and, coupled with greater industry marketing activity, led to record levels of gold jewelry purchases in the region and globally in dollar terms."

The booming global economy was surely a big factor in the increased demand and, after the price surge in 2006, gold in the $600-$700 range must look cheap by comparison. Just as U.S. consumers have become accustomed to higher gasoline prices, in other parts of the world, consumers have become accustomed to higher gold prices.

Weird, huh?