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Gold Demand Major Sources Of Demand For Gold

1106 words - 5 pages

In precious metals industry, investors always prefer gold as an investment. There are many sources of demand for gold, which provide better opportunities for ROI (Returns on Investment). Here are the major sources of gold demand.
Sectors That Has Large Demand for Gold
• Central/Government Banks
Central banks are in constant need of gold. They use this precious metal to increase their gold reserves, which may serve as a guarantee to keep promises to pay to note holders, depositors, trading partners, or be used to secure currency. Banks are considered as one of the largest sources of demand for gold.
• Jewelry Industry
The jewelry industry is always in need of gold. In the past years, the ...view middle of the document...

Since there is a steady and growing demand for gold, they have more opportunities to gain ROI by investing on this precious metal. The gold demand from private investors depends on the market circumstances, and the investment component may differ each year.
Which Country Has the Largest Demand for Gold?
India is one of the countries with largest demands for gold. According to India’s trade reports, the country has recorded imports of 1012 tons of gold for 12 months period ending in March.
Switzerland supplies 55% of the India’s gold demand. The United Arab Emirates provides 19%. South Africa, Australia and U.S. make up the 21% and the remaining 5% comes from various countries.
Why India Requires So Much Gold?
The reason behind India’s huge gold demand may lie behind its cultural practices. Indian women who are getting married are adorned in gold. This is not only an act of displaying social status. It also gives the bride standing and insurance in her new family, as well as financial strength. This is very important for the parents. In fact, they start saving gold as soon as their daughter is born, so that they can provide her a suitable and respectable dowry.

Indians love gold since the ancient times. In fact, the ancient temples of India is considered as a storeroom for gold. In 2011, a gigantic treasure cove was uncovered in one of the historical temples in Kerala state that is several hundred years old.
The search team reported that they saw a 4-feet statue encrusted with emeralds. The treasure also include Napoleonic era coins and of course, jewelries and crowns that are made of gold. The estimated amount for the uncovered treasure is approximately 12-22 billion USD.
How Cultural Affinity Affects the Demand for Gold?
One of the things we can learn from India is that cultural affinity has a huge impact on gold demand. The culture of the country has implanted the love for gold deeply into the hearts its citizens. This precious metal has profound meaning in the life of Indians. Traditionally, families will only sell their gold as a last resort. They will always try to find other alternatives when dealing with financial emergencies.
It is very important for investors who are planning to invest in gold to...

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