Analyst Shares His Thoughts on the Demand for Gold
Frank Holmes, CEO of U.S. Global Investors, breaks down what is currently driving the demand for gold.
“In the world of gold I always say there’s two drivers: There’s the fear trade which is real interest rates and inflation and love, Love Trade and love is about 70 percent of the demand. So it’s so important to look at “Chindia” GDP per capita because it’s highly correlated with loved demand. So what’s happening now is that Love Demand really hasn’t slowed down but we’re seeing Peak Gold – peak supply from mines, they’re falling and there’s no exploration, there’s very few real discoveries and the path of new supply coming on is maybe a decade away. So I think we’re in a contraction period and why we have world class investors all of a sudden last week coming out commenting that they’re buying gold – because there’s lack of money going into the space and you have peak supply but the China, India and the Middle East they continue to have rising GDP per capita.” – Frank Holmes, U.S. Global Investors.