WGC’s head of Investment Research discusses the latest Gold Demand Trends report.
Juan Carlos Artigas leads Investment Research in the U.S. for the World Gold Council. His responsibilities include managing the global Investment Research team and providing oversight of WGC's research initiatives related to positioning gold as an integral part of investor portfolios. HAI's Sumit Roy caught up with Artigas to discuss the WGC's latest Gold Demand Trends report.
HardAssetsInvestor: We saw a divergence in demand during the first quarter. China’s demand declined, while India’s demand surged. What is the reason for that divergence?
Juan Carlos Artigas: It’s a natural byproduct of what I like to describe as one of the best characteristics of gold as an asset. One of the key features of gold is the diversification that it provides investors. It provides this diversification because it is a byproduct of the interrelationships between many sources of demand and supply, and the regional differences that come with that.
The gold market is not always going in the same direction or moving in sync. It’s a truly global asset that responds to a combination of local phenomenon or local economic conditions, which sometimes are moving in the same direction, and sometimes are not. And this is a good example.
India saw an uptick in demand because of more welcoming government policies that have been proposed. You also had a removal of some of the restrictions that were in place last year for imports and exports, as well as an overall sense of growth and potential in the Indian economy as the new government takes place. That is obviously a good thing to have.
That counterbalanced some of the pullback we saw in China due to some of the local conditions that Chinese consumers were facing. China has quite frothy stock markets that were perhaps diverting cash or money to stocks and away from gold.
Many Chinese investors look for momentum in certain markets. As the equities market was going up, they decided not to spend as much in, say, jewelry and instead bought stocks. You see evidence of that from the high number of accounts opened with the stock exchange.