Who’s Buying Physical Gold?

There are many people all over the world that have been obtaining physical gold from gold companies. People obtain gold for different reasons. For example, they might obtain gold for preservation of principle or capital appreciation. Gold is good for providing financial insurance for your paper assets that are in your portfolio. This is due to the fact that gold and paper assets typically have an inverse relationship, so when stocks go down gold prices go up and vice versa. There have been times where stocks and gold both went up at the same time.

Individuals, central banks, large institutions and governments are the different types of gold buyers that purchase gold in order to protect their money.  The majority of gold buyers are very concerned about the worldwide economic situation. The United States has a large concern regarding the dollar losing its value. Gold’s value rises when the dollars value weakens and as the dollar weakens part of the rise in gold is credited to gold being priced in dollars.

Physical gold buyers are the people in this world that show the most concern about the U.S. dollar eroding. 200 metric tons of gold were recently purchased by India from the International Monetary Fund (IMF) and they shared their fear around the U.S. dollar. Gold buyers also buy gold to help provide growth within their portfolio. We foresee the appreciation potential of gold in the near future and individuals and institutions want to take advantage of the opportunity.

Here are more reasons why people buy gold:

1. Turmoil in stock markets
2. Oil and other commodity price shocks
3. High inflation, or the fear of high inflation
4. Banking crises
5. Spiking interest rates
6. Geopolitical crises
7. International loan defaults and other debt crises

These are situations in which gold performs well. If you have a portfolio you need to determine the amount of gold you want to own. What makes this difficult is figuring out what your objectives, goals and concerns are. If the dollar lost 50% of its value you would need 33% of gold in your portfolio in order to offset the losses of your paper assets (this number is overstated but is used to give you a general idea). There are several individuals and governments that currently own gold and more and more people will start buying gold as the dollar continues to slowly erode and lose its value.