Too Many Gaps in Unreliable Gold Council Market Data

There is no point looking to the World Gold Council (WGC) to understand what is happening in the gold market. That is my conclusion after reviewing its market data for the March quarter. The WGC reported that “gold demand grew 21% to 1,289.8t” in the first quarter of 2016. The gold price appreciated by 17% “on the strength of investor conviction”, according to the gold industry mouthpiece as it reported breathlessly that “the enthusiasm with which investors renewed their appetite for gold ETFs in Q1 was palpable”. One needs to understand the contrived nature of the council’s reporting framework to avoid drawing a hopelessly inaccurate conclusion from its commentary. The stock of gold held did not increase by 21%. Nor was the amount of new gold acquired in the March quarter 21% higher than the amount taken up a year earlier. The WGC can misleadingly assert such a large increase because there are gaps in its reporting about who sold. Apparently, the gold being bought appeared magically. This week’s PortfolioDirect expands on the council’s analytical shortcomings (VIEW LINK)