The huge July 2015 dip in gold prices had an expected consequence — demand for gold coins, bars and round exploded. This so-called physical gold is how many lower-end consumers invest in gold, as opposed to large investors who tend to treat gold more as a short-term hedge investment than a long-term investment.
Quarter 3 of 2015 saw a 26% increase in the purchasing of physical gold coins and bars. Surprisingly, the trend has not been fueled by buyers in the United States but rather buyers in India, China, Germany, and Russia.
Gold Jewelry not Accounting for Surge
The manufacture of gold jewelry is the biggest segment of demand for physical gold metal, so one might assume that a large increase in jewelry output was responsible for the surge. However, gold jewelry fabrication actually fell by 1% during Q3 of 2015, again highlighting how the demand has really been fueled by the purchase of gold bars and coins. Though gold prices are forecast to remain around the $1,100 mark, largely due to investors awaiting clarity and timing of any US interest rate hikes by the Fed, the huge increase in the purchasing of physical gold coins and bars signals possible consumer worry and a desire to hold hard currency.