The World Gold Council's Gold Demand Trends recently highlighted several key metrics which show gold is becoming an increasingly attractive investment due to changing macroeconomic circumstances. Let's explore what this means for XAU₮, as the easiest way to hold and transact with gold.
Investment Demand
The first half of 2023 saw a resurgence in investment demand for gold. Physical gold investment rose 56% year-on-year in Q2, reaching a four-year high of 594.5 tonnes. This was driven by strong retail investment demand in the East, particularly in China and India, where gold purchases were up by 52% and 37% respectively.
In fact, growth in purchases of gold coins and gold bars helped offset slower buying activity via central banks. Turkey and Iran replaced Germany and Switzerland in the top 5 bar and coin markets in the first half of 23.
Central Banks, China and Turkey
Central banks have been net buyers of gold for 11 consecutive years and the first half of 2023 was no exception. Despite a slowdown in Q2, net buying was 39% higher year-on-year, with total purchases amounting to 333.2 tonnes. This was driven by a diverse group of buyers, with purchases from 10 central banks.
China, the world's largest gold consumer, saw its gold reserves rise by 74 tonnes, while Turkey's gold reserves fell by 137 tonnes due to sales and swaps with domestic banks. These activities by central banks underscore the strategic importance of gold as a reserve asset.
Central bank buying activity is the highest first half total on record. Despite substantial sales from Turkey impacting the total, 7 in 10 central banks surveyed believe that gold reserves will increase in the next 12 months.
Gold Supply Dynamics
The supply of gold has also seen interesting developments. Total gold supply increased by 7% year-on-year in Q2. This resulted in a 5% increase in total supply produced during the first half of 2023 at 2,460 tonnes, driven by a 3% growth in mine production to a record H1 level.
Mine production reached an all-time high in Q2 2023 at 923 tonnes, the highest second-quarter production level in records dating back to 2000. This, combined with Q1 2023 production of 857 tonnes, generated a record mine production of 1,781 tonnes, 2% higher than the previous record set in 2018.
Recycled gold volumes in Q2 rose by 13% year-on-year, lifting recycling to its highest level since 2016. This increase was driven by three factors in China: recovery from COVID disruptions last year, disappointing trade fairs triggering wholesale inventory recycling and price-sensitive recycling supply due to strong local currency prices.
China and India drove Q2 recycled gold supply up 13% year-on-year, contributing to the overall increase in gold supply.
The Impact on Tether Gold (XAU₮)
Increasing demand for gold and a positive supply picture, all point to a strong case for considering Tether Gold (XAU₮) in portfolios. XAU₮ is an attractive alternative for those looking to tap into the robust gold market while enjoying the benefits of digital assets.
Why Tether Gold Makes Gold Easier
For the average person, owning gold can be a hurdle. They must navigate the physical purchasing and storage of the gold. Few people want to hold a considerable quantity of such an easily identifiable asset such as gold in their home, however, storing it with a professional custodian can be expensive and difficult. Verification is also an issue, it is challenging for the average person to confirm they bought actual gold rather than a substitute metal plated in gold.
XAU₮ provides easily accessible, verifiable, gold on-demand with all of the benefits of blockchain:
1) XAU₮ can be transported with you anywhere you go using any compatible wallet
2) XAU₮ is divisible into increments as small as 0.000001 troy ounces of gold
3) XAU₮ can be bought and sold with ease 24/7, on several exchanges including Bitfinex, OKX, Huobi and many others.
4) XAU₮ can be redeemed for physical gold to any Swiss address or personally picked up from the vault
5) XAU₮ storage is as easy as storing any other crypto asset
6) XAU₮ can be verified and tracked at any time via the Tether Gold website
7) XAU₮ has no custodian fees
XAU₮ is the easiest choice for the average person to increase their gold allocation, and for the crypto savvy it has the benefits of being stored alongside all of your other crypto assets. As global monetary conditions continue to change, central banks and institutional investors are increasingly seeking out hard assets and safe haven assets. Gold has a long history of serving both purposes.
Chart and Data Source
World Gold Council. (2023). Gold Demand Trends Q2 2023. https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-q2-2023
