Dressed to the nines with gold

While paper gold is getting the cold shoulder in the West, the Love Trade buyers in the East are wrapping their arms around all the physical gold they can get their hands on.

In the third quarter, gold jewelry demand was at the highest level since 2010. Buying out of love in the East was significantly higher during the first nine months of the year compared to demand the same time last year, according to the World Gold Council (WGC). As the chart shows, buyers in Hong Kong and China went on a shopping spree for gold jewelry, as demand rose 40% and 35%, respectively, on a year-to-date basis in 2013 compared to the same period last year.

Another way to look at the strong demand coming from the East is to compare it to Western demand. As you can see below, so far in 2013, the East purchased 5 times more gold bars, coins and jewelry than the West. Together, Chindia purchased a whopping 1,500 tonnes in physical gold in nine months.

It's important to note that despite the government's efforts to stop Indians from buying gold, jewelry demand in India was still about 12% higher in the first nine months of 2013 compared to same time frame last year. The buying continued despite the fact that premiums were above the international price of gold.

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