It is worth recalling that 23 years ago the price of gold was only $275 per ounce. Today, physical demand is at the same level as then, although the price of gold has risen seven times! 1999 marked the start of the biggest gold bull market since the 1980s. For eleven years, the cost of the yellow precious metal has grown from $275 to $1920 per unit.
Today, we have forgotten about this bull market as the price of gold has barely moved in the next ten years, underperforming other assets such as real estate, bonds or even stocks.
But those who followed the gold market in 1999 remember well that physical buying coincided with the collapse of the dot-com bubble. The US physical gold buying signal finally ushered in the great gold bull market from 2000 to 2010.
In 2022, physical purchases come amid a stronger-than-expected recovery in the US economy. After Chicago's Purchasing Managers' Index (PMI) hit 56 in February, gains pick up in March, climbing to 62.9 from a forecast of 57. US manufacturing activity picked up in March. Americans consume more, which supports the local industry.
This is evident in the travel industry as well, with Carnival reporting a record 55 consecutive cruises last week, most of which were between Miami and the Caribbean - signs of a fast recovery in the sector. The shift in economic activity appears to be accelerating, even as supply chain issues continue to plague the sector. Waiting times in American ports are finally starting to decrease. By contrast, in China, where the health crisis has thrown the Shanghai region into chaos, the timeline is lengthening.