My favorite indicator for real time gold demand is the amount of gold in the SPDR Gold Trust (ETF) and its fluctuations over time. As we wrote in our book, the driving force for gold is investment demand which is driven by changes in real interest rates. Western-based investment demand from big money (i.e Stan Druckenmiller and George Soros) shows up mostly in the exchange traded funds and specifically, SPDR Gold Trust. The amount of gold in SPDR Gold Trust has risen steadily even as gold consolidated a few months back and has been stable in recent weeks even as gold and gold stocks correct their Brexit breakouts.
The chart below includes the price of gold, the amount of gold in SPDR Gold Trust (bottom) and the rolling quarterly change in the amount of gold in SPDR Gold Trust. Even as gold consolidated for several months in the spring, the amount of gold in SPDR Gold Trust increased. Over the past few weeks gold has retreated by $65 per ounce yet the SPDR Gold Trust has only lost 2% of its gold. Moreover, note that the recent demand surge (quarterly change) is the second strongest of the past 10 years.
Note how strong demand for gold was from 2006 to the middle of 2010. Even though gold corrected 30% during the financial crisis, SPDR Gold Trust only experienced minor outflows of gold. After gold bottomed in October 2008, demand exploded.
Interestingly, demand peaked in the middle of 2010 and went sideways for a few years before succumbing to the bear market. That lack of strong demand in 2011 while gold surged, in hindsight was a warning sign.