The World Buys Gold as Americans Sit on the Sidelines

A big increase in investment demand for physical gold and silver helped drive overall demand higher through the first half of the year, but Americans, by and large, sat out the big rally. In fact, Americans tended to sell their gold bars and coins.

In this episode of the Money Metals’ Midweek Memo, host Mike Maharrey digs deep into H1 demand gold demand data and wonders why so many Americans continue to trade real money for devaluing paper. Mike also discusses the job number fiasco, pointing out that the government has a long history of revising job numbers lower.

Mike opens the show explaining why he was initially reluctant to write about precious metals.

“I didn’t want to be pigeonholeed as a ‘gold bug.’ I’m sure you’ve heard that term. It’s not meant as a compliment. People who are interested in gold and silver are often stereotyped as weirdo prepper kooks with bunkers in their backyards. I didn’t want to be perceived as that guy.”

Mike obviously set aside those concerns. He points out that if he wants to avoid that smear, he can just go to Asia.

“While a lot of people in the so-called mainstream might look down on me for talking up gold here in the U.S., I’d probably be considered one of the smart guys over there.

“When you think about it, the negativity toward precious metals in the country is pretty crazy. It’s certainly not rooted in the American DNA. Most of the founding generation was wary of paper money. They wanted a hard money standard – that means gold or silver. Thomas Jefferson summed it up. ‘Paper is poverty, that it is only the ghost of money, and not money itself.'”

Mike points out that the political class in the U.S. has done a fantastic job of creating negativity around gold and silver.

“They have successfully soured the majority of Americans on real money. That’s to their benefit. They can print fiat money, and that’s the engine that drives big government. But here’s what I’m driving at. This anti-gold bias is a very Western phenomenon. And you can see that in the demand for gold. This big rally in the price of gold we’ve seen over the last year-plus has happened with American investors, by and large, sitting on the sidelines. This momentum for this bull run has come from emerging market central banks and Eastern investors.”

Mike takes a deep dive into the H1 gold demand data, starting with central banks. While central bank gold buying slowed somewhat in the second quarter, it remains far above the historical average between 2010 and 2021.

Turning to investment demand, Mike notes that it was up 78 percent year-on-year, primarily driven by Eastern investors. Bar and coin demand was up 44 percent in China and 7 percent in India. Even Europe charted a pickup in physical gold demand.

“But as I’ve already pointed out, Americans continued to sell their gold. Year-on-year bar and coin sales plummeted by 53 percent in H1. Demand in the second quarter was only 9 tonnes, the lowest quarterly level since Q4 2019.”

North American ETF inflows were stronger, but were still outpaced by Asian demand.

Looking at other demand segments, Mike notes jewelry demand has sagged due to higher prices, and demand for gold in tech and industry was also down slightly, primarily due to headwinds in the electronics sector, due to tariff worries.

Mike also urges listeners, “Don’t sleep on silver,” pointing out that both the fundamentals and technicals signal significant upside for the white metal. He also notes that this is the perfect time to get started with silver investing with the https://www.moneymetals.com/silver-starter-kit-standard-price/186" rel=”noreferrer”>Money Metals 9-piece silver starter set.

Mike then pivots to talk about the July jobs report and President Trump’s firing of the BLS commissioner, calling it “a fiasco.”

Trump called the BLS jobs data “rigged.”

“Trump isn’t wrong. I’ve been saying the numbers are rigged for a long time. In fact, significant downward revisions to the initial numbers have been the norm for years.”

Mike highlights the number, particularly the downward revisions.

“In total, the BLS erased 258,000 jobs with a few computer strokes.”

Mike says he doesn’t know if the former BLS commissioner was trying to make Trump look bad or not, but the agency has a long history of reporting rosy job numbers and then quietly revising them down later.

“For example, in 2023, job numbers were revised down in 10 of the 12 months. Looking back over time, it’s clear that revisions have always been part of the process. The thing that strikes me is that the revisions are almost always down. Since 2003, the final BLS numbers were lower than the initial report 14 times compared to seven upward revisions. It’s almost as if the agency is trying to make the government look good.”

Mike wonders out loud why anybody takes these numbers seriously.

“One could argue that calculating job data is a difficult process, and revisions are to be expected. I accept that argument, but when the error almost always occurs in the government’s favor, one has to wonder…”

Mike notes that job numbers aren’t the only sketchy data coming out of government agencies.

“I’ve argued for years that the CPI data grossly understates price inflation. And we know this is on purpose because the government literally changed to formula in the 1990s to understate the actual rise in prices.”

So, government data isn’t reliable. That’s not really shocking. Why does it matter?

“The problem with the disingenuous BLS jobs data is that very few people pay attention to the revisions. (This month being the exception because they were just too big to ignore.) The markets only react to the initial numbers. You never see markets rally because the BLS erased a bunch of jobs from the economy with a few clicks of its calculator. The revisions happen quietly in the back alleys. Nobody pays any attention to them. That creates the illusion that the labor market is much stronger than it actually is. So, why should we trust any of these numbers, much less make decisions based on them?”

Mike points out that the sudden focus on a weakening labor market increases the likelihood that the Federal Reserve will cut rate this fall.

“After all, price inflation is basically under control, right? Or is it? Don’t forget the CPI data is equally unreliable. Price inflation is higher than they’re telling you, and they’ve been expanding the money supply for over a year. That is, by definition, inflation. Now they are going to ramp up the inflation machine even more? Sounds like a recipe for more devaluation of your money. That’s why you want real money.”

That leads to a call to action. Call 800-800-1865 and talk to a Money Metals precious metals specialist. Don’t be like so many Americans trading in real money for devalued fiat paper. Get real money today!