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Chinese Lunar New Year Ended, Gold Demand Down?

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… Absolutely not!

People say that when the Chinese New Year ends (31 January), gold demand would come down.

What do we see two weeks after Chinese New Year? A record amount of Chinese gold demand at 64 tonnes a week, that’s 256 tonnes a month, above global mine supply.

SGE Withdrawals (In Gold We Trust: Koos Jansen)

I believe we could see an increase in gold demand when the price of gold rises. It seems counterintuitive, but the gold demand curve is not straight, it is curved (red graph below).

We might see it happening right now.

New Gold: The Perfect Storm for Growth

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As the gold correction has almost run its course, it’s time to once again benefit from the rise of gold by buying into gold mining stocks. One nice growth story is New Gold (NGD).

New Gold has 3 operating properties: Mesquite, Peak Mines and Cerro San Pedro Mine with altogether approximately $US 200 million net cash flow. The market cap of New Gold is $US 5.54 billion with a price to book value of 2.5. This corresponds with a P/E of 24.78. Cash costs of the projects are coming down, while production is steadily increasing. You could think this is very pricey, but the secret lies in its development projects of which the cash flow will grow at an exponential pace.

New Gold has 3 development projects: New Afton, El Morro and Blackwater. These properties will propel NGD exponentially. To see how, please visit my article at: Seekingalpha