Gold prices today continue to bounce up and down based on speculative headlines.
But what anyone investing in gold should look at is the long-term gold price outlook and the driving forces behind it.
The fundamentals here will push gold prices above the current levels around $1,350 and above $1,400 an ounce in the months ahead, and higher next year.
Here's why you can bet on higher gold prices in 2014...
Gold Prices and Chinese Imports
With most commodities, investors should not look to the "paper" commodities market for guidance, but to the actual physical demand coming from the billions of people in the emerging world.
Gold is no different.
Take China, for example.
Gold imports into the country from Hong Kong continue at a robust rate, underpinning gold prices.
China imported 129.2 metric tons of gold in July, up from 113 tons in June. That is 70% higher than year ago imports of 75.8 metric tons. July was the third consecutive month that imports exceeded the 100-ton level.
Analysts at Commerzbank commented to the Financial Times, "China remains the key driver of gold demand and is able to offset weak investment demand [in the Western world] to some extent."
The country's total gold consumption in 2013 is expected, by the World Gold Council, to reach 1,000 metric tons. This would make China the number one gold consumer in the world, surpassing India.
But that's not to say that India lost its centuries-long cultural affinity for gold, despite the current government's and central bank's efforts to limit gold ownership.
India Still Craves Gold
Gold demand from India traditionally picks up in the September-December period because of the wedding season and the festival of Diwali.
A major factor coming into play in India this year that will drive higher gold prices may sound surprising, but translates into surging demand...
I'm talking about a heavy monsoon season. The rains are translating into bountiful crops for many of the country's normally poor farmers.
This is important because roughly 60% of Indian demand for gold comes from rural areas. With the lack of banks in many rural areas, gold is the way people store wealth.
The last time a good monsoon was seen in 2010, demand for gold in the fourth quarter (after harvests) jumped by 37%.
The World Gold Council believes surging Indian demand in the latter part of the year may be more than 70 metric tons a month. If this happens, Indian demand this year will hit a record 1,000 tons, matching China.
How can that happen with the Indian government restricting gold imports?
Bachhraj Bamalwa, director with the All India Gems and Jewelry Trade Federation, explained to Reuters, "There is nothing available through official channels, [so] supply is happening through unofficial channels."
In other words, smuggling. Much of the smuggling of gold is coming from across the border with neighboring Pakistan.
Gold is flowing into Pakistan. According to the Pakistan Bureau of Statistics, imports of gold into the country rose nearly 1,533% year on year through July to about 3,250 kilograms or more than three metric tons.
Many Indian buyers simply got around their government's restrictions on gold by going next door to Pakistan, where gold imports have been duty-free since 2001.
Buyers then smuggle the gold across the border into India. The Pakistan government says smuggling of gold from Pakistan to India doubled in just four months.
Pakistan did impose a 30-day ban on gold imports in August, but that has ended.
Bottom line from this is that nothing will stop India's cultural affinity for gold, not even their government. So much for gold bears' argument about the Indian government successfully restraining its citizens' consumption of gold...
With China and India accounting for more than half of the physical demand for gold and rising every year, it means more and more demand for the precious metal.
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