Gold Demand Surged in 2006

That's the word from the World Gold Council, as relayed by this story in the International Diamond Exchange.

• At $44 billion, gold jewelry sales set a record high.

• industrial demand was the highest ever at 458 tons.

• Demand for investment gold increased 7% over 2005 to 637 tons and 45 percent in value

Now while demand surged in dollar value, demand for gold for jewelry and from central banks actually fell in terms of tonnage. For example, in 2006 jewelry demand rose 14% in value, but fell 16% in weight. However, two important points ...

1) We are seeing new demand come in from China, and a resurgence in demand from the upwardly mobile in India. This emerging market demand should be a huge force in 2007.

2) Despite higher prices, gold production is decreasing from year to year. Overall supply fell 13% in 2006.

All in all, I'm very excited about gold and gold mining stocks right now. We are seeing a huge breakout in one of the gold mines we have in Red-Hot Canadian Small-Caps, and ditto for one of the gold mines we have in Red-Hot Asian Tigers. The others are smoking on the launch pad.

And as for gold itself, take a look at this weekly chart ...

Check out my new gold and energy blog at MoneyAndMarkets.com