Be it equities or gold, investors seem to have a logic which is often at odds with the real economy. Stock markets have rallied despite worries over the economy and investors in gold are buying when actual consumers are not. As per the World Gold Council, the demand for gold has fallen to a six-year low in the second quarter and stands at 719.5 tons. Apparently, the recession is affecting demand from the two main consumers - jewelry (down 22%) and electronics (down 26%). The demand for gold fell by 38 % in India, the largest buyer.

However, investors in the yellow metal bought 46% more than last year. Interestingly, the central banks around the world are among those investing. In fact, they have turned net purchasers this quarter for the first time since 2000.