The quote below comes from The World Gold Organisation:
“Dollar demand for gold reached an all time quarterly record of US$32bn in the third quarter of 2008 as investors around the world sought refuge from the global financial meltdown, and jewellery buyers returned to the market in droves on a lower gold price. This figure was 45% higher than the previous record in Q2 2008.Tonnage demand was also 18% higher than a year earlier.”
If you have the time there is a very positive interview with the WGC on BNN, just click this link to watch it.
The World Gold Council had an independent report prepared for them by GFMS Limited which concluded that demand had rose on the Swiss, German and US stock Exchanges despite widespread shortages of gold, with retail investment demand up 121% to 232 tonnes in Q3. It puzzles us that these reported shortages and the increased demand are not pushing gold to higher levels. Also, over at ebay we understand that coins and bars are fetching much higher gold prices as the scarcity of gold coins and bars drives up premiums.
EFTs are playing a major part as a popular investment vehicle and the report had this to say about them:
“Gold ETFs enjoyed a record quarterly inflow of 150 tonnes in Q3, boosted by extreme levels of economic and financial uncertainty. The peak in inflows occurred in late September, triggered by the collapse of Lehman Brothers and a fear of banking sector failures. Net inflows surged by an unprecedented 111 tonnes during 5 consecutive trading days, equivalent to US$7bn.”
Chief Executive Officer of World Gold Council, James E. Burton, added the following comment:
"Looking forward, given the uncertainty that surrounds the global economy, gold’s safe haven appeal should continue, but so too will the possibility of heightened levels of activity in the speculative side of the gold market, therefore it is too soon to call an end to market volatility."
This is all very positive but it does raise the question of whether the investment community now prefers the relative safety of an EFT to the highly risky business of mining.
The World Gold Council (WGC), a commercially-driven marketing organisation, is funded by the world’s leading gold mining companies. A global advocate for gold, the WGC aims to promote the demand for gold in all its forms through marketing activities in major international markets. For further information visit www.gold.org.
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