Less than 1 per cent of physical gold is now held by investors globally, latest figures from the World Gold Council have revealed.
According to the 40-page Gold Investor: Risk Management and Capital Preservation report, this marks a rising trend since the 1970s, when individual investors held onto more than 10 per cent of the yellow metal.
This may have been the result of exponential losses during the 1980s, but also because the highest demand for the precious commodity is still from consumers in the US, Asia and the Far East, followed by central banks.
The report cited that 48 per cent of all demand over the past five years has been driven by jewellery, although there has been rising demand from exchange-traded funds and central banks, as well as from institutions seeking bars and coins.
This week (correct), the Singapore Bourse announced it would start kilobar gold trading to lure investors back to the physical commodity.
Exchange-traded funds |
Collectively, physically backed exchange-traded funds hold 1,700 tonnes of gold worldwide. As at August 2014, there were 60 gold-backed ETFs tracked by the WGC The total value of these was $71bn (£43.7bn) If these were companies, they would be in the top 10 per cent of companies worldwide, ranked by market capitalisation. |
Source: WGC
Kelly-Ann Kearsey, dealing manager at the online trader GoldMoney, said “While the gold price did try to pick up a little, last week it fell to its lowest level since early January.
“This came as positive US economic data, and the expectation that the US Federal Reserve will start to increase interest rates, boosted the dollar to a four-year high against a basket of leading currencies.”
The news came shortly after the Royal Mint announced it was to start selling single gold Sovereigns for £197 and larger gold Britannias for £800, as well as silver coins for £19. Investors can either pay for the Mint to store it, or get it sent to their homes.
Adviser view
Nick Bamford, managing director of Surrey-based Informed Choice, said: “I think investing in gold or silver bullion is a bad idea for investors, because gold is a non-income producing asset, and buying it is better described as speculating rather than investing.
“Its price is driven by demand from other speculators, often buying it as a ‘safe haven’ during times of irrational fear, when other mainstream investment assets are turbulent or there are bad economic times ahead. This makes the gold price rather volatile.”
