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Investor report says demand for gold is strong in all stages of economic cycle

Thursday 25th September 2014

Gold demand benefits from all stages of the economic cycle – in times of expansion as well as times of duress – according to a new paper published by the World Gold Council.
 
“The growth dividend: how rising GDP lifts consumer gold demand”, penned by Juan Carlos Artigas, is one of a series of works published this week by the organisation. 
 
Explaining the theory explored in the paper, Artigas said: “Conventionally, investors have viewed gold as an asset they should buy when risks increase, such as during times of inflation, economic uncertainty, political unrest or currency depreciation.  Gold is unique in that it also benefits from periods of economic expansion when there is typically stronger consumption of technology and jewellery, which together represent more than half of global gold demand.” 
 
The paper features also features research from Avinash Persaud, Chairman of Intelligence Capital Limited and global markets expert. His analysis illustrates the positive relationship between economic growth and consumer demand for luxury goods like gold jewellery.
 
According to the paper, jewellery and technology together account for 58% of global gold demand—far greater than the 35% of demand driven by investments in bars, coins and gold-backed ETFs. 
 
“The vast majority of gold demand is not for speculative or investment purposes, but for the more [commonplace] and deep-rooted purpose of fabrication of gold into jewellery or decoration.  The level of investment demand is much smaller than jewellery demand…,” Dr. Persaud’s research finds. “The gold market is large [and] annual gold demand is approximately US$175 billion to US$200 billion – greater in size than the entire European luxury goods market.”
 
The additional papers published this week are titled, Ten years of gold ETFs: a wider and more efficient market and A practical hedge: less exotic, multipurpose, lower cost.
 
The full report can be downloaded at http://www.gold.org/investment/gold-investment-research.
 





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Editorial Contact Details - Conor Shilling
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