Investment Demand For Certified Gold Posted by James Randolph on February 19, 2010
February 17, 2010 – Although consumer demand for gold dropped by 11% in 2009, investment demand for certified gold rose, capping another strong year for the precious metal. Total consumption of gold stood at 3,385.8 tons for 2009, allowing sales to exceed the $100 billion mark for the year according to the World Gold Council. WGC Chief Executive Officer Aram Shishmanian commented that this news offers a “clear illustration” of the diversity that exists in the worldwide gold market.
"As the year progressed a rebalancing of gold market fundamentals occurred, ensuring that as investment demand came off from the exceptional levels seen in the first quarter, total demand for the year remained robust thanks to a rebound in jewelry and industrial demand," Shishmanian said in a statement.
Gold demand for jewelry suffered while the world economic crisis raged, but has been showing signs of recovery as consumer confidence returns. Industrial demand for gold has been down for several years but posted an annual gain. Growth in these sectors is important because certified gold prices are driven largely by increasing demand.
Spurred by strong demand in the western markets, in Exchange-traded Funds and in China, gold investment rose in 2009 and continues to rise in the first two months of 2010. "Gold’s broad demand and supply drivers provide a unique balance in the face of economic volatility and uncertainty. This ensures gold retains its intrinsic appeal irrespective of the prevailing market conditions," Shishmanian opined.
The continued expectation for 2010 is favorable, as the WGC noted that supply-side conditions would offer price support and the dehedging which occurred late in 2009 is unlikely to continue as certified gold investors look to protect their assets in the face of currency-based problems in a number of countries. Gold has a strong forecast for the months ahead and looks to be a viable investment option for many.
Senior Staff Writer – Certified Gold Exchange