Investing in gold surges 38% as investors seek to preserve wealth

21 May 2009 / by Rachael Stiles
The World Gold Council has reported that investing in gold saw a surge in the first quarter of 2009, as investors shied away from risk and favoured the traditional safe haven of the previous metal.

Continuing fluctuation in the market and fears of further uncertainty saw investors continue to turn to gold, the WGC said, "seeking out its proven wealth preservation qualities."

Total demand for gold rose 38 per cent in quarter one compared to the same time last year, accounting for a $29.7billion rise in the total value, the WGC's Q1 '09 Gold Demand Trends report has revealed.

Investment demand for gold – including exchange traded funds (ETFs), gold bars and coins – was primarily accountable for the rise in growth in the gold sector, which reached 596 tonnes, a 248 per cent rise on the first quarter of 2008.

According to Aram Shishmanian, CEO of the World Gold Council, the first quarter's figures reveal that there has been "a seismic shift" away from investors looking for capital appreciation towards wealth preservation. And, the WGC expects this trend to "define investment behaviour in the next decade."

"Gold, as one of the few assets that has held its value during the current economic crisis, has been sought out by investors who are drawn to its proven protective attributes as well as safeguarding themselves from the erosive effects of future inflation," Mr Shishmanian said.

"The shift in the balance of demand that we have witnessed this quarter, where the gold price has risen despite a severe drop in jewellery and industrial demand, perfectly demonstrates the robust nature of gold’s fundamental supply and demand dynamics."

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