Sales of gold coins hit 10 year high as investors seek 'safe haven'

21 November 2008 / by Rachael Stiles
There's a gold rush on at the moment as investors scrabble to put their money into something which is traditionally seen as a safe haven in times of economic turmoil, seeing the sale of gold coins rise to a 10 year high.

The third quarter saw sales of gold coins and bars at their highest for more than 10 years, "as investors around the world sought refuge from the global financial meltdown", according to figures released yesterday by the World Gold Council, in its Gold Demand Trends report.

The WGC said that investing in gold coins and bars rose by 121 per cent during this time, compared to the same quarter in 2007, the strongest quarterly performance since the mid-1990s.

More than $6.5billion was spent on gold coins and bars, a total of 232.1 tonnes. In the first three quarters of 2008, net retail investment reached 443.6 tonnes, a rise of 10 per cent on total 2007 figures.

Gold exchange traded funds (ETFs) also saw record levels of interest, with inflows of 150 tonnes – an eight per cent increase compared to the same period last year – and jewellery sales have also experienced strong growth.

"Gold’s universal role as a store of value has shone through during this quarter helping attract investors and consumers to all forms of gold ownership." commented James E. Burton, CEO of the World Gold Council.

"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."

While gold prices have retreated from the highs they reached during the summer, it remains a popular commodity amongst investors seeking diversification, says Mark Harris, analyst at New Star Asset Management.

"Gold is a traditional safe haven because its price tends to be resilient during times of uncertainty." he explained. "Its dual status both as a commodity and a monetary asset is part of its appeal. Given the sectoral and geographic diversity of its demand, price changes in the precious metal are relatively insulated from Western economic cycles while recent volatility has highlighted the advantages of its tangibility, especially since the financial turmoil stemmed from the credit market."

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