The World Gold Council has been tracking the price of gold for three decades.
Consumer demand in Australia last year grew 8 per cent to 30.9 tonnes of gold, but that quantity is just a drop in the ocean when you consider global demand rose 18 per cent to 4741 tonnes — its highest annual total since 2011. And that was before global banks began to teeter.
World Gold Council Regional CEO for Asia Pacific Andrew Naylor said demand was propelled by central bank-buying — which more than doubled to 1136 tonnes last year — complemented by strong retail investment.
“Central bank demand was at a 55-year high, and that did take gold demand to its highest in 10 years,” Mr Naylor said.
“The big driver of that really is concern about inflation.
“Gold can be an effective inflation hedge. It’s not the only inflation hedge out there, but for many, it seems to be the most effective inflation hedge.
“At the moment there is certainly renewed investment interest in gold, but we see it as a strategic asset.
“The main reason gold is seen as a safe haven and is a risk mitigator is gold’s diverse sources of demand. You’ve got central bank demand, you’ve got jewellery demand, tech demand, bar and coin demand, and each of those sectors of demand reacts to different economic scenarios.
“If you look at gold’s performance over time (and of course there’s volatility and it can go down one year, be up the next), it has been a source of returns and has outperformed many other asset classes.”
Mr Naylor said gold’s liquidity was important to investors, and more than US$145 billion dollars of gold was traded every day.
Aside from gold bars, coins and gold-backed ETFs, gold is sought after by the jewellery industry, for technology and industrial applications, gold leafing and gilding, medical devices and in dentistry.
To learn more about gold and investment exposure, download The Market Herald Thematica, Shining in the Dark: Why Gold holds its Ground HERE.
