World Gold Council: Gold Investment Digest Report - 2008

World Gold Council report of gold performance for 2008

NEW YORK & LONDON - (Business Wire) Gold proved its metal in 2008, according to World Gold Council’s latest Gold Investment Digest, providing a safe haven and long term store of value for investors in record volume and outperforming many other assets in relative price and volatility terms.

Despite one of the most tumultuous years in financial markets since the Great Depression, gold ended the year on a firm footing recording its eighth consecutive annual price increase. The last three months of 2008 was a quarter of two halves. While distressed gold sales by some institutional investors meeting margin calls on other assets had a dampening effect on price in the first few weeks of the final quarter, by mid November broader recognition that the dire financial situation was likely to endure for some time, fears about the credit system and future inflationary impact of shifts in monetary policy and the dollar resuming its secular decline led gold to rally by around $150/oz. Gold, therefore, closed the year at US$869.75.oz, up 4% from the same period in 20071.

Gold price volatility remained high by historical standards at the end of the year, at 37% (gold’s long-run price volatility is around 12.5%), although still below most other asset classes. However, underpinned by robust and diverse market fundamentals, gold traded in a tighter range than other financial assets, major world indices and most other commodities.

“Gold’s performance over the year is impressive considering the massive wealth destruction that took place elsewhere in financial and commodities markets,” said Natalie Dempster, Head of Investment, North America for World Gold Council. “Impacted to a lesser extent by the financial crisis, which affected equities, and declining industrial demand, which affected physical assets, gold outperformed global equities and all major commodities during 2008.”

During the final quarter, investors turned to physical-backed gold ETFs in large numbers, buying 96 tonnes of incremental gold via exchange trade funds. December recorded the strongest monthly inflow into gold ETFs, with investors buying 44 tonnes of gold. Investment in gold ETFs, monitored by the World Gold Council, now stands at around US$33 billion2.

“As investors became increasingly concerned by the state of the economy during the course of the year, they turned to gold as a store of value. Within the third and fourth quarters of 2008, inflows into gold ETFs reached record levels as investors were motivated by gold’s lack of counterparty risk and the opportunity to hold a real, physical asset,” Dempster said. “As we move into 2009, continued uncertainty over the financial landscape, combined with future inflationary fears resulting from interest rates cuts and quantitative easing by central banks, are likely to pique investor interest in gold further.”

Gold Investment Digest, a concise and comprehensive analysis of investment trends and economic indicators that influence investment interest in and the demand for gold, can be downloaded at www.gold.org. Users will need to register, which is free of charge. At the same address, users can access a range of investment statistics, which we have completely overhauled to extend the country coverage and make the materials easier to download. For further information, or should you like to learn more about investment in gold, please contact:

Notes to Editors:

World Gold Council

World Gold Council (WGC), a commercially-driven marketing organization, is funded by the world’s leading gold mining companies. A global advocate for gold, WGC aims to promote the demand for gold in all its forms through marketing activities in major international markets. For further information visit www.gold.org.


World Gold Council’s latest Gold Investment Digest concludes 2009 should result in increased gold demand.