Investment in gold has seen a ninth consecutive year of positive results thanks to dollar depreciation, the possibility of future inflation, a shift in central bank reserve management and an increase in gold reserves by developing nations, finds the World Gold Council.

In its latest Gold Investment Digest, the World Gold Council reported that the price of gold rose to US$1087.50/oz on the London PM fix at end December 2009, a 25 per cent increase in price over the year. Gold also recorded a better performance than other assets, including international equities, and remained the least volatile of all the commodities monitored by the WGC except for the S&P GS Livestock Index on average.

Gold exchange traded funds (ETFs) attracted new funds over 2009, with investors buying up 30 tonnes of gold via them in Q4 2009, contributing to ETF gold holdings worth US$62bn at year end prices.

"As the global economy began to show signs of recovery in the second half of 2009, the gold price and demand for the yellow material remained strong," commented Juan Carlos Artigas, investment research manager at the World Gold Council. "This looks set to continue throughout 2010 as investors concerned about price stability, the spectre of inflation and the outlook for the US dollar seek ways to protect their wealth. However, WGC estimates that just one per cent of global assets are invested in gold, leaving ample scope for further growth in investor allocations."

The full report is available here.

Share Story: