Keynote Address: A rational perspective of gold
Alistair Hewitt, Head of Market Intelligence, World Gold Council
Historically, gold has been perceived as a particular safe haven for investors. However with the likes of bitcoin, trump-economics, and trade wars, is gold no longer the stable commodity it once was.
Gold in today’s climate has always been seen as a good investment, as Alistair discussed. The reasons for this is because:
- Gold generates returns comparable to that of stocks
- It provides diversification, offsetting losses when the stock market falls
- It has a well-established, deep, and liquid market
By combining these three points, an investor’s portfolio can significantly improve.
Current average demand for gold stands at around 4100 tonnes per annum (US $166billion). The demand is split with 54% used in Jewellery, 30% in investment, 10% in technology, and 6% in the central bank. Demand for gold in 2018 is only improving and there is a larger pool of countries buying gold for their central banks. India has returned to the market since a 90’s hiatus, Hungary has cited geopolitics and volatility as reasons for investing in gold, and Iran is in a 5-year high demand due to US sanctions.
An outlook for 2019 and gold is looking very good. China and India demand is predicted to stay healthy (they have a majority of the jewellery trade). With advancements in technology, gold will be needed for smartphones and tablets. In addition, central bank demand will only increase as trade wars and political instability will continue further into 2019.