Current Gold Investment Demand

The current gold investment demand has been pretty good lately. In order to get a better picture, let us take a glance at the previous year. According to GFMS stats, mine production was up by 6% in 2009, whereas the supply of gold was up by 27%. The most positive data was that gold investment took a leap from 885 tonnes in the year 2008 to 1820 tonnes in 2009. This is a gain of 105% in the global demand, which is spectacular.

In the leading bullion market-India, gold investment demand shot up by over 500% in the second quarter of 2009. According to the World Gold Council, the total identifiable investment demand for gold remained very strong in 2009. This includes ETFs, gold bars and gold coins. According to WGC statistics, investment demand for gold rose to 222 tonnes, higher than the past. Retail investment, which includes the demand for gold bars and gold coins, was up by 23% in 2009. Inferred investment was up by 10 tonnes as compared to the last year.

The increase in investment demand was triggered by the economic crisis that hit more than a year ago. That is when investors turned towards safer, more solid assets such as gold. Ignot is ideal in providing a hedge in unpredictable socio-economic situations.

The pre-set situation suggests that the demand for bullion will remain healthy. It seems that gold is here to sustain a vibrant market and encourage robust investments. There is growing awareness amongst investors regarding bullion as an indispensable investment vehicle. Gold has the potential to play a strategic role in the face of a multi-challenged financial setup. Many investors turn to gold exchange traded funds, which are thought to be one of the most desirable hedges against economic downtime. ETF investment accounts for a large chunk of total ignot investment.

The main incentive for high gold investment demand is the belief that the rate of growth of demand for bullion will outpace the supply of gold. The vulnerable economic situation has compelled the investors to diversify their investment portfolios. Hence, they have rightly turned to gold. Most of the investors are now holding at least 10% of their investment holdings into real bullion or gold related assets. Bullioin is considered to be like an insurance policy against financial and monetary crisis.

Gold is inversely correlated with the dollar. Hence, as the dollar weakens, and the fears of it further weakening increases, the investment demands for gold increases. Gold provides a reliable defense against currency weakness, which is a common thing today. Most investors believe gold to be the ultimate haven. In the present economic climate, which is fraught with uncertainty, the gold investment demand is on the rise.

The central banks of the world are by far the largest holders of gold. With the central banks now becoming net buyers of gold rather than net sellers (which was the case in the past), the demand for gold has definitely increased.

Investors are watching the gold market like a hawk - ready to make their move as soon as there are shifts in the gold price.

Learn how to buy gold in the times of recession by the help of professionals.