Informed views, research, and high-level advisory services from the World Gold Council
Regular publications from the World Gold Council’s in-house thought leaders and industry experts, along with prominent academics and think tanks, provide informed views, research, and high-level advisory services to central bankers, policymakers, regulators and investors around the world.
Our latest insights
Gold as a source of collateral
The 2007-2009 financial crisis highlighted inadequacies in counterparty risk management in the global over-the-counter (OTC) market. G20 leaders have committed to address this by implementing regulatory reforms that will augment the use of central counterparty (CCP) clearing. This will in turn increase demand for the collateral assets that need to be posted with CCPs. In order to give clearing members as much flexibility as possible, CCPs have begun searching for appropriate new sources of collateral. This has become a particular focus as the credit quality of many traditional collateral assets, such as European government bonds, has deteriorated sharply as a result of the ongoing sovereign debt crisis. Gold is emerging as a solution.
The case for gold as a reserve asset in the GCC. Dubai International Finance Centre.
The Dubai International Financial Centre states: “Our results indicate that if a relatively conservative central bank should hold gold as an asset class, its potential returns of any given level of risk (i.e. at any standard deviation) increase by several points more a year than when excluding gold from its optimal portfolio. Similarly, a dollar invested (in January 1987) by a fictional conservative central bank in an international reserves portfolio would have grown to $6.6 by May 2010 – which is about 1.5 more times than an international reserve portfolio without gold."
The Future of the Eurozone and Gold, Centre for European Policy Studies
“CEPS concludes that: “Overall, the main findings suggest that, in the near future, motives other than inflation hedging will be the main drivers of gold market dynamics. Growth in Asia’s emerging economies, which are among the largest sources of gold demand, and financial market uncertainty, will be the most important ones. In particular, Asia is expected to decouple at least partially from trends in the eurozone, even if the worst scenario were to materialise.
Hence, while adverse conditions could slow Asian growth, demand for gold from this region should not fall significantly. Moreover, even in the most optimistic scenario for the eurozone, global uncertainty will not evaporate easily. As a consequence, the gold price may continue to trend upwards for a period driven by investment demand from both private sector and official investors."
