Gold Investor, September 2017

Published

CEO

World Gold Council

London has a long and rich history within the global gold market. Home to a number of world-renowned gold market institutions, London sets a global price benchmark and is the international centre for over-the-counter (OTC) trading. The market is deep, broad, highly liquid and strategically positioned between global time zones. London vaults also house more than 7000 tonnes of gold, second only to Fort Knox.

Despite London’s leading position however, the market has been under pressure, as regulatory changes call into question the OTC trading model and other centres, particularly Shanghai, increase their influence.

In response, the London market is in the throes of change, supported and assisted by the World Gold Council.

As a global organisation, the Council has one over-arching aim: to make gold a mainstream financial asset. We do not favour one hub over another but we do strive to ensure that the global gold market is efficient, effective and trusted by investors. That involves working with partners across the world to drive transparency, accessibility and liquidity.

LMEprecious exemplifies this approach. Launched this summer as an initiative from the London Metal Exchange (LME), the World Gold Council and leading industry players, LMEprecious allows market participants to trade gold futures on-exchange in London. Early progress has been encouraging, as we report in our News section.

The LBMA, an international trade association for gold and silver, has also taken steps to introduce greater transparency in the London market, as chief executive Ruth Crowell explains. OTC market participants will gradually be required to report trades, London vault holdings are being published for the first time and the Global Precious Metals Code has been launched to maintain the highest standards of integrity in the market.

These should all help London to retain its pre-eminent position. Elsewhere too, however, the gold market is evolving.

Russia is the largest official purchaser of gold in the world and the third largest producer. Yet private institutions and individuals are subject to one of the most punitive tax regimes in the world and investment is exceptionally low. This could be about to change, bolstering Russia’s position on the global gold stage and increasing gold’s contribution to the domestic economy.

Gold’s investment status continues to gain ground in the West as well.

Frank Holmes, CEO of US Global Investors, suggests investors should allocate a significant percentage of their portfolio to gold in response to rising political uncertainty and mounting debt levels.

Jennifer Johnson-Calari and Adam Kobor, who have worked closely with central banks and sovereign wealth funds explain why gold is an increasingly appropriate investment for these long-term guardians of national wealth.

Tom Brady, chief economist of Newmont Mining Corporation, reveals his predictions for global gold supply and Mark Hanna of leading US jewellery group Richline analyses the current state of the jewellery industry and assesses its prospects.

We hope you enjoy the read. Do email us with your thoughts at [email protected].

Aram Shishmanian