Investing in Gold: Going mainstream

Gold is becoming more mainstream: investors range from individuals to pension and sovereign wealth funds, and they are located in developed as well as in emerging markets. Global investment demand for gold worldwide has grown by an average of 18% per year since the turn of the century. 

Central banks have also expanded their use of gold as part of foreign reserves. Collectively, emerging market central banks have tripled their gold holdings over the past decade. 

Many factors have contributed to the increase in investor appetite for investing in gold: 

  • An expanding middle-class in Asia has increased purchasing power in the region
  • A renewed focus on effective risk management following the 2008-2009 financial crisis
  • A re-evaluation of new sources of portfolio returns after a prolonged period of ultra-low interest rates.

Gold is liquid and accessible. It trades more than US$200 billion a day in the over-the-counter market. Also, new products, such as gold-backed ETFs, have provided alternative ways to access the market.

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*Based on 10-year average demand estimates ending in 2016. Includes jewellery, technology, bars, coins and ETF demand. It excludes over-the-counter transactions and central bank purchases.
Source: Thomson Reuters GFMS, World Gold Council