Record Dollar Demand for Gold from Safe-Haven Buying - WGC

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The latest Gold Demand Trends, published by the World Gold Council using figures compiled by independent research house GFMS Ltd., records an all-time quarterly record of $32 billion in demand for gold as investors sought refuge from the global financial meltdown. This was 45% up in the previous dollar record, registered in the second quarter of this year. Tonnage demand was 18% higher than a year previously.

The latest Gold Demand Trends, published by the World Gold Council using figures compiled by independent research house GFMS Ltd., records an all-time quarterly record of $32 billion in demand for gold as investors sought refuge from the global financial meltdown. This was 45% up in the previous dollar record, registered in the second quarter of this year. Tonnage demand was 18% higher than a year previously.

The primary component of demand during the quarter was not jewellery, which increased by 45 tonnes. Instead "identifiable investment demand", which incorporates demand for gold through Exchange Traded Funds, along with bars and coins, was the largest contributor to overall demand, with 382 tonnes, a gain of 56% year-on-year. On the basis of the average price for the quarter this would have absorbed approximately $10.7 billion - double the levels of a year ago.

The collapse of Lehman Brothers generated the peak inflows into the Exchange Traded Funds (late September) with net inflows surging by an unprecedented 111 tonnes over the course of five consecutive trading days, equivalent to approximately $7 billion. The inflow over the whole quarter was 150 tonnes, which does show that, apart from the post-Lehman flows, ETFs were comparatively sluggish over the quarter.

Coin and bar demand were particularly vibrant, with an all-time record of 51 tonnes, and France becoming a net investor in gold for the first time since the early 1980s. It had, until this past quarter, become almost automatic to expect France to be a small net disinvestor as younger generations consistently sold off some of the gold coins that they inherited frrm the hoarding developed by their parents or grandparents...

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