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Global gold demand in Q1 2012 was 1,097.6 tonnes

17 May, 2012

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Global gold demand in Q1 2012 was 1,097.6 tonnes (t), down 5% from the high demand levels seen in Q1 2011 (1,150.7t), according to the World Gold Council’s Gold Demand Trends report. This decrease was largely to be expected given the introduction of import taxes in India and high gold prices. Gold demand value however, showed a 16% increase year on year to an estimated US$59.7 billion. The average price of gold for the quarter was US$1,690.57, 22% higher than the average for Q1 2011. Demand for the quarter was underpinned by increased demand in China, continued central bank purchasing and inflows into exchange-traded funds (ETFs).

The main highlights from the report are as follows:

• China’s investment and jewellery demand reached 255.2t up 10% on the previous year’s levels. Investment demand recorded strong growth with a quarterly record of 98.6t, up 13% from Q1 2011, demonstrating investors’ continued need to preserve wealth amidst ongoing concerns over inflation. Jewellery demand in China also increased significantly to 156.6t, accounting for 30% of global jewellery demand making China the largest jewellery market for the third consecutive quarter.
• Gold demand in India was affected in Q1 2012 by a number of factors; a new tax on gold jewellery, two increases in the import duty for gold and weakness and volatility in the rupee. Jewellery demand fell 19% to 152.0t from Q1 2011. Investment demand was down 46% from the previous year at 55.6t. In May, the government withdrew the new tax on jewellery and the market is already responding positively.
• Central banks across the globe continued the now established trend of net purchasing with demand in Q1 2012 reaching 80.8t. Demand was driven by Eastern Europe with Russia and Kazakhstan adding to their holdings and accounting for a substantial amount of the purchasing. Mexico’s central bank made the largest single purchase of 16.8t. The main driver for this demand by emerging market central banks is the need to diversify their holdings.
• First quarter demand for ETFs and similar products totalled 51.4t, equivalent to a value of US$2.8bn; in stark contrast to the first quarter of 2011, when the sector witnessed net outflows.

Marcus Grubb, Managing Director, Investment at the World Gold Council said,

“China and India have seen continuing economic growth and whilst China’s economy is expected to slow, it will nonetheless surpass the rates of growth in the West. As we previously forecast it is likely China will become the largest source of demand for gold in 2012.

This growth story also extends to other emerging market economies and is reinforced by central banks’ continued buying of gold, as a diversifier and a preserver of national wealth. The current picture of the gold market is diverse and not withstanding a flight into US dollars and treasuries near term, we believe the fundamental reasons for investing in gold today remain very strong and compelling.”

• First quarter gold demand of 1,097.6t was down 5% in comparison to Q1 2011 though in line with the average of the preceding eight quarters.
• The value measure of gold demand was 16% higher year-on-year at US$59.7bn.
• Demand in the jewellery sector of 519.8t was down 6% year-on-year, which when considered against a rise in prices of 22% shows resilience in jewellery demand. Increasing prices are leading to a re-premiumisation of gold, as it becomes even more exclusive. In US$ terms, the value of jewellery demand grew by 14% to a record US$28.3 billion.
• The average gold price of US$1,690.57 was 22% higher than the average of Q1 2011. As a result, in value terms, virtually all sectors of gold demand posted year-on-year increases, with the exception of physical bar demand, which was broadly flat, and the official sector, where purchasing activity was below Q1 2011’s exceptional levels.
• First quarter gold investment demand (including gold bars, coins, ETFs and similar products) grew by 13% year-on-year to 389.3t. In US$ terms, this equated to a demand value of US$21.2bn, 38% higher year-on-year. Increases in demand for ETFs and medals/imitation coins meant that demand reached 389.3t, 45.8t above Q1 2011 despite declines in demand for physical bars and coins.
• At 107.7t, demand for gold used in the technology and industrial sectors was down by 7% compared with year-earlier levels.

The Q1 2012 Gold Demand Trends report, which includes comprehensive data provided by Thomson Reuters GFMS, can be viewed here.

For further information please contact:
Melissa McVeigh
World Gold Council
T +44 20 7826 4754
E melissa.mcveigh@gold.org

Quintin Keanie
Capital MSL
T+44 20 7255 5154
E Quintin.Keanie@capitalmsl.com

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"Gold and gold jewellery bought and worn on this important day signifies never-diminishing good fortune..."

03 May, 2012

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Special 6% discount on purchase of gold coins for limited period

The World Gold Council has announced today that it is working in partnership with India Post and Reliance Money to celebrate the festival of Akshaya Tritiya, by offering consumers a special discount of 6% on the purchase of gold coins from India Post offices.

Starting from today, 19 April 2012 until 30 June 2012, consumers can purchase 99.9% pure, Swiss-manufactured gold coins in denominations of one gram, five grams, eight grams, ten grams, 20 grams and 50 grams from a network of 980 India Post outlets across the country.

Akshaya Tritiya, one of the most important festivals in the Indian calendar, falls on Tuesday 24 April this year. It is considered a particularly auspicious day to buy gold, and following this tradition is believed to bring a family long-term prosperity and success.

Commenting on the gold coin promotion, Ajay Mitra, Managing Director, India and Middle East, World Gold Council said: “Gold and gold jewellery bought and worn on this important day signifies never-diminishing good fortune. The traditional and cultural appeal of gold, combined with its strong fundamentals, means the precious metal remains central to Indian households’ long-term investment strategies, and never more so than during the festival of Akshaya Tritiya.

“In fact, during 2011 Indian households continued to turn to gold as a store of wealth, with gold now accounting for seven percent of household savings. We are therefore delighted to be working in partnership with India Post on this gold coin promotion.

“One of the World Gold Council’s primary objectives in India has been to make pure gold accessible to all segments across the country, as we believe in the long-term value of gold as an integral part of a savings portfolio. India Post’s extensive network, combined with its credible and trust-worthy brand, means it is the perfect partner for such an initiative, and we look forward to working together for many years to come.”

For further information please contact:

Rakhi Khanna
World Gold Council
T +91 22 6157 9107
E rakhi.khanna@gold.org

Arun Gopalakrishnan
Hanmer MSL
T +91 98205 17588
E arun.gopalakrishnan@hanmermsl.com

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16 Feb, 2012

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Global demand for gold in 2011 rose to 4,067.1 tonnes (t) worth an estimated US$205.5 billion - the first time that global demand has exceeded US$200billion and the highest tonnage level since 1997, according to the World Gold Council’s Gold Demand Trends. The main driver for this increase was the investment sector where annual demand was 1,640.7t up 5% on the previous record set in 2010 and with a value of US$82.9 billion. The pre-eminent markets for investment demand in 2011 were India, China and Europe.

China and India remain the cultural heartlands of gold, generating 55% of global jewellery demand and 49% of global demand:

• India remains the largest country for demand with 933.4t, which is notable considering the volatility of the gold price and the weakness of the Indian rupee against the US dollar during the second half of the year. Gold jewellery accounted for over 500t and the investment market demand reached 366.0t. Indian demand accounted for 25% of total bar and coin demand worldwide.
• In China, annual demand of 769.8t was up 20% year-on-year as a result of increases in both jewellery and investment. The largest rise was in investment, where demand of 258.9t with the value of RMB84.5billion leaped 69%. China jewellery demand increased every quarter of last year and was the largest single jewellery market worldwide for the second half of 2011.

There was also a surge in demand in Europe with the region posting its seventh consecutive annual gain to 374.8t. Germany and Switzerland were the main drivers of growth in the region as the eurozone remains in turmoil and the need for asset protection continues to be a priority.

Central banks continued the trend established in 2010 of being net buyers of gold. Purchases by central banks soared from 77.0t to 439.7t. This reflects the need to diversify assets, reduce reliance on one or two foreign currencies, rebalance reserves and ultimately protect national wealth.

Marcus Grubb, Managing Director, Investment at the World Gold Council remarked,
“What we can see from these 2011 figures is that there were two main factors driving the results: Asian growth and optimism on the one hand and western desire to protect assets against uncertainty on the other. Looking particularly at Asia, there was a major boost to the overall figures from the increase in Chinese demand, which is a trend that we see continuing over the next year. It is likely that China will emerge as the largest gold market in the world for the first time in 2012. What is certain is that the long-term fundamentals for gold remain strong, with a diverse and growing demand base, coupled with constrained supply side activity.”

Gold Demand Statistics for 2011:

• On the supply side, gold mine production reached a new annual record of 2,809.5t, 4% up on 2010. Recycling was down 2% year on year to 1,611.9t, which when average price rises of 28% are taken into account, indicates that near-market supplies are drying up and that consumers may be holding on to their gold in the expectation of higher prices.
• Gold used in electronics was up 1.1% to 330.4t worth a record US$16.7billion, which is unexpected considering the increase in cost. Annual demand for technology as a whole was steady at 463.5t due to growth primarily in the Chinese market. The value of this tonnage increased dramatically by 28% to a record US$23.4billion.
• The value of jewellery demand in 2011 reached a new annual record of US$99.2billion. India and China continue to believe in both the intrinsic and emotional value of gold jewellery which explains why overall global jewellery demand was resilient despite high gold prices, difficult economic conditions, volatility and currency weakness against the US dollar. Annual demand was 1,962.9t down 3% from 2010.
• One major element of fourth quarter investment relates to the significant increase of inflow into gold ETFs to 86.8t in Q4 2011 compared to just 22.3t in Q4 2010. The annual comparison is much weaker as inflows of 154.0t for 2011 are significantly lower than 367.7t for 2010, although this should be seen in the context of 2010 being an exceptional year.
• Demand for gold bars and coins continues to be robust and was another major contributor of the increase in investment demand, which climbed 24% to 1,486.7t.
• A record gold price of US$1,895/oz was set on the London PM fix on September 5thand 6th 2011.

A copy of full year 2011 Gold Demand Trends report, which includes comprehensive data, can be viewed at: www.gold.org/investment/research/regular_reports/gold_demand_trends/.

For further information please contact:
Melissa McVeigh
World Gold Council
T +44 20 7826 4754
E melissa.mcveigh@gold.org

Quintin Keanie
Capital MSL
T+44 20 7255 5154
E Quintin.Keanie@capitalmsl.com

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"...Put simply, when used as a foundation asset, gold preserves wealth.”

06 Dec, 2011

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New research by New Frontier Advisors (“NFA”) confirms gold’s unique role as a diversifier and foundation asset in the portfolios of euro-based investors, especially at a time of heightened currency and investment risk.

The report, ‘Gold as a strategic asset for European investors’, commissioned by the World Gold Council, explores gold as a strategic asset across five sets of asset allocation studies, including four using historical data spanning 1986 to 2010, and one using the 1999 to 2010 time frame.

The paper highlights that an optimal strategic allocation to gold for euro-based investors ranges from 2-3% for the most diversified and lowest risk portfolios, to 4-9% for portfolios split 50/50 between equities and bonds, to as high as 10% for portfolios with the majority of assets in equities.

The research uses the Michauds’ unique Resampled Efficient Frontier^™1 optimisation technology to allow analysis of the statistical significance of gold for adding diversification value. For each data universe, three different sets of optimised asset allocations are utilised: without gold and commodities, with gold and without commodities, and with both gold and commodities. The analysis assumes that gold has zero real returns.

The paper finds that gold adds significant diversifying power due to its low or negative correlation with most other assets in an optimised portfolio context.

Marcus Grubb, Managing Director, Investment for the World Gold Council, said:

“During a period of extraordinarily serious economic uncertainty in the eurozone, we wanted to examine the relevance of gold as a strategic asset for euro-based investors to protect their portfolios and to mitigate the systemic risks being faced.
“The conclusion of the research from NFA provides evidence that gold offers particular value as a strategic diversifier within a European portfolio. Put simply, when used as a foundation asset, gold preserves wealth.”

This research builds on the World Gold Council’s own fundamental research for investors and supports the findings from recent reports on gold as a portfolio diversifier. All reports can be viewed at: www.gold.org/media/

¹Invented by Richard Michaud and Robert Michaud. U.S. patents 6,003,018, 6,928,418, 7,412,414, 7624,060: Israel 138018. Worldwide patents pending. New Frontier Advisors LLC is worldwide licensee.

For further information please contact:

Stephanie Mackrell
World Gold Council
T +44 20 7826 4763
E Stephanie.mackrell@gold.org

Quintin Keanie
Capital MSL
T+44 20 7255 5154
E Quintin.Keanie@capitalmsl.com

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