Precious Metals

Gold promoted as strategic asset

A new report from the World Gold Council identifies gold’s role as a strategic asset.

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A new 14-page report just released by the World Gold Council outlines gold’s relevance as a strategic asset.

Since 2001, according to the WGC, worldwide investment demand for gold has grown annually by an average of 18 percent.

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“This has been driven in part by the advent of new ways to access the market, such as physical gold-backed exchange-traded funds (ETFs), but also by the expansion of the middle class in Asia, and a renewed focus on effective risk management following the 2008–2009 financial crisis in the US and Europe,” according to the WGC analysis.

Gold has long been used as a vehicle for investment portfolio diversification.

“As a strategic asset, gold has historically improved the risk-adjusted returns of portfolios, providing returns while reducing losses and providing liquidity to meet liabilities in times of market stress,” according to the WGC’s market outlook.

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Over the long term, gold has outperformed cash investments, bonds, stocks and commodities. Gold has also historically rallied in periods of high inflation. Gold also trades more readily than many other major financial assets.

“The average pension fund portfolio would have increased returns and reduced risk by investing in gold over the past decade,” according to the WGC findings. 

The WGC estimates approximately 190,000 metric tons of gold are above ground, an amount worth more than $7.6 trillion U.S. Of that total, 20 percent, or 34,400 metric tons, are in coin and bar form and valued at $1.5 trillion.

The majority of it is in jewelry, amounting to 89,600 tons, or 47 percent, and valued at $3.6 trillion.

The council is self-described as “the market development organisation for the gold industry.”

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