Kate Pulvermacher, World Gold Council
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Gold regaining global appeal
David McKay
Posted: Sun, 02 Apr 2006

[miningmx.com] -- “INSTITUTIONAL investment in gold has barely begun,” said Kate Pulvermacher, MD of investment research and marketing at the World Gold Council (WGC).

For an industry body whose interest it is to promote investments in gold that’s exactly the kind of statement you’d expect to hear. But there’s evidence to suggest mounting interest by general investors in gold.

Around $50bn was invested in commodity-linked indices in 2004, increasing to $80bn last year. “I’ve heard estimates of $120bn in 2006,” said Pulvermacher.

Apart from interest in copper and other commodities, gold also gets some investment attention. In many cases, the investment is in fully collateralised, long-only futures.

The gold price has been in an upward trend since 2000 and the weight of evidence says the force is with the yellow metal in these unpredictable times. Trust in the US dollar has evaporated and general investors are seeking alternatives to the overinvestment in bonds and property.

Pulvermacher said that interest in gold of the intensity seen over the past few years was absent for an entire generation: from around the Seventies to now. Gold’s collapse in the Eighties, the rise of financial services and the tech bubble completely negated interest in gold. From a perception viewpoint the Bank of England’s decision to auction gold in 2000 was another big blow for the metal.
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However, Pulvermacher believed that there’s a step change in the way gold is now perceived, particularly by pension funds. “We’re about three years’ away from pension funds reaccepting gold as a feasible asset class along with bonds,” she said. In Britain, pension fund exposure to gold has now doubled to around 5t.

That’s small beer in volume, as the recently created exchange-traded fund in the US – Streettracks – has sold about 500 tons, equal to central bank sales last year. But it’s indicative of a perception change.