JOHANNESBURG (miningweekly.com) – The global gold bars and coins market has boomed considerably in the past decade, with the investment market well positioned for growth, a new report by the World Gold Council (WGC) shows.
The ‘Global investment market: new perspectives on consumer behaviour’ report shows a surge in demand for gold bars and coins from 430 t, with a value of just under $10-billion, in 2006, to 1 051 t in 2015, equating to $40-billion in monetary terms.
The growth is attributed to a number of factors, including the opening up of new markets, such as in China, for example, where, prior to 2004, it was illegal for individuals to own gold bullion.
The global retail investment market is now well positioned for further growth, with a WGC comprehensive research programme scrutinising gold-buying behaviour across the major markets, revealing latent demand for gold in China, India, Germany and the US.
Gold has a “particular strength” in the role of wealth protection, underpinned by its perceived stability and its independence from the financial system.
“Gold is unique among investments in delivering rational, as well as emotional security. Gold is appreciated for being a stable place to invest money, resilient in the face of the volatility present in financial markets today, while its physical tangibility makes investors feel secure,” the WGC explained.
Capitalising on these positive sentiments opens up untapped potential; however, a more “targeted” approach will be required to attract investors.
“Converting this latent demand will not be easy. Retailers will need to carefully consider investors’ attitudes to risk, investment needs and how people gather information before making an investment decision,” the council pointed out.
The report pointed to developed market investors being more conservative, valuing simplicity and convenience, and not viewing gold as an easy routine investment.
Mitigating this perception will require allaying concerns around high-value entry points and a lack of flexibility.
In developing markets, there was work to be done to position gold as a lower-risk way of achieving long-term returns, and to take the share of investments away from stocks and shares, the WGC added.
“Seamless integration of online and offline gold experiences can act as a unique differentiator and will be critical to engaging digitally-savvy millennials for the future,” the council pointed out.