Gold Investors: If We Can’t Hold It, We Don’t Want It

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The price of gold has been in correction mode since hitting all-time nominal highs more than two years ago. Last year, the precious metal suffered its first annual decline in more than a decade as investors in paper-related gold products ran for the hills. However, demand for physical gold remained impressive.

In 2013, global gold demand reached 3,756.1 tonnes, valued at $170 billion, according to the World Gold Council’s latest report. That is down 15 percent from 4,415.8 tonnes in 2012, but due mostly to a sharp contraction in exchanged-traded funds. In fact, ETFs and similar products witnessed outflows of 880.8 tonnes, compared to inflows of 279.1 tonnes in the previous year. Over the past five years, global gold demand has averaged 4,104.3 tonnes.

“The sharp drop in the gold price in the second quarter, and subsequent price weakness through the remainder of the year, had a marked impact on the value of gold demand in 2013,” explained the WGC report. “The average annual gold price in a number of currencies — including the U.S. dollar, euro, British pound, and Chinese renminbi — was around 16 percent lower than 2012. However, a number of key markets, notably Japan, India, and Turkey, experienced markedly different price moves, due to sizable currency depreciation.”

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