Given the uncertainties surrounding miners, many investors prefer to invest in gold bullion and related products. In the fourth quarter of 2012, total gold demand reached 1,195.9 tonnes, the highest fourth quarter total on record and the best quarterly haul behind the third quarter of 2011, according to the latest report from the World Gold Council. Total demand for the entire year slipped 4 percent to 4,405.5 tonnes, but with a value of $236.4 billion, it was an all-time record in dollar terms. In the bigger picture, annual gold demand was 15 percent higher than the average for the previous five years.
While some central banks print money in historic amounts, others are buying gold. Central banks purchased 145 tonnes of gold in the fourth quarter of 2012, the highest quarterly haul since the sector became net buyers just a few years ago. For the entire year, central bank buying surged 17 percent to 534.6 tonnes, the highest annual total since 1964. In comparison, central banks bought 456.8 tonnes in 2011.
UBS estimates that central banks purchased around 54 metric tons of gold in the first two months of 2013, worth nearly $3 billion. Precious metals strategist Edel Tully explains, “While the information is backward-looking, the vote of confidence from central banks does help market sentiment when the buying is confirmed. The real value in central bank gold buying, though, is when it occurs and/or when market participants think it is around.”