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Gold demand pushes past $100B mark in '08

February 20, 2009

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Demand for gold jewelry in 2008 was up 11 percent in dollar terms, at almost $60 billion, but down 11 percent in tonnage terms, at 2,138 tonnes.

New York--Sustained investor interest in gold over the course of 2008, combined with the dismal state of the global stock markets, helped push dollar demand for gold to $102 billion, a 29 percent increase on 2007 levels, according to the World Gold Council's (WGC) "Gold Demand Trends" study.

Featuring figures compiled independently for the WGC by GFMS Ltd., the study shows that identifiable gold demand in tonnage terms rose 4 percent on previous year levels to 3,659 tonnes. In addition, identifiable investment demand for gold--which includes exchange traded funds, bars and coins--was 64 percent higher in 2008 than in 2007.

The WGC says that of the statistics, the most striking trend was the reawakening of investor interest in the holding of physical gold. Demand for bars and coins increased 87 percent over the year, with shortages reported across many parts of the globe.

Looking specifically at gold jewelry, demand was up 11 percent in dollar terms, at almost $60 billion, but down 11 percent in tonnage terms, at 2,138 tonnes.

Jewelry buying was affected by the adverse economic conditions across the globe, coupled with a high and volatile gold price, yet the WGC says resilient spending on gold jewelry--indicated by strong buying when the market offered attractive prices--points to the strength of underlying demand.

In the United States, economic conditions produced a mixed bag of results for gold demand. Fourth-quarter jewelry demand was down 35 percent, yet demand for gold bars and coins increased by a whopping 370 percent.

"These figures confirm that investors around the world recognize the benefits of holding gold during this time of unprecedented global financial crisis, recession and the specter of future inflation," WGC Chief Executive Officer Aram Shishmanian said in a media release. "Gold has again proven its core investment qualities as a store of value, safe haven and portfolio diversifier, and this has struck a chord with nervous investors."
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