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Demand for gold soars as price tumbles
Posted By admin On October 23, 2008 @ 11:35 am In Economic Crash in Focus | Comments Disabled
October 23, 2008
The onset of a global recession and falling stock markets have triggered a stampede for gold – the traditional safe haven during times of uncertainty.
According to the World Gold Council, exchange traded funds are the main beneficiary of the flight to safety. ETFs experienced their strongest quarterly inflow during the third quarter since SPDR®Gold Shares – the first gold ETFs – were launched in November 2004.
But the Council added that bullion dealers around the world reported an unprecedented surge in demand for coins and small bars. It said that there had been reports outright shortages of gold and high premiums over the gold spot price. The US Mint temporarily suspended sales of American Buffalo gold 1 ounce coins after its stocks were depleted, while UK, German and Austrian coin dealers have also reported an enormous increase in demand during the third quarter, it added.
The average gold price edged down slightly between June and September, to $870.88/oz, from $896.11/oz in the previous three months. Gold traded as high as $986/oz on July 15, the day after the US Treasury and Federal Reserve Bank announced plans for a joint bail-out of mortgage giants Fannie Mae and Freddie Mac, but fell sharply later in the quarter to a low of $740.75/oz on September 11. This proved short lived, however. By the end of the quarter, the gold price had rebounded to $884.50/oz.
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