Gold is fast becoming an asset class in virtually every fund manager’s investment portfolio, which is going to take the gold price to the next level, says Gold Fields CEO Nick Holland.

“Within three to five years, you’ll find that investment demand is probably the same as jewellery demand,” Holland predicts.

He sees no impediment in the way of continued demand for gold exchange-traded funds (ETFs)

“Today, ETF volume is at nearly 2 000 t, and I don’t see anything that is going to stop it from keeping on growing.

Some would have you believe that it’s all going to end up in 
tears, and that the ETF gold is all going to have to be sold, and that it’s all going to come back onto the market. I’m not sure that’s right. 
People will always be selling, yes, but there will 
be people buying and probably buying more.

“So, if you believe in the gold price, your investment thesis has got to be based on 
investment demand. That’s what’s going to take the gold price to the next level,” he adds.

The other factor is the possibility of 
reflation in the US. Holland sees US reflation as being inevitable reasons, because of the 
unlikelihood of the US government being able to raise the taxes of US consumers, who are already in debt.

He sees reflation as the only way of getting out of that debt, and reflation leading to 
inflation: “We’re going to get serious inflation again. It may take another year to arrive but when it does, I think you are going to see some interesting action in the gold market,” Holland predicts.

The World Gold Council calculates that only about a half a per cent of total worldwide funds under management are currently 
invested in gold and, if that has to double to one per cent, the council calculates that there would be insufficient gold in the vaults of central banks to accommodate the 
increase in demand.

“That gives an idea of the potential growth in investment demand for gold,” Holland says.

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