JOHANNESBURG (miningweekly.com) –The dollar demand for gold has reached an all time quarterly record of $32-billion in the third quarter of 2008, as investors around the world sought refuge from the global financial meltdown, the World Gold Council (WGC) said on Friday.

This figure was 45% higher than the previous record in the second quarter of 2008, while tonnage demand was also 18% higher than a year earlier.

“Gold’s universal role as a store of value has shone through during this quarter, helping attract investors and consumers to all forms of gold ownership. The rise in demand for gold bars and coins has been impressive, as the record rise in gold exchange traded funds (EFT) inflows,” said WGC CEO James Burton.

The council stated that identifiable investment demand, which incorporated demand from gold through ETFs, bars, and coins, was the biggest contributor to overall demand during the quarter, and was up to $10,7-billion.

Gold ETFs enjoyed a record quarterly inflow of 150 t during the first quarter, which had been boosted by extreme levels of economic and financial uncertainty. The WGC stated that the peak in inflows occurred in late September, triggered by the collapse of financial institution Lehman Brothers, and a fear of banking sector failures. Net inflow’s surged by an unprecedented 111 t during five consecutive trading days, equalling $7-billion.

Retail investment rose by 121% to 323 t in the third quarter, with strong bar and coin buying reported in the US, Swiss, and German markets.

“The quarter also witnessed widespread reports of gold shortages among bullion dealers across the globe as investors searched for a haven. Overall, the third quarter saw Europe reach an all-time record of 51 t of bar and coin buying, and France became a net investor in gold, for the first time since the early 1980s.”

Burton said that perhaps the most encouraging feature of the results was the return to positive jewellery buying which had been absent for several quarters, owing to the high levels of price volatility.

The third quarter saw a record $18-billion of consumer demand for gold jewellery, with buyers returning to the market on lower price points, which demonstrated the underlying positive sentiment towards gold.

The WGC said that the biggest contributor to the positive trend was India, which witnessed a rise of 65% in US dollar value, or 40 t relative to previous year levels. The Middle East, Indonesia, and China all enjoyed rises of more than 40% in value, or 10% in tonnage.

However, there were strong declines in Western market sales, with the US down by 9% in value and 29% in tons, the UK down 5% in value and 26% in tons, owing to the overall decline in the retail market.

“Looking forward, given the uncertainty that surrounds the global economy, gold’s safe haven appeal should continue, but so too will the possibility of heightened levels of activity in the speculative side of the gold market. Therefore, it is too soon to call an end to market volatility,” said Burton.

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