.jpg)
The gold price broke to an all time record high of $1,045 per ounce yesterday on the back of surging investor demand for a hedge against persistent weakness in the US dollar. With the US dollar weakening on the back of historically low interest rates and growing sovereign and private investor concerns about the sustainability of rapidly rising US government debt and quantitative easing, demand for gold has soared. On the back of these growing concerns about the structural outlook for the US dollar, ETF Securities has seen soaring demand for its physically-backed gold ETCs, with total gold holdings backing its ETCs up over 40% since end of last year. ETF Securities' total gold holdings now stand at 8,380,282.792 ounces (US$8.7bn), up 110% over the past two years.
Nicholas Brooks, Head of Research and Investment Strategy at ETF Securities commenting on the rise in the gold price said:
"The US dollar has been in structural decline for some time and the continued rapid rise in US government debt and extremely loose monetary policy has clearly raised a red flag for both sovereign and private holders of US dollars. After many years of being net sellers of gold, recently central banks have turned net buyers. Private investors - both large institutions and individual investors - have also been turning to gold to hedge against possible structural dollar weakness and possible government temptation to turn to inflation as a method of reducing the real value of rapidly rising government debt. The surge in demand for gold does not appear to be short term in nature as we have been seeing very rapid growth of investor holdings of gold through our ETCs for over a year now. Combined flows into ETFS Physical Gold and Gold Bullion Securities have increased by 2,304,888 ounces since September of last year, a 41% rise. This trend has accelerated recently, with gold holdings rising by 5% over just the past six weeks, highlighting growing sovereign and private investor concerns about the sustainability of US policies."
