Gold demand trends Q1: Jill Leyland – economic adviser, World Gold Council
‘Tonnage demand has fallen, but in value terms the demand has shot up.’
Interviewer: Chris Buchanan
Posted: Wednesday , 28 May 2008
mineweb.com
MONEYWEB: Dollar demand for gold rose 20% in the first quarter of the year. That was due to a gold price reaching record highs. Tonnage demand for the metal down by 16%. We're joined now by Jill Leyland, the economic adviser to the World Gold Council. Jill, tough times ahead for gold, with in particular jewellery sales at the mercy of a consumer under pressure worldwide.
JILL LEYLAND: Worldwide under pressure is not quite right, Chris. As you said, tonnage demand has fallen, but in value terms the demand has shot up. Gold's main markets are India, China, Middle East, Turkey and the US. Now, in the US obviously the consumer is under pressure, but in all the other markets the consumer is still doing very well.
MONEYWEB: What about ETFs - demand up 100%, now become a $2.2bn asset class.
JILL LEYLAND: Absolutely, yes. It's been a very successful asset class, and it's brought new investors to the gold market and it's opened up gold investment to investors who would have found it difficult to access before, either for legal or regulatory reasons, or because their mandate didn't permit it, or simply because they did not want the hassle of recording physical barter in coins.
MONEYWEB: Jill, a disconnect has been raising its head with the increasing commodity prices and retreating share prices for the miners. Why is this disconnect happening?
JILL LEYLAND: I'm probably not the best person to ask about share prices, because that's not a subject which we follow too closely. We're concerned really with marketing gold. Of course, gold demand in dollar terms has been growing very strongly. During the first quarter of this year it was double what it was four years ago.
MONEYWEB: The WGC's outlook on the gold price - is that $1200 to $1400 level attainable in a volatile market?
JILL LEYLAND: I'm sorry, I'm not allowed for legal reasons to make a specific forecast of the price, but what we can say is that supply of gold remains constrained because mine [indistinct] has been, if anything, slightly falling year by year, and nobody sees a radical change there, whereas we believe jewellery demand will remain buoyant because most of gold's major markets are doing very well economically. And finally of course, there's been a surge of interest by investors in gold over the last few years, not just because of the recent financial crises - it's been much more long term than that, partly for economic and political reasons and partly because, as you said, the ETFs have enabled more investors to access the market.
MONEYWEB: Jill Leyland is the economic adviser to the World Gold Council. Gold a big export for South Africa. And also we've seen, Steven, that the miners have come under pressure in this last GDP figure because of electricity constraints on their output. And it looks like it's going to continue.
STEVEN GREENSTEIN: Certainly. I think the cost base of the miners when you're mining gold so deep, especially in this part of the world, is significant. In the gold market, you know, I'm not a gold bug myself, but certainly the speculators are attracted, so you can certainly expect volatile and interesting times.
MONEYWEB: That's it for SAfm Market Update with Moneyweb. |
