JOHANNESBURG (Business Day) --South Africans have the strongest case globally to invest in gold, Exchange Traded Gold, a separate entity to the World Gold Council, said in Johannesburg on Tuesday.
Principal of Exchange Traded Gold, Simon Village, said the reason for the interest among South Africans was because of the traditional restrictions placed on South Africans to diversify offshore.
American Stuart Thomas, also a Principal at Exchange Traded Gold, said the reason Americans were now piling into the product was because gold had become relevant to the American investor for the first time since 1980.
Pension Sector Growth
He said Americans had wanted to hold their gold in an equity account, and they now had that opportunity via exchange traded funds.
Village said a huge opportunity for exchange traded products going forward was in the pensions sector. The fact that only two percent of fund managers had exposure to gold was positive as a two percent and above holding could improve a portfolio's diversification, he said.
There was also clear scope for growth and that gold would provide the ideal portfolio diversifier.
When asked by I-Net Bridge about the key challenges the industry faced, he said: "Removing the barriers to investing in gold."
He said the challenge was to broaden the product base and added that his company was considering opportunities in Canada, Mexico, Asia, Italy and Germany.
Chinese Impact
Byron Woods spoke about the growth of the South African Newgold exchange traded fund in South Africa, backed by the World Council and administered by Absa, and reported that since debuting in November 2004 the product had reached a peak in May and - on the whole - was up an impressive 63.86%.
Owen Rees, Marketing Adviser to Exchange Traded Gold added that a new vault was being constructed at HSBC to house the gold the company is holding in trust.
He said the fact that assets equaled $9.2 billion by June 1 was a tremendous vote of confidence in exchanged traded gold products.
Woods said the run on the oil price had been a factor in pushing gold and more investors were taking an interest.
He mentioned the potential impact of purchases by the Chinese central bank, which currently had minimal gold reserves. He said this would be a huge amount of gold to source.
