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Source: Reuters -
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With global markets suffering another round of fear-driven selling, many investors are flocking to the supposed safe haven of gold.
It is now hovering just under $US1,000 an ounce, and Michael O'Kane from New Zealand Mint says the demand for gold for investment alone is growing 200% year-on-year.
Over the past year, gold has fluctuated, dipping to a low of 708.86 and is now at 1,009.70.
While O'Kane acknowledges that gold is volatile at the moment, it is faring well compared with other markets.
"The commodities basket as a whole dropped by nearly 50% after Lehman Brothers (the global financial services firm who filed for bankruptcy last year). Gold was the only one that dropped by about 20%, so the strength is still there behind the actual value of it," he says.
The demand for gold differs in its various forms: jewellery demand is down 6% year-on-year, and industrial demand is down 10%, but O'Kane says demand is high from people wanting to own physical gold as an investment.
"You're not having to spend hundreds of thousands of dollars to buy it. You don't need to own a lot of gold. What we generally look at is anywhere from 5-10% of a portfolio in a physical metal," he says.
It seems the only issue is the refining and manufacturing process which is beginning to backlog due to increased investment demand.
But, while some may say that it is too late to invest in gold as prices continue to climb, O'Kane says the long-term prospects are good.
"Gold's been worth something for the last 2,500 years, [the chances] of not being worth something going forward are very slim."
