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Gold investment trends for 2008
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Exchange-Traded Funds
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Gold has long been considered one of the most precious metals and in today’s financial markets investors are increasingly seeking exposure to it.
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Exchange Traded Gold (“ETG”) is the franchise that developed Lyxor Gold Bullion Securities (“Lyxor GBS”), which is listed on the London Stock Exchange, Deutsche Börse, Borsa Italiana and Euronext Paris. Each security allows investors to gain exposure to the gold price as it represents approximately one-tenth of a fine troy ounce of gold bullion.
Lyxor GBS is Europe’s first, largest, most successful and most liquid exchange traded commodity and has proven to be a popular solution for a wide array of financial advisors and investors. With over US$3.174 billion dollars of gold in trust in January 2008, the Lyxor GBS Europe’s top exchange traded commodity (“ETC”).
In this article ETG takes a look at the behaviour of the gold price so far this year.
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January 2008 started with a bang as the gold price fi xed at a record US$858.85/oz (on the London PM fix) on the first trading day of the New Year, almost US$9/oz ahead of the previous record set in January 1980. The fi rst month of the year saw a significant exaggeration on trends seen in recent years. The average gold price increased on the same period in 2007 by the largest percentage in seven years, increasing 41% to US$889.60/oz. The average number of daily trades for Lyxor GBS on the London Stock Exchange was 183 in the fi rst month of 2008, a noticeable increase on the 73 in January 2007, with a value of US$23million.
Despite the drop in mid-January from US$913/oz to US$875/oz, prices continued to increase till of the month, when the gold price reached a high of $923.25/oz on 31st January, fuelled by the continuing fears over the US economy and falling dollar. The price continued to be pushed by investors driven towards the gold market to hedge against the dollar weakness, the rising inflationary pressures and increasing levels of geopolitical risk. The weak dollar in January 2008, causing prices generally to rise, was noticeably absent when the gold price remained in the US$600 - $650/oz mark in January 2007. Predominantly on an upward trend in 2008, the gold price fi nished the fi rst month 42% higher than the US$650.50/oz on the 31st January 2007.
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As often evident in a period of uncertainty in the financial markets, gold price volatility was apparent throughout the first month in 2008. While this may seem to dampen the well-known trait of gold as a safe haven for investors, gold volatility levels were not as high when compared against other commodities, continuing to assert gold’s position as one of the least volatile commodities. The geographical diversity of production and reserves also means that gold is less vulnerable to country or region specifi c economic or political shocks than other commodities, for example, the effect of instability in the Middle East on the oil price, as seen in recent months.
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Key highlights
-The gold price fixed at a record US$858.85/oz (on the London PM fix) on the first trading day of the New Year
-Average gold price increased by 41% on January 2007
-Tonnes of gold in trust in the Lyxor GBS product was up 22% year on year
-Value of gold in trust in the Lyxor GBS product was up 72.5% year on year.
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Lyxor Gold Bullion Securities
| LSE code |
GBSS |
| Issuer |
Gold Bullion Securities Limited |
| Currency* |
GBp |
| Management Fee |
0.40% p.a. |
| Website |
www.lyxorgbs.com |
*a USD quotation is also available |
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Since the launch of Lyxor GBS on the Borsa Italiana, Deutsche Börse and Euronext Paris, asset growth has continued to impress. Lyxor GBS’s gold under management has grown almost 22% to 105.2 tonnes since January 2007, with an increase in value of 72.5% to US$3.1 billion ($3,130,134,835), as both retail and institutional investors look to gain exposure to gold as an effective way to manage portfolio risk and for strategic diversification purposes.
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To find out more on Lyxor Gold Bullion Securities call the Lyxor ETF Team on 0800 707 6956,
visit www.lyxorgbs.com
or write to info@lyxoretf.co.uk
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