The Investment Case for Gold and Ways to Access the Market
Juan Carlos Artigas
World Gold Council
Wednesday, March 17, 2010
Omni Los Angeles at California Plaza
Sponsored by CFA Society of Los Angeles & the World Gold Council
THIS PROGRAM SHOULD BE OF INTEREST TO MEMBERS WHO WANT TO LEARN ABOUT CONTEMPORARY ISSUES IN THE DECISION MAKING FOR INVESTING IN GOLD.
For thousands of years, gold has been valued as a global currency, a commodity, an investment and simply an object of beauty. However, as financial markets developed rapidly during the 1980s and 1990s, gold receded into the background and many investors lost touch with this asset of last resort. Recent years have seen a striking increase in investor interest in gold. While a sustained price rally over the past 8 and half years, underpinned by fundamental factors of demand and supply, is clearly a factor in this resurgence, there are many reasons why people and institutions around the world are once again investing in gold. This presentation provides you with the background to these reasons and describes the defining characteristics of the gold market from an investor's point of view.
In this program*, we will cover some of the main characteristics that make gold an attractive strategic investment. In particular, its role as portfolio diversifier, safe haven, inflation hedge, and dollar hedge. Moreover, we will discuss the factors that drive demand and supply as these, ultimately, define the price of gold. On the demand side, we will discuss drivers of jewelry (68% of average annual demand), investment (20% of average of annual demand), and industrial demand (the remaining 12%). On the supply side we will cover trends and drivers in mining supply, exploration spending, recycled gold, and central bank sales. Finally, we will discuss various ways to access the gold market.
Juan Carlos Artigas is an Investment Research Manager for the World Gold Council in New York, where he is in charge of writing strategic and tactical notes that put gold in the context of global financial markets. He regularly presents the strategic case for investing in gold to institutional and private investors.
The World Gold Council’s mission is to stimulate and sustain the demand for gold and to create enduring value for its stakeholders. The organization represents the world’s leading gold mining companies, who produce more than 60% of the world’s annual corporate gold production in a responsible manner and whose Chairmen and CEOs form the Board of the World Gold Council (WGC).
As the gold industry’s key market development body, WGC works with multiple partners to create structural shifts in demand and to promote the use of gold in all its forms; as an investment by opening new market channels and making gold’s wealth preservation qualities better understood; in jewelry through the development of the premium market and the protection of the mass market; in industry through the development of the electronics market and the support of emerging technologies and in government affairs through engagement in macro-economic policy issues, lowering regulatory barriers to gold ownership and the promotion of gold as a reserve asset.
The WGC is a commercially-driven organization and is focused on creating a new prominence for gold. It has its headquarters in London and operations in the key gold demand centers of India, China, the Middle East and United States. The WGC is the leading source of independent research and knowledge on the international gold market and on gold’s role in meeting the social and economic demands of society.
* The program is subject to revisions according to market developments.