Gold remains private investors' commodity investment of choice

For at least 2500 years, Gold has been considered a stable means of payment and a safe investment, which made it all the more shocking when in mid-2015, some market experts inspired media interest when they expressed their belief that gold may have lost its function as a safe haven, thus losing its raison d'être. When the private bank Sal. Oppenheim announced their plans to remove gold from their customer portfolios since it was 'a volatile and meaningless investment devoid of intrinsic value', investors' irritation seemed perfect. Opposing comments, such as gold being 'the ultimate means of payment with a 'track record' of some thousand years' by Thorsten Polleit, chief economist at Degussa gold trading, did not always find the deserved media attention. Nevertheless, the interest of European private investors in gold has barely decreased; the precious metal continues to be the unchallenged number one when it comes to commodity investments. There are good reasons for this: while from the beginning of 2014 to mid-2015 the gold price in US dollar moved sideways before decreasing in the third quarter of 2015, the price gold in other currencies performed much more bullish, especially in euro: in 2014, the gold price in euro increased by 12 per cent, and by 8 per cent until mid-2015. Even during the weak third quarter of 2015, gold performed relatively well, considering that while the gold price had lost nearly 3 per cent since April, the German benchmark index DAX decreased by some 20 per cent during the same period. Lately, there is increased evidence of a an upwards trend for commodities in general, and gold in particular: the Bloomberg Commodity Index rose in late October 2015 by 4 per cent, primarily due to precious metals – especially gold – while the interest in gold futures has risen for the fifth time in a row until the end of October 2015, according to the Commitments of Traders Report of the U.S. Commodity Futures Trading Commission – strong evidence of the recovering interest in gold on a broad level.

Arnulf Hinkel
Financial journalist