Gold set for another decade of dominance

Gold set for another decade of dominance The “safe haven” metal has been one of the standout asset classes over the last 10 years, but untapped demand and various sovereign debt crises could see it rally further still. By Joshua Ausden, News Editor, FE Trustnet Untapped demand from China, India and retail investors in general will be the principal drivers of the gold price over the next decade, says ETF Securities’ Graham Tuckwell, who has rubbished reports that the precious metal’s strong run has come to an end. Gold has been one of the best-performing asset classes of recent years in spite of a relatively soft period over the last 18 months or so, which has coincided with a strong period for equities. Performance of indices over 10yrs Source: FE Analytics Improving sentiment around risk assets and the unprecedented gains of gold since 2008 have prompted many investors to pull their money out of the precious metal, with some forecasting a significant correction in the near future. However Tuckwell (pictured), chairman of ETF Securities, believes investors cannot afford to write off gold and says he expects stellar returns in the years to come. "Ten years ago, you heard about gold, people talked and got emotional about it, but you couldn’t buy it readily," he said. "It is widely acknowledged that the launch of gold ETPs has had a very significant impact on the gold market and is now a key part of it." "We have witnessed a decade of growth and despite some predicting the end of the gold bull market, I think the next decade has a lot further to go." "Untapped demand from China and other parts of Asia will be one of the biggest factors to drive product development and broaden access." "While the larger investors in these markets can already buy gold ETPs on other exchanges, smaller investors want to buy on their local exchange. Currently, these products are not widely available in these regions and the demand is growing." He also points to a growing demand for gold from other emerging markets such as Russia, Ukraine, Kazakhstan, and Azerbaijan, which have all propped up their reserves in recent months. Tuckwell launched the world’s first physical gold exchange traded product (ETP) in Australia around a decade ago, similar to ETFs now listed on 31 exchanges with combined assets under management (AUM) of around $147bn.