Monday, October 31, 2011

Gold Investment Worldwide is Tiny

This is an telling graphic of the distribution of investor global holdings by asset class as a percentage of total. As at December, 2010 there was an estimated US$146 trillion of investments worldwide. Only 1% of this was in gold.

There are a number of conclusions you could make. One is that gold isn't seen as a very worthwhile investment as it doesn't produce an income, therefore, investors steer clear of it. In other words, it's just a fairly useless lump of shiny yellow metal. Looks good on ladies necks and fingers; good for nothing much else.

But as you know, I tend to differ. Read past blogs here about the wealth preservation value of gold and you will see that we may have a wee ways to go before gold is anywhere near catching the eye of the full investment community. If Joe Sixpack from Main Street enters the ring, then look out for the third manic stage of the gold bull market to begin. It is possible. After all, in the late 1970s, gold was over 20% of the graph as shown above.

It is still underowned. When people get to see that the games being played by our leaders and bankers are just that, games, then maybe the rush to preserve value will look like a stampede.

Gold in New Zealand dollars: $2125.32 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $43.02 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)

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