Mumbai: The global gold bar and coin market has boomed in the past 10 years. In 2006 global demand was 430t; by 2015 it had more than doubled to 1,051t. In monetary terms the growth is even more dramatic, surging from just under US$10bn to almost US$40bn, says the latest study report published by the World Gold Council (WGC).
Several factors have underpinned this growth. The first is the opening of new markets: in China, for example, it was illegal for individuals to own gold bullion before 2004. But more generally, successive financial crises have tested investors’ faith in governments, banks, monetary policies and fiat currencies around the world.
In 2016 the WGC concluded a comprehensive research programme investigating gold buying behaviour across the major markets – China, India*, Germany and the US. The objective was to better understand what motivates people to buy gold, what their purchase journey looks like, and what the triggers and barriers are when it comes to buying gold. And, importantly, to assess the potential for growth in global retail gold investment.
The most encouraging finding of the research is that the global retail investment market is well positioned for growth, with latent demand for gold in China, India, Germany and the US.
Converting this latent demand will not be easy. Retailers will need to carefully consider investors’ attitudes to risk, investment needs and how people gather information before making an investment decision.
For example, the investment markets in the mature economies of the US and Germany are characterised by more conservative investor behaviour. In China and India – countries which experience faster rates of growth – a more speculative approach prevails.
How investors gather information differs across markets, too. Social media is very important in both China and India. In the US, financial advisors and financial websites are key. And in Germany banks play an important role.
This report is a summary of just some of the key finding from our research. The WGC hopes it would help mints, fabricators, banks and other retailers think about how to convert some of this global latent demand into sales.
