Investment Strategies

Wealthy Malaysians Pile Into Gold To Spread Risks [DO NOT EDIT]

Vanessa Doctor, Asian Editor, 23 July 2009

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Malaysian high net worth investors are looking at gold to spread risks, which has seen a 30 per cent surge in year-on-year global demand, according to a study by the World Gold Council, an organisation representing the gold industry.

Members of the Malaysian high net worth sector are looking into gold to diversify their investment portfolios. Gold, the choice alternative of many since the onset of the financial crisis, has seen a 30 per cent surge in year-on-year global demand, according to the WGC’s Q109 Gold Demand Trends study.

In an article in The Star, United Overseas Bank Bhd global markets and investment managing director Michael Beh Soo Heng said that those who had invested in gold six months ago would have seen the commodity's value rise by 16 per cent now, while those who might have done so two years ago would be enjoying a 43 per cent gain.

In a separate investment trends report, the WGC said: “Traditionally an inflation hedge, gold was sought by investors who had growing concerns about central bank’s exit strategies and the implications of a reversal in quantitative easing measures.”

During the second quarter, gold prices slipped, ending the quarter at $934.50 per ounce, on the London PM fix, compared with $916.50/oz at the end of the first quarter. The gold price rose as high as $981.75 on 1 June coinciding with the quarterly low in the dollar.

“Fears of future inflation drove investor interest as seen by the continued demand for the ETFs during the quarter. Traditionally, gold has been an effective inflation hedge, and as our recent study shows, also performs well during low to medium inflationary environments,” said Natalie Dempster, head of investment, North America, World Gold Council.

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