Gold Demand: Investment is gearing up.

The latest quarterly “Gold Demand Trends”, issued by the World Gold Council, reports that world gold jewellery demand in the fourth quarter of 2008 was down by 6% in tonnage terms, under the weight of a weak economic environment. On the contrary investment demand for bars and coins jumped by a factor of almost four.

The data were well analysed by David Wilson of Societe Generale. According to Wilson, <Combined jewellery and investment bar demand stood at 843.1 tonnes in the fourth quarter, and as a result of the massive increase in the purchase of coins and bars, which rose from 61.4 tonnes to 304.2 tonnes, the two sectors between them were up more than 200t against the fourth quarter of 2007.>

<The largest increase in investment bar demand came from Japan...Thereafter the biggest swings came in Europe, with Switzerland and Germany both adding over 30 tonnes>.

Demand is also also strong in the Exchange Traded Funds (ETF) arena: <In 2009 to date, as investment has strengthened, the tonnage of gold in these funds has increased by more than 280 tonnes>.