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Gold investments expected to continue growing this quarter

Investments in gold are set to increase this quarter with many people viewing gold as a more stable investment choice than other sectors, say experts.

There was a 38% increase in gold investment demand in 2008 compared with 2007’s Q4. Saudi Arabia saw a massive 300% jump in investment demand, Egypt 67% and other Gulf countries registered a 2% increase. “We do expect an increase in demand in the gold investment sector. People in the Gulf countries and the Middle East generally, are realizing the investment assets.

The stock markets are collapsing, real estate is on hold and no one knows where it’s heading, whereas gold is not company-owned and there are many international factors affecting it,” said Lama Al Saheb, head of marketing and public relations for the World Gold Council’s Middle East office.

UAE gold jewelery sales increased by 17% in 2008 to exceed AED 13.7 billion ($3.7 billion) compared with AED 11.4 billion ($3.1 billion) in 2007. Total gold demand in the Middle East was up one% in the Q4 of 2008 compared with 2007.

Around 90% of total consumer off take in the region is in the form of jewelery. Weakness in this sector which was down 7% largely offset strong growth of 139% in the net retail investment. Total off take in 2008 was down 2% in the region.

Both the UAE and Saudi Arabia were down 4%, other Gulf countries were down 13% whereas Egypt was up 12%. Saudi Arabia also saw a notable surge in investor demand, increasing from 1.7 tons in the Q4 of 2007 to 6.8 tons in 2008.

Internationally, demand for bars and coins rose 87% through 2008. Jewelery demand was up 11% to $60 billion for the whole year but down 11% in tonnage to 2,138 tons. While many investors are too nervous to invest in areas such as real estate, gold is a more dependable investment.

“These figures confirm that investors around the world recognize the benefits of holding gold during this time of unprecedented global financial crisis, recession and the spectra of future inflation.

Gold has again proven its core investment qualities as a store of value, safe haven and portfolio diversifier, and this has struck a chord with nervous investors,” said Aram Shishmanian, CEO of the World Gold Council. (Gulf News)