Gold set to maintain its glitter

While the COVID-19 pandemic dampened consumer demand for gold in 2020, leading to a 14 per cent decline compared to 2019, Randy Smallwood, chair of the World Gold Council (WGC), is cautiously optimistic that investor demand for the precious metal will remain strong in 2021.

Mr. Smallwood, who is also president and CEO of Vancouver-based Wheaton Precious Metals, says there has probably never been a more important time to invest in gold as a strong, consistent store of value relative to fiat currencies.

“All the factors point to support for a stronger gold market in 2021,” he says. “The biggest factor is the amount of economic stimulus that’s going to be required from governments throughout the world. In the last financial crisis, support was measured in billions, this financial crisis is now being measured in trillions. That shouldn’t be lost on people.”

The WGC’s latest Gold Demand Trends report shows that demand for gold in 2020 dropped to 3,759 tonnes, caused mainly by a 34 per cent decline in gold jewellery demand compared to 2019 as consumer spending shrank.

However, investment demand was up 40 per cent over 2019 with most of the growth in the form of gold-backed exchange-traded funds (ETFs) aided by gold bar and coin demand growth in the second half of the year.

Inflows into global gold ETFs reached an annual record of 877.1 tonnes (US$47.9-billion), but an 11-month consecutive run of positive inflows that began in December 2019 ended in November 2020 when a recovery in sentiment and a drop in the price of gold resulted in 130 tonnes of outflows in the fourth quarter, according to the WGC report.

For more information, visit gold.org.

Advertising feature produced by Randall Anthony Communications with Prospectors & Developers Association of Canada. The Globe’s editorial department was not involved.