COMMODITIES
Gold council may offer new funds in Europe and India
 
     
JAN 12 :  The World Gold Council, a producer group supported by the world’s biggest mining companies, may start selling gold-backed securities in Italy, Germany, Belgium, the Netherlands, Luxembourg and India.

The securities, also known as exchange-traded funds, will be similar to the one already traded in London, said James Burton, chief executive officer of the London-based council. The group has also backed funds traded in New York, Singapore, Mexico and France. The existing securities, introduced from 2004, represent a total of $11 billion of gold.

Investment demand for gold will remain strong,” Burton said in an interview on Thursday. “Investors like to buy at home if they can. That's why we are planning to expand into continental Europe and the Far East.” Gold for immediate delivery reached a 26-year high of $730.40 an ounce in May, partly as investors bought the metal as a hedge against inflation amid record energy prices. Gold, which has since slumped almost 16% as oil prices retreated, may reach a record $850 an ounce this year, web-based data, news and analysis provider TheBullionDesk.com predicted on Thursday.

Gold exchange-traded funds allow investors to buy or sell gold without taking delivery of the physical gold. The securities are backed by gold held in a vault on behalf of investors. Investor purchases of gold through exchange-traded funds stand at 18 million ounces, according to exchangetraded gold.com. Gold for immediate delivery rose $2.30, or 0.4 percent, to$613.90 an ounce as of 12:01 pm in London.

India is the world’s biggest gold consumer. Italy is the second-biggest buyer of gold for jewelry, after India.

“The fundamentals of the gold market are still looking good,” said Burton, a former CEO of the California Public Employees’ Retirement System who joined the World Gold Council in2002. Mine production is “not expected to grow dramatically until at least 2010,” while demand from fast-growing economies such as India and China will continue to climb, he said.

Burton is “quite bullish” on Vietnam, which joined the World Trade Organization on Jan. 11. The country produced 60 tonne of gold in 2005, compared with as much as 52 tonne the year before, he said.

Vietnam’s WTO membership “drives wealth and trade, and economic activity will pick up,” he said. Jewelry demand dropped 18% in the third quarter of 2006, partly as price volatility drove buyers away, Burton said.

—Bloomberg