The Hindu Business Line : Will investors favour gold securities?

WHETHER there is a broad-based genuine investor interest in exchange traded gold securities is a question engaging the attention of players and observers of the bullion market. This is because an exchange-traded gold bullion product that was launched with so much expectation failed to sustain investor interest after an impressive start.

The Gold Bullion Securities (GBS) exchange traded gold bullion product on the London Stock Exchange launched on December 9, 2003 was formally delisted on April 30 this year as the interest in the product waned.

Currently, as there is only one listed UK exchange traded gold product, trading activity in the product should, hopefully, begin to genuinely reflect investor interest in gold, it is believed.

"It is hoped that the new listing of the product will allow a broader group of institutional investors (from unit trusts) to invest in the product, and the next few weeks will finally reveal whether there genuinely is broader, unfulfilled, investor interest in gold or whether this is a false hope," said Mr Kamal Naqvi, precious metals analyst with Barclays Capital.

Given the recent trend reversal in prices, the market will need to see strong investor interest if gold is to avoid a further fall, the expert opined.

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