By Richard Dyson: Five or six years ago, few private investors were very concerned about the
price of gold. Then came the financial crisis. When major banks were
failing, a sense of apocalypse focused investors' minds on the value of
physical assets as never before.
But other factors were at work. The evolution of new investment vehicles and
trading platforms suddenly made it easy for private investors to buy small
parcels of real gold. With "physical gold" exchange-traded funds,
for instance, investors buy shares quoted on the London Stock Exchange,
where each share is backed by solid gold stored in a Docklands bank vault.
You could buy and sell gold as easily as you could blue-chip shares.
As the crisis rumbled on, increasing numbers of private investors used these
ETFs to speculate, or as part of their planned portfolios, so that from
owning about 800 tons of gold in 2007, total ETFs owned almost 3,000 tons by
2012. The gains enjoyed by the investors during that period were terrific,
sucking in yet more money, stimulating further appetite, and so on.
Now the gold price is in reverse and ETF investors are selling their holdings
fast.



