A new research paper sheds fresh light on the meteoric rise of the gold price over the last decade. Gold has risen more than 500% in the last ten years. Gold bulls often say this is because of rising inflation and falling confidence in the fiat money system. Gold bears, however, argue that the real reason is the creation of exchange-traded gold funds, which encouraged a wave of speculative investors in the Western world.
But according to a study by Amit Bhartia and Matt Seto of American investment firm GMO, the majority of physical gold purchases have not come from speculators in exchange-traded funds (ETFs). ETFs only account for a tiny fraction (around 7.5%) of the near-30,000 tons of gold purchased between 2000 and 2010. The demand didn't come from developed market investors or central banks either in fact, central banks have been net sellers.
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