Global gold futures trading turnover increases 80% in ?08

Futures and options trading of gold on the global exchanges have increased by 80% in 2008 to a record $5.1 trillion and trading of silver increased by 60% to a record $1.2 trillion.

The bulk of trading in gold and silver takes place on the over-the-counter (OTC) market, predominantly in London. Exchange-traded transactions have steadily grown in recent years with Commex in New York, Tocom in Tokyo and more recently MCX in India generating the bulk of activity.

Total turnover of gold including OTC and exchange trading has increased by 58% to a record $20.2 trillion in 2008 from 12.8 trillion in 2007. Silver trading also increased 39% during the year to a record $2.6 trillion from 1.8 trillion in 2007. The growth in turnover was partly due to an increase in prices of precious metals during the year with gold posting an all time high in March of $1,011 per ounce, according to London-based IFSL’s Bullion Markets 2009 report.

International Financial Services, London (IFSL) is a private sector organisation, with nearly 40 years experience of promoting the UK-based financial services industry throughout the world.

Gold and silver trading has posted record activity since the start of the credit crisis. The traditional “safe-haven” appeal of precious metals has attracted many investors to this asset class. Exchange traded gold and silver funds have been the strongest source of growth in demand since their introduction in 2003, report said.

The OTC market accounted for nearly three-quarters of gold trading and 56% of silver trading. Most of this activity was transacted through the LBMA (London Bullion Market Association). Daily reported net trading in gold on the LBMA averaged $20 billion in the first 11 months of 2008, up 45% on the same period last year. Daily trading in silver on the LBMA increased 32% to $2 billion.

Glittering performance

• Total turnover of gold up by 58% to $20.2 trillion

• OTC mkt accounted for three-quarters of gold trading

• Silver trading up 39% to record $2.6 trillion

• Silver futures trading increased by 60%