Gold and silver trading at record levels in 2008

Gold and silver trading has posted record activity since the start of the credit crisis according to IFSL’s Bullion Markets 2009 report. The traditional “safe-haven” appeal of precious metals has attracted many investors to this asset class. Gold turnover increased 58% in 2008 to a record $20.2 trillion. Silver trading increased 39% during the year to a record $2.6 trillion (see table below). 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.

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 $2bn. The actual volume of London market turnover is probably three to five times the reported turnover because transactions which are netted out do not appear in the published statistics.

Futures and options trading of gold on exchanges increased more 80% in 2008 to a record $5.1 trillion. Trading of silver increased 60% to a record $1.2 trillion. Exchange traded gold and silver funds have been the strongest source of growth in demand since their introduction in 2003. Comex in New York, MCX in India and Tocom in Tokyo account for most of exchange traded activity.