When Covid-19 came knocking, most investors were thrown into a panic mode. Some sold their shares as the rushed to find a safe haven to secure their wealth. Some rushed for the US dollar but the wise rushed for the gold.
For centuries, gold has remained one of the most precious currencies in the world. It is the only “currency” that has managed to wade through recessions around the world. It is the only safe haven that assured one of secure wealth.
In March 2017, Absa Bank Kenya sponsored and launched the ETF, that is, the trade in Gold at the Nairobi Securities Exchange (NSE). This remains the only ETF in Kenya, giving investors an opportunity to trade in gold in the form of shares at the NSE.
Recent data from the NSE indicate that the highest ever recorded price of gold was in September 2011 which traded at USD1, 920.30 per ounce at a time when the world was still struggling from post-financial crisis effects.
More recently, Gold has achieved an all-time high in July 2020, primarily as a result of the metal being perceived as a safe-haven asset for investors during a time of shock and uncertainty in financial markets emanating from the Coronavirus pandemic.
Since markets initially reacted in March 2020, there have been multiple fundamental factors supportive to the investment argument for Gold, noting this year’s ETF net purchases totaling 24.8 million ounces or over $1.1 billion to the end of July – an increase of 30 percent.
The Gold ETF in Kenya has also been rising with a 48.8 percent increase since launch, and 22.4% increase Year-to-Date. A new high for the cross-listed ETF was recorded at 1,860 shillings on July 21, 2020, at the NSE.
The demand for gold is expected to continue rising as uncertainty continues around Covid-19 and investors seek safe, stable asset classes amid the volatile financial markets.
“We have noted renewed investor appetite for listed ETFs. For instance, on 31 March 2020 the Absa New Gold ETF recorded an all-time high turnover of 66 million shillings, an 8.15 percent contribution to overall day’s turnover of 804 million shillings- the highest since its listing,” said the NSE in a statement.
General devastation and concern specific to the global economic outlook, given the pandemic’s effects on business and employment, have compelled investors to seek out Gold to preserve their wealth.
As the global economy and growth has declined this year, a […]
