“Not sure if you saw this – recent quarterly commentary and analysis from the World Gold Council provided a summary breakdown of gold demand which I thought was highly instructive and strongly suggests that investment demand is nowhere near the peak reached in January 1980.

“Investment Demand as a percentage of overall gold demand – 1980 (48%), 2000 (5%), 2010 (37%).”

Eoin Treacy's view Thank you for these interesting statistics. 1980 represented the end of a secular bull market in gold price which many characterised by “gold fever”. The speed of the advance and prevailing mood of the crowd at the time supported that view. The year 2000 marked a 20-year anniversary of bear market in gold prices and sentiment had turned from ebullient to derogatory.

After 10-years of positive annual returns, investment demand for gold has again become a sizeable portion of the market. This is a positive as prices rise because investors tend to increase their positions in line with the trend. However as David has noted in the past, it can be a double edged sword because investors and speculators can also take fright for any number of reasons which has a negative effect on prices.