The World Gold Council says the first six months of 2016 were a 'perfect storm' in which economic, political and social uncertainty around the world led to record first-half investment in gold and Western demand drove the price increase. The World Gold Council’s Q2-2016 analysis issued in August shows demand for gold up by 15%, compared to Q2-2015. Demand from the traditional sectors – jewellery, technology, central bank purchases and dentistry – were down substantially, but more than offset by gold demand for investment purposes, and particularly by investment in ETFs. Recycling of gold was also up, no doubt driven by higher prices. In India, where gold as jewellery is traditionally the largest sector, demand dropped in Q2 due to the price, strikes by Indian jewellers and government regulation. The higher price also pushed down demand for gold jewellery in China. For the first time ever, worldwide demand for investment purposes exceeded the demand for jewellery. Worldwide demand for investment purposes has been extraordinary and appears to be driving 2016 price gains. Of the total Q2-2016 demand of 448 tonnes, 237 tonnes was for ETFs. H1-2016 investment gold demand exceeded H1-2009 demand following the 2008 world financial crisis. In 2013, the Chinese gold ETF market opened. While demand for the gold ETFs began very slowly, there has also been a major increase in gold ETF demand within China. During Q2 gold price increased by 7% and for H1 2016 the price increased by 25%. So far in 2016, financial uncertainty and purchases by hedge funds and other investors, especially ETFs, have been driving the price of gold. The year began with a stellar 17% Q1 price gain, which climbed further in the second quarter. By the end of H1, it had gained 25%, its strongest H1 performance in more than 35 years. While gold has achieved historically high price gains in H1, the greatest gains year-to-date in September have been realized by equity investors in senior gold miners such as Newmont and Barrick, whose shares have gained 113% and 126%, respectively. In the six months since March, there have been four short-term gold price pullbacks, usually driven by pronouncements of impending US Fed interest rate hikes or negative statistics relating to housing or jobs, especially in the US. Underpinning the gold price and driving the price higher have been financial concerns about weak countries in the European Union, the UK’s BREXIT, negative interest rates, quantitative easing and poor growth projections for many countries, as well as the results of the US election, and most recently, North Korea’s A-bomb detonation. The price trend has continued up. The financial and political concerns underpinning gold price gains this year do not appear to be solvable in the short term. It is reasonable to assume that investors will bet against radically improved worldwide economic performance in the medium term, and that economic and political issues will maintain upward pressure on the price of gold. A return of traditional Indian and Chinese jewellery purchasers to the market would also enhance the price. Taking advantage of frequent short-term price pullbacks may be an opportunity for shrewd investors to enter this ongoing gold bull market. (Written by Peter R. Jones, Executive Vice President, Century Global Commodities Corporation )