World Gold Council reinventing itself

SINGAPORE, Oct. 22 (UPI) -- The World Gold Council, an association of world's leading producers, is reinventing itself to make the organization a more effective instrument to promote gold, said Chris Thompson, chairman of the WGC.

"The WGC is going through a radical transformation process. We are in the process of restructuring, reducing the number of our offices to tighten up our operations and make the organization more accountable then in the past," Thompson told a conference Tuesday.

Earlier this month, the new WGC Chief Executive James Burton, former CEO of the California Public Employees Retirement System, Calpers, took over with a new mandate of "reinvigorating" the council. Burton is expected to present by year-end a detailed and cost-effective overall strategy for the promotion of gold.

Thompson said the council wants to revitalize investment interest in gold, "as there are opportunities in gold as a pure investment." But he also said that the council would continue to promote jewelry consumption, which will still be the biggest part of its budget.

The WGC was founded in 1987 for the purpose of stimulating the demand for gold by consumers as well as investors.

"We have a far-reaching vision, which if successful, will restore gold to its historical predominance," Thompson said.

Speaking at the conference, gold investors were certainly bullish about the prospect of the yellow metal, especially in the current theme of risk aversion for the market. Gold has outperformed the Dow Jones by 70 percent since early 2001 and by a factor of 20 since 1980.

David Crichton-Watt, managing director of The Phoenix Gold Fund, said "I don't think it's going to be rumors of war that drive investors to gold but the fear for their depreciating assets."

Crichton-Watt pointed to the very high level of corporate debt in the United States and the increasing risk U.S. commercial bonds carry. "At the end of the day, the only asset class that is not a liability is gold," he noted.

Naomi Fink from the UBS Warburg foreign exchange strategy added, "Gold remains a classic risk-haven and currently the price of gold remains very much driven by risk aversion."

Fink saw some near-term price pressure on gold if there is a sustain rally in equities, as the two asset prices are inversely correlated. However, she also pointed that the U.S. dollar remains volatile and could see further pressure, which will be a positive for gold the medium-term.