Gold Rush: Why Gold Continues to Attract Kenyan Investors 

This was associated with a time when thousands of miners sought to seek gains fast upon discovery of new mines. 

The interest would then spread across continents through trade merchants as people sought early buy-ins. 

This was rife in the 18 th Century, led by California in the United States in 1848.

Two centuries later, with little to no new gold mines, the current generation has the capital markets to distribute that wealth. It is no longer a preserve of the rich, with the introduction of Exchange Traded Funds (ETFs). 

ETFs are funds whose performance replicates the spot market, but which allow investors to gain value in a pool of stocks, debt or commodities at more affordable rates.

This understanding then underpins the importance of tracking global performance of the commodity itself, in this case, Gold, which is the only ETF so far in Kenya, sponsored by ABSA and launched in March 2017 at the Nairobi Securities Exchange (NSE).

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. 

Gold prices are currently steadily rising as well with a multi-year high of USD1,841.90 per ounce recorded on July 21, 2020 globally.

The Gold ETF in Kenya has also been rising with a 48.8% increase since launch, and 22.4% increase Year-to-Date. 

A new high for the cross-listed ETF was recorded at Kes.1,860 on July 21, 2020 at the NSE as the graph below indicates.

The demand is expected to continue rising as uncertainty continues around Covid-19 and investors seek safe, stable asset classes amid the volatile financial markets.

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As NSE, 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 Kshs. 66 Million, an 8.15% contribution to overall day’s turnover of Kes.804 Million- the highest since its listing.

It is encouraging to see positive market trends despite the unfortunate circumstances we all find ourselves in. 

This is the highest activity seen on the ETF based on the turnover recorded since its listing at the NSE. Investing in ETFs is affordable and easier for first time, retail and institutional investors to access a wider range of investment options previously only available to select investors.

The NSE continues to encourage investors to take advantage of this buyers’ market.

To reap the benefits of this surge, investors are only required to purchase a minimum of one hundred units. Albert Einstein said that ‘In the middle of difficulty lies opportunity’. 

Therefore, as we exercise caution in these challenging times due to Covid-19, let us also not be blind to the opportunities that come in amidst the black swan event facing the globe currently.

Source: Nairobi Securities Exchange.