Gold investors are turning to the verified carbon market and the world's fast-growing commodity in their droves, according to the boss of the industry's leading company.
...And Charles Stephenson, managing director of Advanced Global Trading (AGT), which is headquartered in Dubai, claims he has witnessed floods of investors in the first quarter of 2012 who have pulled positions out of gold in order to increase the number of Verified Emissions Reduction (VER) Carbon Credits in their portfolio.
He says: "We've seen an increasing number of clients opening accounts with AGT selling increasingly shaky gold positions to buy into the verified carbon market, largely because all investors who have traded with us have made a profit - some as high as 38 per cent within 18 months. News of these returns has spread through referrals from clients to friends, family, colleagues and we now generate a large number of new accounts through our existing clients on a weekly basis."
Gold has retreated significantly from last year's record highs and there is uncertainty as to where the market will go next, where Carbon Credits are driven by market supply and demand differentials and are uncorrelated to other financial markets. Traditionally seen as safe, gold has fallen victim to a wave of sell-offs across risk assets, as the political turmoil in Greece threatens insolvency and an exit from the Euro.
Mr Stephenson adds: "We have numerous clients who have reduced or sold their gold positions to increase their carbon position in large quantities, given the average opening balance across our clients is $36,000 with an average balance overall of around $150,000 and a significant number of our clients trade up to $5m."
prices in the EU's emissions trading scheme (EU ETS) have fallen over 60 per cent in the past 12 months, hitting hit record lows of €6 a tonne, which undermines the case for investment in low carbon technologies.