Investors back gold because they are afraid of everything else

The value of the safe haven asset is up by almost 30% in 2016

Investors back gold because they are afraid of everything else

Petr David Josek / AP

The World Gold Council says that a "perfect storm" has led to a spike in demand for gold.

Investors have migrated from government bonds to the precious metal as central banks have flooded bond markets a part of their attempts to stimulate economic activity.

Gold has outperformed other assets as its price has surged by 27% in 2016.

Earlier in this week Japan's 10-year-bond auction drew the weakest demand for these properties in five months. It came after Japan announced a new stimulation package.

The World Gold Council, which sponsors the SPDR Gold Trust discussed investors' move towards gold:

"Many analysts are interpreting weak Japanese Government Bond demand as a signal that investors are starting to lose confidence in the effectiveness of unconventional monetary policies, following increasingly desperate bids by the world's central banks to reflate the global economy.

"In this environment, we believe investors are using gold to hedge portfolio risk as they add more stocks," it said.