2002. 2 it remains to be seen whether the increased supply will be sufficient to bring prices down significantly. the depletion of easy - to - mine resources has contributed to a significant rise in extraction costs. other factors might also push in the same direction : for instance, it is possible that the internalisation of external mining costs, previously born by society as a whole ( i. e. through the degradation of the natural environment ), might contribute to commodity prices remaining at elevated levels. with regard to gold, on the other hand, i am doubtful that the main source of uncertainty is related to surprises in future mining supply or fabrication demand. as i mentioned before, absent new vast discoveries, investment demand will arguably continue to dominate future gold prices. third argument : today's commodity investment boom is structural and will be long - lasting let's turn our focus to investment demand. in recent years, institutional and private investors appear to have rediscovered commodities as an asset class. according to some market estimates, investment in commodities has surged tenfold since 2003 and amounted to usd 120bn in may 2006. many market analysts see this increase as the beginning of a new trend : their argument goes roughly as follows : if all pension funds had only 3 % of their assets invested in commodities, this would represent a total investment of more than usd 500bn. 3 the gold market has also benefited from a surge in investment demand. according to market specialists, net investment exceeded 700 tonnes in 2005. exchange - traded funds ( etfs ) have become particularly popular because they give investors the opportunity to make flexible and liquid investments in gold, even for small volumes. at the end of 2003, gold etf investments accounted for less than 20 tonnes. today, they likely exceed 500 tonnes. does the risk / return payoff of commodities justify this new interest? empirical studies have shown that the inclusion of commodities as an asset class improves the efficient frontier of a portfolio. nonetheless, we all know that returns and correlations can change. with respect to correlations, there is arguably no compelling reason why low correlations between commodities and bonds or equities should change significantly going forward. the case for diversification with regard to investing in commodities may therefore well remain intact. with regard to returns, however, things appear more complicated, particularly if we base our analysis on the return of commodity futures indices. in the past, most commodity markets have been in backwardation : futures prices were lower than the spot price. this was beneficial to

growth threshold of 50 points. growth in the us, especially, is very robust and, on this side of the atlantic, the uk has exceeded expectations ( blue ring ). particularly important for switzerland were the surprisingly favourable economic indicators in europe this summer. in the second quarter of 2013, the euro area reported positive growth for the first time in six quarters. there are encouraging signs from the peripheral economies, especially. since mid - year, for instance, these countries have again been recording surpluses on their current accounts. nevertheless, these signs must be put into perspective. the improvement in the peripheral economies is beginning from a very low base level and the unemployment figures are oppressive. the banking system is very fragmented and unhealthy bank balance sheets give rise to declining levels of lending. this hampers the monetary policy transmission mechanism. in addition, there are sustained high levels of public and private debt. all of these factors are likely to hold back economic developments in the peripheral economies for some time yet. moreover, the euro area remains extremely heterogeneous. chart 8 shows the level of real gross domestic product ( gdp ) in the euro area and its largest members, as well as for switzerland. in italy and spain, gdp is just under 10 % below the maximum pre - crisis level, while in germany it has been above the precrisis figure since 2011. given the subdued developments in the euro area, it is surprising how well the swiss economy has performed. in switzerland, gdp is already almost 5 % above the pre - crisis level. however, it should be borne in mind that, over the past few years, economic growth has been extensively supported by the increase in the population. in terms of gdp per capita, switzerland has not yet quite returned to the pre - crisis figure, unlike germany, for instance, where per - capita gdp is now almost 3 % above the pre - crisis level. the growth driver in switzerland has thus been the domestic economy, while the contribution provided by foreign trade has been relatively modest. there are substantial differences from one industry to another. in general, the services industries are growing and business remains very lively in construction. in manufacturing, by contrast, which is traditionally cyclical and export - oriented, developments have been less advantageous, and equipment investment has also suffered in switzerland. the output gap remains negative, so that there is no pressure on wages and prices in the foreseeable future. the outlook is favourable, since we expect that the gradual recovery of