After peaking at over $1,900 an ounce in August 2011, gold prices are down around 12%, as of this writing, to about $1,670. Nevertheless, investors' demand for gold bullion ETFs has not dulled.

Global gold exchange traded product holdings have risen to a record level of 78 million ounces, reports, while the largest gold ETF, SPDR Gold Shares (GLD) pulled in $1.3 billion from investors in the past four weeks, increasing its asset base to $67.5 billion.

The current news reinforces a trend that emerged from the latest report from the World Gold Council. Overall gold demand was down 7% in the second quarter of 2012, versus the same quarter of 2011, and 10% lower than in the first quarter of 2012. Yet demand for gold ETFs and similar products in the second quarter of 2012 was flat, year over year.

"Despite a modest decline in overall demand, net demand for ETFs was relatively resilient," said Marcus Grubb, managing director, investment, for the World Gold Council. "Broadly, the numbers show that gold continues to be used for capital preservation purposes, risk management and as a source of liquidity. For many investors, gold ETFs are an efficient and relatively cost effective vehicle to invest in bullion. Given their presence on regulated exchanges around the world, they continue to grow in popularity as more investors choose to include gold in their portfolios as a long-term core holding."

According to Grubb, ETF assets to the half-year point in 2012 were up by 52.4 tons ($2.6 billion), compared with a decrease of 6.7 tons ($350 million) in the first half of 2011. "That was a result of the resiliency of ETF demand and the attractiveness of gold ETFs as an investment vehicle," he said.

The World Gold Council also noted that gold demand in India and China fell in the first half of 2012, from the year-earlier period, but European retail investors' demand for bars and coins increased by 15%, year over year, as "the ongoing sovereign debt crisis in the Eurozone underpinned European investors' enduring conviction in gold's capital preservation properties."

Worldwide, official sector reached a record high, more than double the level of the second quarter of 2011, as the central banks of the Philippines, Russia and Ukraine as well as the National Bank of Kazakhstan added to their holdings.

Donald Jay Korn writes for Financial Planning.