Gold bars.
Photo by: World Gold Council
JOHANNESBURG (miningweekly.com) – Central banks and supranational organisations, such as the International Monetary Fund and the Bank of International Settlements, currently hold nearly 34 000 t of gold as reserve assets, the World Gold Council reported on Thursday.
The council puts the primary reason for recent gold buying down to heightened economic and political risks, low negative interest rates and the rebalancing of allocations.
It states in a release to Mining Weekly that official holdings represent 17% of total above-ground stocks of gold, an asset that universally ticks the investment boxes of all the world’s State-controlled central banks.
The council calculates that in dollars, gold has provided an average yearly 10% rate of return since 1971, owing in part to its liquid and value enhancing market that has been attracting significant exchange-traded fund (ETF) opportunities for the private sector since 2003.
The council notes that gold-backed ETFs – which in 2017 held 2 368 t – have transformed the gold investment market by making it easier and cheaper for many to invest in gold.
Another active area is recycling, a market in which used gold is sold for cash.
The council calculates that recycling has accounted for about 30% of total supply over the last 20 years, with jewellery making up 90% of recycled gold and industry providing the rest.
Over the last two decades, China has become the world’s leading gold market and once high-flying South Africa has slumped to below the tenth position as a gold producer.
Currently, China plays the key market role as the world’s largest gold producer and consumer.
“But to many, the ancient eastern country’s gold market remains a mystery,” the council states in the release, which notes that it averages 10 to 20 years for a mine to begin operating.