Gold Council Report Spotlights Industry Trends and Forecasts

SEATTLE (Scrap Monster): The World Gold Council (WGC) has published the Gold Investor-September 2017 Report which analyzes current state of global gold industry and predicts the future prospects of the sector.

According to the report, gold witnessed a strong rally which took it to the highest levels since August 2016. The key factors that boosted gold demand during the year-to-date period include tensions over North Korea, weakness in US dollar, political uncertainty in Washington and an overvalued US stock market. The surging public and private debt coupled with negative interest rates lifted gold’s image as a reliable all-time asset and a portfolio-diversifier. It must be noted that gold has outperformed the US equity indices so far this century.

LBMA has introduced a new system by which over-the-counter market participants would report trades. This in turn will deliver an accurate picture of the size and shape of the market and promote transparency amongst investors. Furthermore, it will help to instill confidence in the liquidity and efficiency of London market, said Ruth Crowell, chief executive of the LBMA. As per official reports, initial steps are already underway and the system will be rolled out next year. Incidentally, LBMA has revealed that 7,449 tonnes of gold, valued at around US$298 billion is being held in London vaults.

The WGC Report notes that the US gold jewellery market consumed 118 tonnes of gold in 2016. The gold jewellery exports to the US have grown 30% since 2013. Though the US is still the third largest market in the world, the demand has started signs of stabilizing. Additionally, the expansion of online retailing has begun to threaten the existence of US department stores. As per statistics released by the Jewelers Board of Trade, 1,564 jewellery businesses have ceased operations in 2016 alone. This clearly indicates that jewellery retailers have struggled to adapt to the online retailing revolution.

In terms of gold buying by Central Banks, Russia led the world by purchasing 201 tonnes of gold in 2016. Over the past decade Russian Central Bank has added nearly 1,250 tonnes of gold to its gold reserves. The country’s current gold holdings amount to nearly 1,700 tonnes, which in turn accounts for approximately 17% of the country’s wealth. Meantime, China added 80 tonnes to its reserves, followed by National Bank of Kazakhstan with acquisition of 36 tonnes of gold.

Finally, the report predicts gradual decline in global gold mine supply over the forthcoming years, mainly on account of downward trend in prices, a reduction in exploration spend and a decline in development projects.