DEMAND FOR GOLD
Demand for gold may be for industrial or investment purposes.
Demand for manufacturing can be defined as the transformation of gold into finished products or parts, for commercial or industrial uses. The jewellery sector, has always been the most important sector of the total demand and in recent years it has overtaken worldwide mining production. In the early 80’s ¾ of demand was concentrated in developed countries, and vice versa in the 90’s in emerging countries. Production has passed from around 1,200 tons in the 70’s and early 80’s to 2,800 at the start of the 90’s until it reached around 3,150 in 1999. The increase in manufacturing in the 90’s was especially due to the increase in the production of traditional objects worn for special social occasions and for weddings in India, which thanks to legislative liberalization of the sector, has become the largest consumer of goldsmithery. China, India and Indonesia are the countries with the greatest future development potential considering the fact that half the world’s population lives here. Jewels are slowly losing their role as a safe haven and are increasingly becoming a sign of prestige and social status, especially when talking about brands and advertised products. While appeal for height of fashion jewels that are branded is having more and more success, the start of the new millennium was not so favourable to goldsmithery production, highlighting a progressive fall to the current around 2,500 tons produced (2,401 in 2007). There are many causes for this fall; among the many we can certainly identify a change in consumers’ customs and habits especially in Western countries, more attracted by other goods that by now are mass goods, such as cell phones or other High Tech objects (palmtops, IPods, digital cameras, etc). The 2000’s furthermore were characterized by periods of economic slowdown which rocked the trust of consumers of goldsmithery / jewellery products, influencing their purchasing decisions and reducing the spending budget of families who purchase jewels. However the approach of investors and savers towards gold has been very different. After at least a decade of falls, from 2001 a new bullish multi-year trend began, largely sustained by investment itself and for protection from economic-financial risks (see depreciation of the dollar ) and geopolitical risks. Demand for gold for investment was expressed on several fronts or rather in the form of coins or ingot, or linked to instruments that are directly or indirectly derived from physical gold (ETF). Lastly gold also has a specific industrial usage: due to its resistance, corrosion and oxidization it is used in the dentist industry, and production is mainly concentrated in Japan, Germany and England. The sector experienced a boom in the 70’s, followed by a strong decline due to competition from other cheaper materials and then subsequently in the 90’s there was a recovery. It is also used in aerospace and in the coin manufacturing sector.
Worldwide gold demand
2003 2004 2005 2006 2007
Production of jewels 2482 2613 2708 2284 2401
Other industrial uses 515 555 579 648 671
Purchase of gold for investment 180 257 264 235 236
De-hedging net of producers 289 438 92 410 446
Net implicit investments 760 --- 465 404 158
De-hedging --- 12 --- --- ---
Total Demand 4225 3862 4108 3982 3912
Source: Gold Fields Mineral Service
Worldwide jewellery production
Tons
1999 2000 2006 2007
Europe 744 739 445.9 430.4
North America 202 200 232.9 201.9
Latin America 106 103 75.2 71
Middle East 577 679 534.2 594.3
India SC 758 700 705 756.5
East Asia 522 522 805.6 863.4
Africa 37 37 34.7 41.6
Australia 6 6 10.3 9.8
Total in world 3153 3204 2931.5 3072.1
The totals may not be the sum of the columns due to independent rounding. Translation of "Official Sector Gold Holdings"
Source: Gold Fields Mineral Service
VOLUMES OF FUTURES CONTRACTS FOR GOLD IN THE WORLD
Number of contracts Gold Equiv. (tons)
Comex (100 on.) Tocom (1 Kg) Comex + Tocom Others Total
1974 2250 8 10 18
1975 393517 1124 1436 2660
1976 479363 1491 1096 2587
1977 981551 3053 2869 5922
1978 3742378 11640 8965 20605
1979 6541893 20347 11620 31967
1980 8001410 24887 8595 33482
1981 10373706 32266 8364 40629
1982 12289448 87773 38312 5226 43538
1983 10382805 81750 32376 3768 36144
1984 9115504 275621 28628 433 29061
1985 7773834 547777 24727 266 24993
1986 8400175 1030438 27158 190 27348
1987 10239805 2158745 340008 1118 35126
1988 9496 2038380 31575 422 31997
1989 9988577 2686684 33754 290 34045
1990 9730041 6873294 37137 161 37298
1991 6799917 4567630 25718 58 25776
1992 6002009 4193775 22862 37 22899
1993 8916195 8764441 36497 49 36546
1994 8503366 12481095 38929 53 38982
1995 7785544 10945134 35161 42 35203
1996 8902179 9511000 37199 n.a. 37199
1997 9541904 8872000 38550 n.a. 38550
Source: Gold Fields Mineral Service
Demand for gold may be for industrial or investment purposes.
Demand for manufacturing can be defined as the transformation of gold into finished products or parts, for commercial or industrial uses. The jewellery sector, has always been the most important sector of the total demand and in recent years it has overtaken worldwide mining production. In the early 80’s ¾ of demand was concentrated in developed countries, and vice versa in the 90’s in emerging countries. Production has passed from around 1,200 tons in the 70’s and early 80’s to 2,800 at the start of the 90’s until it reached around 3,150 in 1999. The increase in manufacturing in the 90’s was especially due to the increase in the production of traditional objects worn for special social occasions and for weddings in India, which thanks to legislative liberalization of the sector, has become the largest consumer of goldsmithery. China, India and Indonesia are the countries with the greatest future development potential considering the fact that half the world’s population lives here. Jewels are slowly losing their role as a safe haven and are increasingly becoming a sign of prestige and social status, especially when talking about brands and advertised products. While appeal for height of fashion jewels that are branded is having more and more success, the start of the new millennium was not so favourable to goldsmithery production, highlighting a progressive fall to the current around 2,500 tons produced (2,401 in 2007). There are many causes for this fall; among the many we can certainly identify a change in consumers’ customs and habits especially in Western countries, more attracted by other goods that by now are mass goods, such as cell phones or other High Tech objects (palmtops, IPods, digital cameras, etc). The 2000’s furthermore were characterized by periods of economic slowdown which rocked the trust of consumers of goldsmithery / jewellery products, influencing their purchasing decisions and reducing the spending budget of families who purchase jewels. However the approach of investors and savers towards gold has been very different. After at least a decade of falls, from 2001 a new bullish multi-year trend began, largely sustained by investment itself and for protection from economic-financial risks (see depreciation of the dollar ) and geopolitical risks. Demand for gold for investment was expressed on several fronts or rather in the form of coins or ingot, or linked to instruments that are directly or indirectly derived from physical gold (ETF). Lastly gold also has a specific industrial usage: due to its resistance, corrosion and oxidization it is used in the dentist industry, and production is mainly concentrated in Japan, Germany and England. The sector experienced a boom in the 70’s, followed by a strong decline due to competition from other cheaper materials and then subsequently in the 90’s there was a recovery. It is also used in aerospace and in the coin manufacturing sector.
Worldwide gold demand
2003 2004 2005 2006 2007
Production of jewels 2482 2613 2708 2284 2401
Other industrial uses 515 555 579 648 671
Purchase of gold for investment 180 257 264 235 236
De-hedging net of producers 289 438 92 410 446
Net implicit investments 760 --- 465 404 158
De-hedging --- 12 --- --- ---
Total Demand 4225 3862 4108 3982 3912
Source: Gold Fields Mineral Service
Worldwide jewellery production
Tons
1999 2000 2006 2007
Europe 744 739 445.9 430.4
North America 202 200 232.9 201.9
Latin America 106 103 75.2 71
Middle East 577 679 534.2 594.3
India SC 758 700 705 756.5
East Asia 522 522 805.6 863.4
Africa 37 37 34.7 41.6
Australia 6 6 10.3 9.8
Total in world 3153 3204 2931.5 3072.1
The totals may not be the sum of the columns due to independent rounding. Translation of "Official Sector Gold Holdings"
Source: Gold Fields Mineral Service
VOLUMES OF FUTURES CONTRACTS FOR GOLD IN THE WORLD
Number of contracts Gold Equiv. (tons)
Comex (100 on.) Tocom (1 Kg) Comex + Tocom Others Total
1974 2250 8 10 18
1975 393517 1124 1436 2660
1976 479363 1491 1096 2587
1977 981551 3053 2869 5922
1978 3742378 11640 8965 20605
1979 6541893 20347 11620 31967
1980 8001410 24887 8595 33482
1981 10373706 32266 8364 40629
1982 12289448 87773 38312 5226 43538
1983 10382805 81750 32376 3768 36144
1984 9115504 275621 28628 433 29061
1985 7773834 547777 24727 266 24993
1986 8400175 1030438 27158 190 27348
1987 10239805 2158745 340008 1118 35126
1988 9496 2038380 31575 422 31997
1989 9988577 2686684 33754 290 34045
1990 9730041 6873294 37137 161 37298
1991 6799917 4567630 25718 58 25776
1992 6002009 4193775 22862 37 22899
1993 8916195 8764441 36497 49 36546
1994 8503366 12481095 38929 53 38982
1995 7785544 10945134 35161 42 35203
1996 8902179 9511000 37199 n.a. 37199
1997 9541904 8872000 38550 n.a. 38550
Source: Gold Fields Mineral Service