Gold Market
Demand
For thousands of years it has played a primary role as a medium of exchange and store of value, despite losing some lustre since the 1970s when the United States took its currency off the gold standard. Nowadays, Gold has many applications and uses in society including jewellery, central bank reserves, an investment asset, and technology.
Since the 2008 global financial crisis the majority of demand has continued to come from investors and jewellery purchases - jewellery being a primary wealth preservation tool in many countries around the world. However, following the COVID-19 pandemic, and the record amounts of money printing (quantitative easing) which followed, central banks have begun increasing their holdings as economies wrestle with high levels of inflation and resulting currency devaluations. In 2022, of the ~4,700 tonnes of gold consumption, central banks more than doubled their annual purchases (to 20+%) compared to their average annual purchase over the last decade - this was the largest amount since 1967.
Sources: World Gold Council and World Economic Forum
Supply
Global supply of gold has remained steady over the last decade, in the range of 4000-5000 tonnes per annum, of which 20% is typically recycled gold with the variable remainder coming from virgin material at operating mines around the world.
Gold is also classified as a high-risk material in both the London Metal Exchange (LME) and Chicago Mercantile Exchange (COMEX), along other commodities like Tin, Tungsten or Tantalum (knows as 3TG metals). As such, producers/refiners selling on the LME or COMEX (the two largest global precious metals exchanges), or complying with laws such as the Dodd-Franck Act, must prove their responsible sourcing compliance in order to place product into their respective markets.
As a global leader in mining safety, working conditions and gold mining / refining capacity, Australia has a unique opportunity to capitalise on its strengths and position itself as the global supplier of choice.
Source: World Gold Council
Investor Opportunities
Gold has many tailwinds supporting its spot price and positive sentiment in the market,
including continued central bank money printing, high global inflation rates and stagflation fears in the market.
This opportunity is for investors looking to access a de-risked gold exploration project, with short term plans to cash flow, which is operating in a tier 1 mining jurisdiction.
