Filed Pursuant To Rule 433
Registration No. 333-167132
November 18, 2011
Registration No. 333-167132
November 18, 2011
Gold Demand Trends
Third quarter 2011
November 2011
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www.gold.org |
Overview
Third quarter gold demand increased 6% year-on-year to 1,053.9 tonnes, worth a record US$57.7bn. A
strong rise in investment demand drove the growth in overall demand, as investors across the globe
sought wealth preservation, portfolio diversification and strong returns. Mine supply increased
slightly, with mine production and recycling activity both contributing to the rise. Read more...
The evolving structure of demand and supply
A snapshot from the start of each decade since 1970 reveals that gold market fundamentals have
experienced dramatic change. We examine the shifting market dynamics over this time, discuss
reasons for the change and consider the implications. Read more...
Global gold market — third quarter 2011 review
Investment demand was the engine of growth in overall gold demand during the third quarter.
Price volatility, combined with record high prices, discouraged gold jewellery demand, but gold
demand from the technology sector was extremely resilient. Read more...
Gold demand by category in tonnes and the gold price (US$/oz)
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Contents
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Contributors
Louise Street
louise.street@gold.org
louise.street@gold.org
Johan Palmberg
johan.palmberg@gold.org
johan.palmberg@gold.org
Juan Carlos Artigas
juancarlos.artigas@gold.org
juancarlos.artigas@gold.org
Eily Ong
eily.ong@gold.org
eily.ong@gold.org
Marcus Grubb
Managing Director, Investment
marcus.grubb@gold.org
Managing Director, Investment
marcus.grubb@gold.org
Table of Contents
Overview
Third quarter gold demand volume increased 6% year-on-year to reach 1,053.9 tonnes, worth a
record US$57.7bn. A strong rise in investment demand drove the growth in overall demand, as
investors across the globe sought to protect their wealth, diversify their risk and benefit from
gold’s strong returns. Jewellery demand contracted in the face of record gold prices and
challenging economic conditions, while the technology sector contributed a steady level of demand.
The gold price surged throughout July and August, reaching a record US$1,895.00/oz on
the London PM fix on 5 and 6 September, and even higher levels on intra-day trading. Gold then
staged a fairly deep correction from this level, before stabilising during the closing days of the
quarter and subsequently establishing a base around US$1,600-1,650/oz. Despite this sharp
pull-back, gold still outperformed most other assets, generating solid returns on both a quarterly
and year-to-date basis. By the end of September, gold had delivered gains of 8% over the quarter
and 15% over the year-to-date. The quarterly average price of US$1,702.12 was 39% above the Q3 2010
average of US$1,226.75 and 13% above the second quarter average.
The price rise was partly a function of, and partly a reason for, the strong upsurge in global
investment demand. Markets were buffeted by the worsening crisis in Europe, a shock US debt
downgrade and deteriorating confidence levels among consumers and businesses. Equity and credit
markets suffered the consequences, and gold was increasingly a beneficiary as investors recognised
its unique attributes of risk reduction and security, with the additional benefit of positive
returns. In Middle Eastern and Asian markets primarily, the rising price reaffirmed bullish
expectations and prompted an upward revision of target prices among the investment community.
The increase in investment demand during the third quarter was notable for its widespread
geographical distribution. Virtually all markets saw strong double-digit growth in demand for gold
bars and coins, with only three countries, India, Japan and the US, experiencing a year-on-year
contraction. These growth rates are all the more remarkable when considering the substantial bout
of profit-taking which accompanied the price correction in September. Western investors were
attracted to gold’s insurance-like properties, given the worrying developments in the euro area.
Meanwhile, investors in Eastern markets focused on positive price expectations for gold as well as
its inflation-hedging properties (inflation levels remained elevated in a number of these markets).
Activity among central banks continued to fulfil our expectations of further purchases in Q3. In
fact, net buying accelerated notably during the quarter — totalling 148.4 tonnes — as the issues
surrounding the creditworthiness of western governments’ debt seeped into the official sector. A
number of banks continued their well-publicised programmes of buying, while a slew of new entrants
emerged wishing to bolster their gold holdings in order to diversify their reserves. We see this
trend continuing into 2012.
Gold Demand Trends | Third quarter 2011
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Technological demand was extremely resilient in the third quarter, thanks largely to an
increase in demand from the electronics segment. Demand for gold used in electronics was marginally
stronger year-on-year, in spite of the unfavourable market conditions. Much of the growth was
attributable to rising demand from China, offsetting sluggish conditions in other markets.
However, we expect to see the effects of the prolonged western economic downturn feed through to
this sector in the coming quarters. Poor consumer sentiment, weak income growth and fragile labour
market conditions across western markets are likely to stall growth in the electronics segment,
where there are already indications of a build up in semiconductor inventories similar to 2008.
Gold recycling amounted to 426.5 tonnes in Q3, a rise of 13% year-on-year. However, taken in the
context of the 39% rise in the quarterly average price over the same period, this can be
interpreted as a relatively subdued result. Despite new record prices, the supply of recycled gold
was still well below the quarterly high of 609.8 tonnes from Q1 2009, at a time when average prices
were still below US$1,000/oz.
This restraint in recycling activity is indicative of the expectation among gold consumers for
higher prices, as well as a lack of near market supplies of old gold. As we have mentioned
previously, many of the old, out-dated items of jewellery that consumers may want to sell have
already been flushed out in prior waves of recycling. For investors, the price levels at which they
would be happy to take profits on their holdings of gold bars and coins are being revised ever
higher in light of the new record gold price set during the quarter.
Table of Contents
The evolving structure of demand and supply
A snapshot from the start of each decade since 1970 reveals that gold market fundamentals have
experienced dramatic change. Shifting dynamics have driven the market’s evolution from
concentration to dispersion, across both borders and sources of demand and supply. We discuss the
drivers for and the implications of these changes.
A time for refection
News on the deteriorating euro area sovereign issue has been inescapably prominent over the
past few months, and is likely to remain so until a detailed and viable solution is tabled. There
was a glimmer of hope in the spring of 2010 following bailouts for Ireland, Portugal and Greece,
that a corner had been turned. Yet subsequent events, and to some extent the seeming inevitability
of the situation, have conspired to turn what appeared to be a relatively minor European problem
into an escalating global crisis. Contagion of government and bank insolvency as well as faltering
economic growth is a worrying prospect. As uncertainty over the future has grown, gold’s reputation
as a bastion of wealth preservation, reliable collateral pledge and a monetary asset is
increasingly pushing it to the forefront of financial, economic and political discourse.
However, the last couple of years, global economics aside, have also marked a pivotal period for
gold through the confluence of a number of milestones and anniversaries. August of this year
observed 40 years since the dissolution of the Bretton Woods
system and a fixed gold price.1 The end of 2010 witnessed the 10th successive annual
price rise, the first such run since the 1970s. January 2010 marked 30 years since gold in real
terms peaked2 amidst high inflation, geopolitical stress and extreme volatility in the
silver market among other factors.
There is ample speculation that the gold market may repeat its prolific rise and fall during the
first two decades of free float as history appears to rhyme with fiscal crises and Middle East
instability, but it is a conclusion drawn from facile parallels. Firstly, the 1970s was a highly
volatile period for gold prices. An 8-month correction in 1975 was almost as severe as that which
took place over a 5-year period in the early 1980s. Secondly, the market was in the early phase of
establishment with few participants on either the demand or supply sides. A detailed study of the
last 40 years reveals that gold market fundamentals have experienced dramatic change, and it is
imprudent to suggest that it is the same market it was 40, 30 or even 10 years ago. By extension,
it would be imprudent to expect the gold market to behave as it has done in the past.
| 1 | For a large part of the 20th century, prior to 1971, most countries linked the value of their currencies to a specified amount of gold or to the currency of a country that did so. Under the Bretton Woods system, designed after World War II, the US dollar would be fixed to gold at US$35/oz, and other countries would have adjustable pegs to the US dollar. | |
| 2 | In real terms (using US CPI and in today’s dollars), the gold price peaked on 21 January 1980, reaching US$2,473/oz. However, this was at the top of a move which saw gold rise and fall by US$600/oz in real terms in less than two weeks. The average price for that month was US$1,944/oz in real terms. |
Gold Demand Trends | Third quarter 2011
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What has changed?
While macroeconomic concerns are the current driving force of gold demand in certain investment
spheres, a panoply of fundamental factors underpin the prevailing price.
There is a common misconception that the price of gold is primarily determined by Western
institutional investors. From time to time, and in the short-term, this may be true given the size
of individual trades on an institutional level. In the medium to long-term, it is still only one of
many equally important drivers. Equally, the investment component of demand often steals headlines
in the press, overlooking the fact that gold jewellery still constitutes the dominant source of
demand for gold. Furthermore, while gold market fundamentals have traditionally reflected events
and activity in North America and Europe — whether from jewellery purchases, central bank activity
or investment demand, a strong shift away from these two centres has taken place in the last 40
years. The rise of the BRIC3 countries and other high growth economies is diluting the
influence of the West. This shift is undeniably conspicuous in the gold market.
The supply side of the market has not escaped the shifting sands either. In fact, the geographical
concentration of supply has seen a far greater change than that of demand, particularly in mine
production. Furthermore, a smaller proportion of supply is provided by mine production than in the
past, with recycled gold making up the difference. A rising proportion of this increasing supply of
recycled gold is stemming from emerging markets where such transactions are more fluid and less
costly.
These changes in the structure of demand and supply have a direct impact on the gold price through
dampening short-term volatility, swings associated with individual regional business cycles, and
extreme moves brought about by idiosyncratic events. Not only does this translate into a more
stable market than in the past, but it also means that gold’s correlation with other asset classes
is reduced. For investors, gold therefore becomes a more attractive addition to their portfolio
strategy. Gold also becomes less susceptible to sharp swings, heralding its value as a tail-risk
hedge. Furthermore, some economic theory provides a framework by which gold should yield a return
approximate to US inflation over the very long run, equivalent to a zero real return. However,
gold’s real return since the end of Bretton Woods has been well in excess of zero. The changing
structure of the market may well be the driving force.
| 3 | Brazil, Russia, India and China. The acronym is attributed to former Goldman Sachs Chief Economist Jim O’Neill. |
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The structure of demand — East meets West
The geographical shift of gold demand since 1970 has been quite remarkable. A look at the first
year of each of the five decades since the price peg was removed shows how dramatic the shift from
North America and Europe to the Indian Sub Continent4 and East Asia5 has been
(Chart 1). North America and Europe had a combined share of 47% of the global market in 1970,
growing to 68% by 1980. This fell to 38%, 28% and 27% respectively in 1990, 2000 and 2010. The drop
in global share was compensated for by the Indian Sub Continent and East Asia, rising from 35% in
1970 to 58% by 2010.
While the chart shows a general regional shift, it appears not to show much of an increase in
dispersion. However, firstly as per Gold Demand Trends convention, the chart does not capture
central bank demand. While the bulk of central bank gold is still held in North America and Europe,
a build-up of gold reserves in emerging markets has been a consistent feature over the last few
years. Secondly, OTC investment demand is excluded due to lack of granular data and would likely
balance the total, on the evidence we have, further back towards Europe and North America.
The chart also hides the fact that a stronger East-West balance raises the probability of
non-correlating business cycles reducing demand volatility. For example, the risks currently posed
to Western investment demand by disinflation prospects are likely tempered by inflation-driven
demand in many emerging markets. This geographical demand shift is likely one of the reasons that
average gold price volatility is lower for each represented year since 1980 (1970 was a low
volatility year as a two-tiered gold price was still in effect. It was not until August 1971, that
the gold peg was completely removed. The average volatilities for 1972 and 1973 were respectively
18% and 35%).6
The distribution of demand across categories shows that investment has once again become a more
prominent component of demand, constituting 38% of the total (excluding central bank purchases) in
2010. However, while the total distribution looks similar to 1980, the regional distribution
underlying each category is very different.
Delving into categories, jewellery demand has been a major driver of the shift from west to east.
As North America and Europe’s dominance of the sector has diminished from a 44% share in 1970 (56%
in 1980) to just 14% in 2010, the Indian Sub Continent and the Far East have grown to represent 66%
of demand from 36% (just 22% in 1980) in 1970.
Chart 1: Distribution of gold demand by region
Gold price volatility = average daily volatility of London PM fix for reference year.
*CIS: Commonwealth of Independent States.
*CIS: Commonwealth of Independent States.
Source: Bloomberg, LBMA, Thomson Reuters GFMS, World Gold Council
| 4 | India represents a minimum 85% of the Indian Sub Continent. | |
| 5 | 58% of which is now China, growing from 7% in 1990 as figures were not available for 1980 and 1970. | |
| 6 | Volatilities calculated on a 260-day basis using daily log returns of the London PM fix. |
Gold Demand Trends | Third quarter 2011
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Chart 2: Distribution of gold demand by category
Source: Thomson Reuters GFMS, World Gold Council
Chart 3: Distribution of jewellery demand by region
*CIS: Commonwealth of Independent States.
Source: Thomson Reuters GFMS, World Gold Council
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The estimate of investment demand is not straightforward due to a lack of granular data. In
addition, new financial innovations including ETFs have likely caused a marginal alteration of
investment mix. We have therefore made a number of assumptions to be able to paint as fair a
picture as possible of the distribution of investment.7
Investment demand8 is shown in Chart 4. North American and European bar demand numbers
are missing from 1970 and 2000 as they were negative, representing disinvestment (an element of
supply, not demand). A stark difference is apparent between 1980 and 2010 as North American and
European investment demand’s share fell from 74% to 45%. At the same time, the Indian Sub Continent
and East Asia have accounted for a large share of the remainder of investment demand with 43% of
the market in 2010. As has been noted in previous Gold Demand Trends editions, China is one of the
fastest growing investment markets. However, Europe has once again become an important player, a
trend born in the aftermath of the 2008 banking crisis.
Technology demand in Chart 5, formerly referred to as industrial demand, has maintained a
remarkably consistent share of the total over the last four decades at just over 10%. This is
despite a changing backdrop and at times, strong price increases. With electronics becoming the
dominant force behind technology demand, as dental usage shrinks, the regional shift from high-cost
producers to low-cost producers has been a natural process. As Chart 6 shows, East Asia and the
Indian Sub Continent, led by Japan, China and South Korea are at the helm of gold use in technology
with a combined regional share having grown from 17% in 1970 to 67% in 2010. This concentration of
demand does however go against the grain of increasing diversity elsewhere and could render this
sector vulnerable to a downturn in the region or key export markets. However, there is a widely
acknowledged faith in the ability of current account surplus countries such as China to continue on
their current growth path in the medium term, supported by a backbone of fiscal and monetary
ammunition, solid domestic demand and investment in industrial capacity. Furthermore, gold
continues to develop new diverse functions within technology thanks to its unique properties and
applications.
Chart 4: Distribution of investment demand by region
*CIS: Commonwealth of Independent States.
Source: Thomson Reuters GFMS, World Gold Council
| 7 | Prior to 1980, information on bar demand was incomplete and prone to revision. After 1980, improvement in collection techniques meant that individual country demand was available for a broad selection of countries. However, European and North American demand has only been available on an aggregate level. Prior years reported the two regions combined as a residual, under implied investment (1980 and 1990). While this residual will contain other forms of demand such as OTC investment, we are reasonably confident that the bulk of that number is representative of bar demand in Europe and North America prior to 2000. It therefore also forms the basis of a conservative estimate of the distribution of that residual. In addition, as bar investment demand is a net figure and can be negative, we have assigned zero values in place of negative values to ensure a credible distribution. In those instances, ‘disinvestment’ has been assigned to supply. | |
| 8 | The geographical distribution of ETF demand, only represented in the 2010 column, is based on the location of the primary exchange of individual ETFs. While a proportion of investors will be domiciled outside the country of primary exchange, we are confident that a majority of ETFs are representative of domestic demand. |
Gold Demand Trends | Third quarter 2011
Table of Contents
Chart 5: Distribution of technology demand by category
Source: Thomson Reuters GFMS, World Gold Council
Chart 6: Distribution of technology demand by region
*CIS: Commonwealth of Independent States.
Source: Thomson Reuters GFMS, World Gold Council
Table of Contents
The structure of supply — Out of Africa
As the demand side of the equation has experienced a global balancing between East and West,
dominated by the US, Europe, China and India, the supply side has witnessed a true dispersion
across the globe. Mine production has historically constituted between 60-70% of total supply
(recycling was not measured in 1970), with recycling, net central bank sales, net producer hedging
and disinvestment forming the rest (Chart 7).
One of the most visible differences between the current market and that of the early years of a
freely traded gold price is the geographical concentration of mine production (Chart 8).
South Africa’s dominance during the first two decades was striking. In 1970, the country produced
79% of ‘free world’ (non-communist bloc) gold. Estimates for communist bloc production at the time
were around 350 tonnes,9 which would have reduced this share to about 62%. However, as
communist bloc supply was not available to the global market directly (traded via central banks)
the former percentage is more indicative of influence.
Chart 7: Distribution of gold supply by category
Source: Thomson Reuters GFMS, World Gold Council
| 9 | Thomson Reuters GFMS Annual Survey 1976. |
Gold Demand Trends | Third quarter 2011
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Dominance by a single state meant that protocols had to be put in place to ensure that South
Africa’s supply served global interests as well as domestic ones. One such agreement was made
between South Africa, the US and the International Monetary Fund (IMF) in 1970 as the market price
fell temporarily below the monetary price of US$35/oz (a two-tier system of fixed and free price
existed until 1971). It was decreed that in the event of urgent foreign exchange requirements,
South Africa was allowed to bypass the market and sell its gold directly to the IMF.
Today, no single country supplies more than 14% of global production. In 2010, China was the
largest single country producer with a 13% share, closely followed by Australia (10%), United
States (9%), Russia (8%) and South Africa (8%). This lack of concentration serves as a buffer
against supply
risks stemming from individual countries, a facet of gold that differentiates from the other
precious metals, which have significantly higher production concentration.
Recycled gold supply (Chart 7), for which no figures were available in 1970, has experienced a
marginal geographical dilution over the last 30 years. 1980 was a year of geopolitical crises,
mostly centred in the Middle East with war between Iran and Iraq, American hostages in Tehran, the
Soviet occupation of Afghanistan among others. These events took their toll as the Middle East
became the centre for recycled gold, constituting 35% of global total. (Iran led the way with 17%,
followed by Egypt and Turkey). By 2010, recycled supply had become less concentrated with East Asia
the largest regional contributor at 27% (China was the largest single contributor at 8.4%).
Chart 8: Distribution of mine production by region
*CIS: Commonwealth of Independent States.
Source: Thomson Reuters GFMS, World Gold Council
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Why has it changed and what are the implications?
The changes discussed in the previous section have many underlying drivers, among which are:
deregulation and market reform; buyer motives; asset performance; geological constraints;
liquidity; and economic imbalances.
The evident shift in demand from West to East is substantially influenced by the regulatory and
reform development in emerging markets following economic liberalisation. Openness and greater
participation in global trade and capital markets have increased consumer access to gold and have
driven wealth creation in newly industrialised nations. In addition, changes in regulation specific
to the gold market such as the three consecutive central bank gold agreements (CBGAs) and the
self-regulation by mining companies with regard to forward hedging, have also supported the
stabilisation of the gold market. Finally, new products and ways to access to gold such as ETFs and
gold accumulation plans have released pent up demand and increased access and flexibility for
individuals as well as institutions.
The shift from West to East has also diluted the motivation for holding gold. Whereas Western gold
buying motives crudely involve profit, status, wealth preservation or diversification, buying
motives in other regions also include affinity, auspiciousness, savings, and gifting. The
rebalancing of geographical demand has also diluted motives for buying gold which, ceteris paribus,
increases stability in the price.
One consequence of increased globalisation and capital market integration is that financial
markets’ performance becomes increasingly intertwined. This is evident in the increasing
correlation between global asset prices, most notably equities. Gold’s globalisation has not
created the same problem as the motives and drivers of gold have become more, not less,
heterogeneous.
Chart 9: Number of new gold finds
Please note that methodologies for each study may not be comparable.
Source: Chris Blain, Bloomberg, LBMA, Metals Economics Group, World Gold Council
Gold Demand Trends | Third quarter 2011
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While there are arguments for and against peak commodity production, most notoriously crude oil,
there are signs that gold production is facing constraints going forward (Chart 9). Analysis by
Metals Economics Group10 shows that the number of new finds in the latter half of the last decade
was decreasing even as prices were rising rapidly. A study on the number of new finds by Chris
Blain11 over 50 years from 1950 to 1997 documented a
peak in the mid 1980s.12 One noticeable
difference between the two is that as the price was rising in the late 1970s, the number of new
finds was increasing. This, as noted, has not been the case over the last few years. The fall in
finds cannot be attributed to a lack of exploration spending. In fact, this figure has been rising
since 2002 and is now over four times higher13 than it was at the beginning of the decade, despite
the global recession in 2008.
Another driver, and ultimate beneficiary, of the changing dynamics of the gold market has been
liquidity. As detailed in a World Gold Council report,14 liquidity in the gold market is far
greater than commonly perceived. Greater liquidity provides assurance for larger as well as smaller
investors. It also provides better pricing transparency and enables gold to be bought and sold more
easily; the latter being key during times when cash may be in short supply. Furthermore, recycling
markets in the West are less developed and prone to higher margins than in India for example, where
jewellery can be bought and sold with ease. Increased liquidity provides a more ductile market,
buffering price swings.
Finally, the global current account imbalances generated along with the emergence of BRIC countries
and others have created an increased desire for sizeable holders of foreign exchange reserves to
diversify. This need is a primary driver of the shift in central bank activity from net sellers to
net buyers, and is expected to continue given low gold to total reserve ratios.
The recent turmoil
in euro area debt markets, the consequences of global fiscal complacency, and geopolitical
upheaval, has focused attention on gold as a bastion of wealth preservation, reliable collateral
pledge, and monetary asset. The current environment draws parallels with similar conditions in the
1970s or 1990s and there is ample speculation that gold will mirror its behaviour in the past.
However, such parallels overlook the evolution of gold fundamentals. The structure of demand and
supply has changed radically over the past 40 years, driving the gold market towards increased
stability, dispersion, liquidity and transparency. This evolution renders many historical parallels
superficial and often fallacious.
| 10 | Metals Economics Group, Gold discovery and costs 1999-2010. | |
| 11 | Blain, Chris, 2000. Fifty-year trends in minerals discovery — Commodity and ore-type targets. | |
| 12 | It should be noted that there may be differences in methodology between the two studies and as such they may not be directly comparable. However, the conclusions drawn by the authors are similar. | |
| 13 | MEG 2000-2003 average = US$640mn, 2007-2010 average=US$2,740mn. | |
| 14 | World Gold Council Research, Liquidity in the global gold market. |
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Global gold market — third quarter 2011 review
Gold demand in the third quarter of 2011 measured 1053.9 tonnes, up 6% year-on-year. Growth in
investment demand more than offset a decline in gold jewellery demand. The contribution from the
technology sector was stable.
The value of gold demand in US$ terms jumped to a new record of US$57.7bn, representing growth of 48% year-on-year. In year-to-date terms, gold demand is valued at US$146.5bn, a rise of 29% over the same period of 2010.
The value of gold demand in US$ terms jumped to a new record of US$57.7bn, representing growth of 48% year-on-year. In year-to-date terms, gold demand is valued at US$146.5bn, a rise of 29% over the same period of 2010.
While the global gold jewellery market contracted by 10% in Q3 2011, at 465.6 tonnes demand was
only 5% below the quarterly average since Q4 2008 of 490.0 tonnes. Moreover, jewellery demand in
value terms was 24% higher year-on-year, at a record US$25.5bn. The rolling four quarter total for
jewellery tonnage reached 2,018.2 tonnes, 2% above the four quarter period ended Q3 2010.
India, the largest jewellery market, experienced a 26% fall in tonnage demand as high and volatile
gold prices, at an inauspicious time in the Hindu calendar,15 deterred consumers. A similar
reaction was seen across the globe, with markets in the Middle East, South East Asia and the West
generating weaker levels of demand in the face of record high gold prices and difficult economic
conditions. Exceptions were China, where gold jewellery demand continued on its healthy growth
path, Hong Kong, Japan and Russia.
Investment demand was the sole driver of the year-on-year increase in global gold demand during the
third quarter, expanding by 33% year-on-year. At 468.1 tonnes, Q3 was the third highest quarter for
investment demand on record, lower only than Q1 2009, a time when record monetary stimulus was
fuelling inflation fears, and Q2 2010, when the European sovereign debt crisis erupted.
Virtually
all the countries that we monitor recorded double-digit increases in demand for gold bars and
coins, with the main thrust of growth coming from Europe. The only markets that experienced a
contraction in gold bar and coin demand were India, Japan and the US. In value terms, total bar and
coin demand grew by 79% year-on-year to a quarterly record of US$21.4bn.
Demand for ETFs and similar products of 77.6 tonnes was 58% above year-earlier levels. ETF holdings
increased steadily throughout the first eight weeks of the quarter, before declining as the late
August/early September peaks in the gold price prompted a notable bout of profit-taking.
The OTC investment and stock flows category of investment demand experienced net outflows of 36.7
tonnes during the quarter. This disinvestment reflected a number of factors, including dollar
strength (as institutions scaling back on their exposure to the embattled euro shifted into US
dollars) and a requirement for easily accessible funds to shore up portfolio losses elsewhere (i.e.
institutions sold their liquid holdings of gold, which was outperforming relative to other assets).
Gold demand from the technology sector was unchanged year-on-year at 120.2 tonnes. In value terms,
this translated to a 39% increase to a record US$6.6bn. Slight growth in demand in the electronics
and other industrial segments was counterbalanced by a continued decline in demand for gold in
dentistry.
The third quarter witnessed a 2% year-on-year expansion in the total supply of gold. An increase in
mine production and recycled gold, together with an increased supply of gold to the market from
minor levels of producer hedging, slightly exceeded a 126 tonne contraction in the supply of gold
of gold from the official sector.
| 15 | The Shradh period was from 13 — 27 September. In Hinduism, Shradh is the name given to the rituals performed for the departed souls of dead relatives and ancestors, particularly parents. |
Gold Demand Trends | Third quarter 2011
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Jewellery
Global demand for gold jewellery was 465.6 tonnes in Q3, 10% below year-earlier levels as surging
gold prices during a period of economic fragility hampered demand. In value terms, demand reached a
quarterly record of US$25.5bn, 24% higher than Q3 2010.
Only four markets bucked the global trend to post a year-on-year increase in jewellery demand:
China, Hong Kong, Japan and Russia.
Indian demand for gold jewellery declined 26% year-on-year to 125.3 tonnes from 168.4 tonnes in Q3
2010. In value terms, demand was slightly higher at Rs314.5bn (+2% year-on-year).
Gold jewellery
demand was sluggish during the seasonally slow months of July and August, which preceded the
inauspicious ‘Shradh’ period in the Hindu calendar. However, the market failed to stage the usual
subsequent pick-up following Shradh as heightened volatility in the gold price, which accompanied a
surge to — and sharp correction from — new record levels above Rs2,800/gm (Rs87,000/oz), further
dampened consumer enthusiasm. Record international prices were exaggerated in the local market by a
depreciation in the rupee against the US dollar.
Despite healthy stock building among fabricators
and retailers ahead of the India International Jewellery show in August and the key gold-buying
festive season (beginning with Diwali on
1 October), consumers were discouraged by the high and volatile prices. Demand recovered slightly
during the closing days of the quarter however, as the price dipped back to below Rs2,600/gm
(Rs80,000/oz).
Consumer confidence in India has been knocked by the persistence of high domestic inflation rates.
Inflation of almost 10%, as measured by the Wholesale Price Index (WPI), adversely affected
jewellery demand, through its impact on both disposable income levels and general consumer
sentiment.
In the context of these market conditions, consumers were seeking lighter weight
jewellery (hollow but appearing heavy and big). In order to sustain demand during the lean season,
some manufacturers dropped their margins to flush out accumulated inventory, while others resorted
to credit terms with their retailers.
The remainder of 2011 should see demand pick up as the festive and wedding season encourages a
recovery in demand. Furthermore, looking into the first quarter of 2012, the successful monsoon
season this year should yield good crops, which in turn should help to ease food inflation, while
also bolstering rural incomes.
In China, gold jewellery demand of 131.0 tonnes was 13% higher year-on-year, equivalent to
RMB46.0bn (48% up on RMB31.0bn in Q3 2010). As a result, China was the largest single market for
jewellery demand in the third quarter, accounting for 28% of global jewellery demand.
The bulk of this increase in jewellery demand was generated by China’s third and fourth tier
(smaller) cities, where continued improvements in infrastructure have allowed retail chains to
expand their network of stores and tap into the growing pool of demand among local consumers. This
demand is being fuelled by rising income levels, a by-product of China’s rapid economic growth.
Demand was buoyant ahead of the National Day holiday on 1 October, which represents a buying
occasion among Chinese consumers, aided by the price correction in September.
24 carat gold
jewellery was the main beneficiary of the increase in demand, with K-gold (18K) experiencing a
modest decline in demand as the rising price level emphasised the investment benefits of pure gold.
Demand for gold jewellery among Chinese consumers will remain buoyant throughout the remainder of
2011, as the year-end holiday season approaches. However, recent price fluctuations may have
stalled demand as consumers wait to see where the gold price stabilises. There are also indications
that demand may begin to decelerate in 2012 as the market struggles to sustain its recent
impressive growth rates.
In Hong Kong, third quarter gold jewellery demand grew by 28% to 6.4
tonnes. The year-on-year increase was largely driven by demand from mainland Chinese tourists, who
are attracted by the preferential tax structure in Hong Kong.16 Demand among domestic consumers was
relatively conservative given the environment of high and fluctuating gold prices.
| 16 | Gold in Hong Kong is not subject to Value Added Tax (VAT) as it is in mainland China. Additionally, gold jewellery in mainland China is subject to a special consumption tax of 5% of the total sales value. |
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Economic growth, although forecast to decelerate over the quarters ahead, remains healthy and,
together with buoyant private consumption, provides firm underpinning to jewellery demand in Hong
Kong.
In Taiwan, jewellery demand of 1.2 tonnes was 24% lower year-on-year. Record gold prices kept
demand in check, particularly as domestic GDP growth began to slow during the quarter. However,
wedding-related gold jewellery demand held firm in the run-up to the peak wedding season, boosted
by 2011 being a propitious year for getting married in Taiwan.
Although the prospects for wedding-related demand are positive over the coming quarters, as well as
for gold gifts for newborns during the auspicious Year of the Dragon in 2012, the outlook for
Taiwanese jewellery demand as a whole is considerably more muted. Economic weakness in Taiwan’s key
export markets and flagging consumer sentiment suggest that demand for gold jewellery will be
relatively subdued.
Gold jewellery demand in Japan was notably resilient in the third quarter, up 3% at 4.5 tonnes as
pent up demand (following the natural and nuclear disasters that hit the country earlier in the
year) was released. In local currency terms, the value of demand increased by 30% to ¥19.1bn, the
highest quarterly value since Q3 2008.
In the wake of the earthquake and tsunami, the Japanese have been re-evaluating the importance of
personal relationships and have chosen to express this through gifts of gold jewellery. Giving gold
to friends and family has been adopted as a way of reaffirming the importance of these personal
bonds.
Japan also witnessed a significant rise in the recycling of gold jewellery, which accelerated
sharply in response to the strong price rise throughout the quarter, resulting in long queues to
recycle old, unwanted items of jewellery. The extent of the selling back highlights the strength of
new jewellery demand, which was able to outweigh the increase in recycling to generate positive net
jewellery demand.
A negative response to the sharp price rise was seen throughout the smaller South East Asian
(VIST)17 markets, where gold jewellery demand collectively declined by 17% year-on-year to 15.4
tonnes. The weakest result was seen in Thailand, where demand fell by 25% to 1.1 tonnes. South
Korea and Indonesia posted declines of 19% and 16% respectively, while Vietnam was 14% weaker
year-on-year. In Vietnam however, jewellery demand began to re-emerge towards the end of the
quarter as the price corrected and the wedding season approached. Indications are also that
Vietnamese consumers are becoming more accustomed to prices at higher levels and underlying
sentiment remains very positive.
Gold jewellery demand in Turkey was in line with the global total, down 10% year-on-year. This was
a resilient result relative to markets in the Middle East, but as the comparison is being made with
a weak Q3 2010 it would be somewhat misleading to draw a conclusion of healthy third quarter
demand. However, the rolling four-quarter total of demand was virtually unchanged and has been
remarkably steady for around 8 quarters, suggesting that demand could be establishing something of
a base. In local currency terms, third quarter demand was valued at TL2.5bn, 44% stronger than
year-earlier levels.
The 22-carat segment was the worst affected by the decline in Turkish demand. This may seem
somewhat counter-intuitive given that it is often considered a proxy for investment gold, but is
reflective of the higher margins levied on jewellery products than on gold
coins. Indications are that Turkish jewellery demand will remain restrained as bullish price
expectations keep the spotlight on investment gold products.
Markets across the Middle Eastern region were universally weaker year-on-year in terms of tonnage
demand; the region as a whole declined by 28% to 38.5 tonnes. The weakest performance was seen in
Egypt, where demand fell by 43% year-on-year to 8.8 tonnes, as the market continued to feel the
effects of the Arab Spring through a decline in tourism, foreign investment and disposable income.
The remaining markets of Saudi Arabia, UAE and the Other Gulf states were between 20-24% weaker.
Demand of 11.0 tonnes in the UAE (-24% year-on-year) echoed the decline in India as expatriates
from the Indian subcontinent reduced their demand for 22 carat jewellery in response to the
volatile price action. Demand for 21 carat gold, largely a reflection of local demand, was weaker
still, but the gem-set and 18 carat segments were well supported by solid demand among European and
Russian tourists.
| 17 | This term was introduced in Gold Demand Trends second quarter 2011 as an acronym for the South East Asian markets of Vietnam, Indonesia, South Korea and Thailand. |
Gold Demand Trends | Third quarter 2011
Table of Contents
Gold jewellery demand in the US extended its downward trend during the third quarter. The high
gold price environment, in the context of continued economic difficulties, resulted in a 12%
decline in the volume of demand to 30.9 tonnes. In value terms, demand was up 23% year-on-year at
US$1.7bn. In a continuation of the trends that we have noted for some time, gold jewellery
continues to suffer at the hands of an unconstructive economic environment. The trend among major
retail chains for lighter-weight gold jewellery, gem-set and silver jewellery is now increasingly
filtering down to the independent retailers. Substitution to alternative materials is an ongoing
pattern with steel jewellery growing in popularity as even silver jewellery has been a victim of
its rising price over the year so far.
Q3 was another weak quarter for the European markets. Gold
jewellery demand in Italy and the UK fell by 22% and 15% respectively from the year-earlier period.
Once again, fresh record highs in the gold price combined with a very fragile European economic
scenario served to weaken demand for gold jewellery in both markets.
The value of Italian gold demand was unchanged year-on-year at €161.0mn, while the value of demand
in the UK grew by 14% to £132.3mn. In Italy, the recent trend of consumers shifting away from gold
towards other jewellery seemed to have abated, with demand all but seizing up for all jewellery,
reflecting the severity of domestic economic conditions. Hallmarking data for the UK showed a
decline in activity across the carat spectrum, with the exception of pure 24-carat gold, compared
with already-weak numbers for 2010.
At 18.3 tonnes, Russia witnessed the highest level of quarterly gold jewellery demand since Q4
2008. Russian consumers are increasing their demand for branded, fashionable jewellery pieces, with
an increasing awareness of the warranties being offered. This is resulting in an increasingly
competitive environment for Russian jewellery manufacturers looking to satisfy more exacting
demands for design and quality assurance.
Technology
Third quarter gold demand in the technology sector was unchanged year-on-year at 120.2 tonnes, a
relatively robust result given the environment of high prices and faltering economic growth in many
key markets. Signals are emerging from the market that global growth in this sector for the
remainder of this year and 2012 will be difficult to achieve as the weak global economy negatively
impacts consumer confidence and potentially reduces demand. While tonnage demand did not expand
from year-earlier levels, technology demand in value terms has risen in line with the increase in
average gold prices for the period. As a result, global technology demand stood at a record
quarterly value — US$6.6bn.
With Japanese industrial production having contracted every month since the devastating earthquake
and tsunami, strong gains in Chinese demand were chiefly responsible for the modest rise in this
segment. Demand for gold used in other industrial and decorative applications recorded a marginal
increase, with double digit growth in China almost entirely offset by falls across much of the
industrialised world. Lastly, demand for gold for dental use suffered heavily, slumping 9% from the
corresponding period in 2010 as gold prices rallied to new record levels.
The electronics sector recorded a modest 1% year-on-year rise in Q3 as global demand in this
segment remained resilient in the face of a difficult economic environment. Demand of 87.1 tonnes
was equivalent to US$4.8bn (up 40% year-on-year) in value terms. Despite this apparently buoyant
picture, analysts are increasingly suggesting that the electronics industry is starting to face
stiff head winds as several key economies around the world confront serious economic challenges.
Western markets were notably soft with little “back to school” demand present after the summer
holidays, which left growth from across East
Asia (mainly China) to offset declines or slowdowns in fabrication demand from industrialised
nations.
According to the Semiconductor Industry Association (SIA), worldwide sales of
semi-conductors (the major consumer of gold in this segment) were US$25.8bn for the month of
September, an increase of 2.7% from sales of US$25.1bn the prior month. Over the year to
end-August, sales grew 2.2% year-on-year, partly as a result of rising demand in netbook and tablet
segments (industry analysts iSuppli estimate that worldwide tablet shipments will exceed 60 million
units in 2011, with Apple accounting for 73.6% of those). Another notable area of growth
highlighted by the SIA has been the increased semiconductor content in cars; automotive
application-specific semiconductors have experienced double digit growth over the year-to-date
according to the industry body.
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However, many of these gains were offset by lower consumer and industrial demand across a wide
range of other products and markets. An area of potential concern for the electronics industry has
been the increasing level of semiconductor stock build-up in the last few months. Inventories held
by semiconductor suppliers in the third quarter of 2011 rose to historic highs, raising concerns
over the near-term outlook for the chip market.
Turning briefly to individual markets, China dominated growth for the period, rising by over 10%
year-on-year, though other key markets also recorded a modest rise in demand. Japanese output
remained muted following the decline in fabrication after the country’s natural disasters in March.
US demand was broadly flat, while a modest decline in demand was witnessed in Germany.
Demand from the other industrial and decorative segment remained subdued, rising by just over 1%
year-on-year to 22.3 tonnes (up 40% to US$1.2bn in value terms). However, trends across world
markets were diverse, with stronger demand from East Asia (predominately China which rose 10%
year-on-year) offset by falls in the euro area, United States and India. A gloomier economic
outlook in western markets contributed to the decline in demand in these areas. However, of greater
importance was the high gold price environment, which had an impact on the electroforming sector.
Political events were also relevant here as much of the jewellery produced by electroforming is
sold in North Africa, where markets were disrupted by the events of the Arab Spring. In contrast,
Chinese demand continued to be bolstered by demand for electroplated giftware and plated
accessories (driving demand for gold potassium cyanide higher), with higher yuan gold prices having
only a minimal impact on consumers’ appetite for these items.
Finally, gold used in dental
applications is estimated to have fallen 9% year-on-year to a new record low (on the basis of
Thomson Reuters GFMS’ records back to 1968) as sharply higher gold prices for the period
intensified the ongoing substitution to base metals and palladium. In addition, gold’s market share
continues to be eroded by the use of ceramics in this segment, with falling prices in this
application warmly received by those with cosmetic concerns. In value terms, dental demand
maintained a solid level of growth, up 26% at US$589.3mn.
Investment
Gold investment demand (all demand for gold bars and coins and ETFs and similar products) reached
468.1 tonnes in the third quarter, a year-on-year gain of 33%. This generates a record quarterly
demand value of US$25.6bn, almost double the US$13.9bn witnessed in Q3 2010.
The inclusion of demand from OTC investment and stock flows gives a quarterly total for investment
demand of 431.4 tonnes, 23% up year-on-year. In value terms, this equates to a record US$23.6bn.
Investment in gold bars, official coins and ETFs collectively generated an additional 120 tonnes of
demand over Q3 2010. This was partly offset by a small negative contribution from the two remaining
segments of investment demand: medals and imitation coins (-4.3 tonnes) and OTC investment and
stock flows (-36.6 tonnes).
The market for ETFs and similar products experienced considerable growth compared with both the
year earlier period and the previous quarter. As the gold price rose throughout July and August,
demand also gathered strength. A wave of profit-taking was seen in late August/early September as
the price peaked and then corrected, before renewed buying interest emerged towards the end of the
quarter as lower price levels were seen as an opportunity. ETFs were also seen to be growing in
popularity in markets such as India and
Japan.
The OTC investment and stock flows category of gold demand experienced outflows of 36.7
tonnes in the third quarter, compared with flat net demand in Q3 2010. OTC activity followed a
similar pattern to ETF demand during the quarter, as increasing demand in the first two months gave
way to selling. The more speculative element of the investment market undertook considerable
profit-taking in September as the euro crises deepened (resulting in a wave of US dollar-buying, at
the expense of gold) and as gold’s outperformance year-to-date made it a candidate for
profit-taking in order to compensate for portfolio losses generated by other poorly performing
assets.
Gold Demand Trends | Third quarter 2011
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Total bar and coin demand surged 29% year-on-year to reach 390.5 tonnes, worth US$21.4bn. The two
largest elements of total bar and coin demand, physical bar demand and official coin demand, both
witnessed year-on-year growth rates in excess of 30%, while demand in the smaller medals and
imitation coins segment declined by 18%. Global trends were noted during the third quarter of
strong buying throughout July and August, then a sharp bout of profit-taking as the price peaked
and pulled back, followed by a period of investors adopting a ‘wait and see’ attitude as they
looked for the price to stabilise.
With the exception of India, Japan and the US, all markets recorded an increase in demand for gold
bars and coins. Only two (Thailand and Saudi Arabia) posted gains of less than 10%; the remainder
all witnessed very strong double-digit growth in investment demand. A number of factors were behind
this growth, chief among them being high inflation in a number of countries, concerns over the
worsening European sovereign debt crisis, and the solid returns generated by gold, particularly in
comparison with the relatively poor performance of many other investments.
Despite an 18% year-on-year decline in investment demand, India remained the largest single market
for gold bars and coins in the third quarter, clocking up 78.0 tonnes of demand, equivalent in
local currency terms to a value of Rs195.8bn. A long-established characteristic of the Indian
market has been that consumers — whether buying investment gold or jewellery — are discouraged
by volatility in the gold price.
This trend was much in evidence again in the third quarter, as the
international gold price surged to new record highs, which were further exaggerated in the local
market due to a depreciation in the rupee versus the dollar. The resultant increase in volatility
sidelined many investors during the closing weeks of the quarter. However, the supportive
background for Indian demand remains very much in place, with inflation still a concern and price
expectations among Indian investors remaining positive.
In China, investor interest in gold bars and coins expanded 24% to yield quarterly investment of
60.2 tonnes. In local currency value terms, this was equivalent to RMB21.1bn, up 63% year-on-year.
The increase was largely the result of continued concerns over elevated rates of domestic
inflation and the expectation among China’s investor community of further rises in the gold price.
The relatively poor performance of alternative main stream assets such as the stock market and real
estate also helped to fuel rising demand. The Gold Accumulation Plan (GAP), jointly launched by
ICBC and the World Gold Council in December 2010, reached 2 million accounts during September.
Year-to-date sales exceeded 19 tonnes.
Although absolute volumes remained trivial (0.5 tonnes), investment demand in Hong Kong generated a
year-on-year growth rate of 52%. Mainland Chinese tourists, attracted by the tax advantages to
buying gold in Hong Kong, accounted for the bulk of the increase. In Taiwan, third quarter demand
for gold bars and coins more than trebled from the same period of 2010. While profit-taking
activity continued to thrive in the environment of record prices, fresh investor buying outweighed
this selling back to generate positive net new investment demand of 1.5 tonnes. Good two-way
trading in the Bank of Taiwan’s Gold Passbook18 was reported, with purchases outweighing sales.
In Japan, despite healthy purchases of gold bars and coins, profit-taking exceeded net new buying
by 17.9 tonnes (versus 9.6 tonnes of disinvestment in Q3 2010) as prices above ¥4,000/g were seen
as a sell signal among Japanese investors. Selling back of existing holdings was accelerated to
some degree by the prospect of a change to tax laws due to be introduced in 2012, which will
require traders handling transactions of gold (and platinum) bars and coins in excess of ¥2mn to
submit payment records to the tax authorities.
Among
the remaining South East Asian markets, all of which experienced year-on-year growth in investment
demand, Vietnam put on the strongest performance. Demand for bars and coins jumped 78% to 33.8
tonnes (a rise of 141% from the previous quarter). Inflation remains the main driver of investment
demand in Vietnam, with prices rising at rates of around 22-23% per annum. Negative real interest
rates (of around -8 to -9%) make savings accounts an unappealing prospect for most Vietnamese
investors, who have also shied away from the poorly performing stock and real estate markets. Gold
tael bars have been the main beneficiary of these trends and the granting of official import
quotas, totalling 25 tonnes, by the State Bank of Vietnam did little to ease the soaring local
premium on gold, which reached levels of around US$15-20/oz.
Indonesia (5.1 tonnes) and South Korea
(1.5 tonnes) remain relatively small markets for gold bar and coin investment, but growth rates
were nevertheless impressive at +46% and +15% respectively. The rise was largely price-generated,
although Indonesian demand was boosted by considerable media coverage of gold’s performance.
In Thailand, gold investment demand increased by 7% year-on-year to 21.5 tonnes, totalling
US$1.2bn in value. Speculators provided the main thrust of this demand, but despite a strong wave
of profit-taking towards the end of the quarter, the net result was a healthy positive quarter for
investment demand.
| 18 | The Gold Passbook is a type of savings account, which was launched in 1997. |
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A 60% rise in investment demand in Turkey generated a quarterly total of 26 tonnes. In value terms,
this was equivalent to TL2.5bn, compared with a value of less than TL1.0bn in the year earlier
period. Turkish coin minting has surged in response to a near doubling of investment demand over
the year-to-date. Notably, demand during August was characterised by very strong interest in
investment coins, compared with gift coins which are usually the more dominant form of investment
in Turkey. This pattern of demand is an indication of bullish expectations for the gold price among
Turkish investors.
Middle Eastern investment demand for gold bars and coins was up 9% year-on-year
at 9.7 tonnes, reaching the highest level since the 10.3 tonnes seen in Q4 2008 — itself a time of
extreme global economic and financial uncertainty. Stronger investment demand across the region
compensated to some extent for the decline in jewellery demand and was underpinned by rising
price expectations together with continued regional and global uncertainty. Egypt generated the
strongest growth, with demand there rising by 60% year-on-year and although absolute levels of
demand remain negligible at 0.8 tonnes, the value of this demand
reached a record £E261.0mn.19 In
the UAE, demand increased 12% to 3.1 tonnes, while demand of 0.9 tonnes in the Other Gulf group of
countries was 21% up year-on-year.
Saudi Arabia remains the largest market in the region, at 4.8 tonnes. This was unchanged from Q3
2010, but is a firm result in a historical context: average investment demand for Saudi Arabia
from Q3 2007 to Q2 2011 was 3.1 tonnes.
As a region, Europe accounted for 30% of total bar and coin
demand and generated growth of 135% year-on-year. Demand of 118.1 tonnes equated to a record
quarterly value of €4.6bn as fears generated by the deepening sovereign debt crisis in Europe were
manifested in a strong desire to buy gold. Gold bars were the main beneficiary of the huge upsurge
in demand, with some bar dealers in the region reporting their busiest quarter ever.
The strongest growth in the region was seen in France, where gross purchases outweighed
profit-taking to the tune of 4.9 tonnes (vs. 0.3 tonnes in Q3 2010). Notably, for a country with
significant inherited stocks of gold where selling back is a key feature of the market, reports
indicate virtually no selling activity in July as investors focused on the wealth preservation
benefits of their gold holdings and instead chose to shore up their holdings substantially.
With demand of 59.3 tonnes, Germany remains the largest bar and coin market in the region and the
third largest market globally. Demand for gold bars and coins more than doubled from the 24.1
tonnes in Q3 2010, posting the second highest quarter on record. The increase was primarily the
result of large-scale investors increasing their exposure to gold by building on their existing
holdings.
A more than doubling of demand for gold bars and coins in Switzerland was accompanied by a rise in
demand for metal accounts. Demand was boosted by 121% to 37.2 tonnes, equal to a record CHF1.7bn. A
number of factors contributed to this growth: the rising gold price; intensifying concerns over the
financial viability of members of the eurozone; and the surprise intervention by the Swiss National
Bank to peg the Swiss Franc to the euro, which impacted the Swiss currency’s status as a refuge for
wealth.
Demand in the remaining countries classified as ‘Other Europe’ jumped 83% to 16.7 tonnes. Despite
healthy growth, these markets collectively accounted for a smaller percentage of the European total
as they were unable to keep pace with the strength of demand growth in the three main markets.
US investors did not react with the same urgency to the crisis engulfing Europe. Although
investment demand of 21.5 tonnes was 9% above the previous quarter, the year-on-year comparison
shows a 13% decline. Demand for American eagle gold coins fell in September
as investors favoured silver coins, sales of which rocketed towards the end of the quarter as the
silver price pulled back sharply. Although continued fragility of the US economy provides firm
underpinning to gold investment demand, the record price level had the dual effect of encouraging
profit taking and imposing budget constraints on beleaguered retail investors.
| 19 | £E refers to Egyptian pounds. |
Gold Demand Trends | Third quarter 2011
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Supply
The total supply of gold reached 1,034.4 tonnes in Q3, 2% higher than year-earlier levels. All
components of supply contributed to the year-on-year increase, with the exception of central banks
where increased purchases reduced the supply of gold to the market.
Mine production increased by 5% to 746.2 tonnes during the third quarter as a number of operations
globally either came on stream or ramped up production. Growth was geographically widespread,
across the African, CIS and Latin American regions.
In Africa, production was boosted by Burkina Faso’s new Essakane mine, which started up in
mid-2010, and a ramping up of production at the Inata operation.
The ramp-up of Randgold Resources’ Tongon mine was the reason for growth in production in Cote
d’Ivoire. The mine was relatively unaffected by escalating political tension in the country.
Smaller increases in production in Africa were seen in Eritrea, from new start-up Bisha mine, as
well as in Ghana and Sudan.
A rise in production in the CIS region was attributable to increased production in Russia (largely
due to the ramping up of the Blagodatnoye and Malomir operations) and Kazakhstan, as production
ramped up at Altyntau Kokshetau.
Further increases in production were noted in Mexico, Peru and Canada, while production in
Australia, Indonesia and the US declined.
The third quarter witnessed insignificant levels of producer hedging activity, compared with modest
levels of net de-hedging in the year earlier period. Net new hedging is estimated at 10 tonnes in
the quarter, compared with de-hedging of 54.4 tonnes in Q3 2010. Total hedging for the
year-to-date amounts to 21.9 tonnes as ongoing (trivial) deliveries into existing hedges have been
marginally outweighed by modest new (largely project-related) hedging.
Turning to the official sector, this was again a source of negative supply in the third quarter.
Net purchases amounted to 148.4 tonnes as a number of banks sought to bolster their allocation to
gold as a percentage of total reserves.
The Russian central bank’s well-publicised programme of buying local production remained on track.
It’s Q3 gold purchases amounted to 15 tonnes, taking its total holdings to around 852 tonnes.
In Bolivia, gold reserves were boosted by 14 tonnes as the central bank made two monthly purchases
of 7 tonnes in August and September. Subsequently, a new legal bill has been passed introducing a
formal process for the central bank to buy domestically-produced gold. Bolivia’s annual production
of gold, most of which is currently exported, averaged around 8 tonnes over the last five years.
Thailand extended its recent string of purchases, increasing its gold reserves by a further 25
tonnes over the course of the quarter. Additional purchases were made by a number of countries’
central banks, which cannot currently be identified due to confidentiality restrictions.
The end of the quarter coincided with the end of the second year of the third Central Bank Gold
Agreement (CBGA). Sales by signatory central banks during the third quarter were virtually
non-existent and amounted to just 1.1 tonnes during the entire agreement year.
Total sales for the year amounted to 53.3 tonnes, due to the additional 52.2 tonnes of gold sold by
the IMF as part of its limited gold sales programmes. European central banks’ appetite for gold
sales has dissipated since the onset of the financial crisis as the period of intense economic and
financial market turbulence has emphasised the stability provided by gold to a central banks’
reserves.
Third quarter recycling activity accounted for 426.5 tonnes of supply in the third quarter, up 13%
year-on-year. In the context of a 39% rise in the quarterly average gold price, and record prices
reached during the quarter, this rise can be considered relatively modest. That the supply of
recycled gold did not accelerate further is an indication of the strength of bullish price
expectations among gold consumers globally, as well as the lack of near-market supplies of old
gold. Anecdotal evidence suggests a strong run up in the price would be required to generate the
next significant wave of recycling.
The pattern of recycling across individual markets was varied, with activity relatively muted in
China, the Middle East and northern Europe. Conversely, the US and southern European markets
witnessed solid growth in the supply of recycled gold.
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Gold demand statistics
Demand
Table
1: Gold demand1 (tonnes)
| Q3’11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| vs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Q3’10 | 4-quarter | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2009 | 2010 | Q4’09 | Q1’10 | Q2’10 | Q3’10 | Q4’10 | Q1’11 | Q2’11 | Q3’112 | % chg | % chg3 | |||||||||||||||||||||||||||||||||||||||||||
Jewellery |
1,813.6 | 2,016.8 | 520.5 | 521.3 | 416.7 | 518.9 | 559.9 | 538.9 | 453.8 | 465.6 | -10 | 2 | ||||||||||||||||||||||||||||||||||||||||||
Technology |
409.8 | 466.4 | 112.5 | 114.1 | 116.1 | 120.1 | 116.2 | 114.1 | 117.3 | 120.2 | 0 | 1 | ||||||||||||||||||||||||||||||||||||||||||
Electronics |
274.9 | 326.8 | 77.5 | 78.8 | 80.4 | 86.2 | 81.4 | 79.8 | 83.3 | 87.1 | 1 | 3 | ||||||||||||||||||||||||||||||||||||||||||
Other industrial |
82.2 | 90.9 | 21.8 | 22.4 | 23.3 | 22.0 | 23.2 | 22.6 | 23.1 | 22.3 | 1 | 2 | ||||||||||||||||||||||||||||||||||||||||||
Dentistry |
52.7 | 48.7 | 13.2 | 12.8 | 12.4 | 11.8 | 11.6 | 11.8 | 11.0 | 10.8 | -9 | -10 | ||||||||||||||||||||||||||||||||||||||||||
Investment |
1,393.2 | 1,517.2 | 250.6 | 247.8 | 574.2 | 352.1 | 343.0 | 313.9 | 373.7 | 468.1 | 33 | 5 | ||||||||||||||||||||||||||||||||||||||||||
Total bar and coin demand |
776.1 | 1,149.5 | 208.8 | 243.0 | 282.6 | 303.0 | 320.8 | 375.9 | 322.0 | 390.5 | 29 | 36 | ||||||||||||||||||||||||||||||||||||||||||
Physical bar demand |
483.1 | 848.6 | 132.9 | 175.2 | 197.9 | 222.1 | 253.4 | 292.4 | 245.4 | 294.2 | 32 | 49 | ||||||||||||||||||||||||||||||||||||||||||
Official coin |
234.1 | 212.5 | 55.7 | 45.3 | 68.8 | 56.6 | 41.9 | 61.8 | 51.5 | 76.2 | 35 | 2 | ||||||||||||||||||||||||||||||||||||||||||
Medals/imitation coin |
58.9 | 88.3 | 20.3 | 22.5 | 16.0 | 24.3 | 25.5 | 21.7 | 25.1 | 20.0 | -18 | 11 | ||||||||||||||||||||||||||||||||||||||||||
ETFs and similar products4 |
617.1 | 367.7 | 41.7 | 4.7 | 291.6 | 49.1 | 22.3 | -62.1 | 51.7 | 77.6 | 58 | -77 | ||||||||||||||||||||||||||||||||||||||||||
Gold demand |
3,616.6 | 4,000.4 | 883.6 | 883.1 | 1,107.0 | 991.1 | 1,019.1 | 966.9 | 944.9 | 1,053.9 | 6 | 3 | ||||||||||||||||||||||||||||||||||||||||||
London PM fix (US$/oz) |
972.3 | 1,224.5 | 1,099.6 | 1,109.1 | 1,196.7 | 1,226.8 | 1,366.8 | 1,386.3 | 1,506.1 | 1,702.1 | 39 | 29 | ||||||||||||||||||||||||||||||||||||||||||
| 1 | Gold demand excluding central banks. | |
| 2 | Provisional. | |
| 3 | Percentage change, 12 months ended Sep 2011 vs 12 months ended Sep 2010. | |
| 4 | Exchange Traded Funds and similar products including: Gold Bullion Securities (London), Gold Bullion Securities (Australia), SPDR® Gold Shares (formerly streetTRACKS Gold Shares), NewGold Gold Debentures, iShares Comex Gold Trust, ZKB Gold ETF, GOLDIST, ETF Securities Physical Gold, ETF Securities (Tokyo), ETF Securities (NYSE), XETRA-GOLD, Julius Baer Physical Gold, Central Fund of Canada and Central Gold Trust, Swiss Gold, Claymore Gold Bullion ETF, Sprott Physical Gold Trust, ETF Securities Glitter, Mitsubushi Physical Gold ETF, Credit Suisse Xmtch and Dubai Gold Securities. |
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Table 2: Gold demand1 (US$mn)
| Q3’11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| vs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Q3’10 | 4-quarter | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2009 | 2010 | Q4’09 | Q1’10 | Q2’10 | Q3’10 | Q4’10 | Q1’11 | Q2’11 | Q3’112 | % chg | % chg3 | |||||||||||||||||||||||||||||||||||||||||||
Jewellery |
56,695 | 79,399 | 18,402 | 18,588 | 16,033 | 20,466 | 24,604 | 24,019 | 21,976 | 25,480 | 24 | 31 | ||||||||||||||||||||||||||||||||||||||||||
Technology |
12,811 | 18,363 | 3,979 | 4,067 | 4,466 | 4,736 | 5,106 | 5,087 | 5,682 | 6,577 | 39 | 30 | ||||||||||||||||||||||||||||||||||||||||||
Electronics |
8,595 | 12,867 | 2,739 | 2,811 | 3,094 | 3,401 | 3,576 | 3,555 | 4,032 | 4,769 | 40 | 32 | ||||||||||||||||||||||||||||||||||||||||||
Other industrial |
2,568 | 3,579 | 771 | 799 | 896 | 869 | 1,020 | 1,005 | 1,119 | 1,219 | 40 | 31 | ||||||||||||||||||||||||||||||||||||||||||
Dentistry |
1,648 | 1,916 | 468 | 458 | 477 | 467 | 510 | 527 | 531 | 589 | 26 | 15 | ||||||||||||||||||||||||||||||||||||||||||
Investment |
43,555 | 59,730 | 8,858 | 8,836 | 22,094 | 13,888 | 15,073 | 13,989 | 18,095 | 25,617 | 84 | 36 | ||||||||||||||||||||||||||||||||||||||||||
Total bar and coin demand |
24,264 | 45,254 | 7,383 | 8,667 | 10,875 | 11,952 | 14,095 | 16,756 | 15,592 | 21,370 | 79 | 74 | ||||||||||||||||||||||||||||||||||||||||||
Physical bar demand |
15,104 | 33,409 | 4,698 | 6,249 | 7,615 | 8,760 | 11,133 | 13,033 | 11,883 | 16,101 | 84 | 91 | ||||||||||||||||||||||||||||||||||||||||||
Official coin |
7,319 | 8,367 | 1,969 | 1,614 | 2,646 | 2,233 | 1,842 | 2,755 | 2,495 | 4,171 | 87 | 33 | ||||||||||||||||||||||||||||||||||||||||||
Medals/imitation coin |
1,841 | 3,477 | 716 | 804 | 615 | 959 | 1,120 | 968 | 1,214 | 1,097 | 14 | 42 | ||||||||||||||||||||||||||||||||||||||||||
ETFs and similar products4 |
19,291 | 14,476 | 1,475 | 169 | 11,219 | 1,937 | 978 | -2,767 | 2,502 | 4,247 | 119 | -66 | ||||||||||||||||||||||||||||||||||||||||||
Gold demand |
113,061 | 157,492 | 31,238 | 31,491 | 42,594 | 39,090 | 44,783 | 43,095 | 45,753 | 57,673 | 48 | 32 | ||||||||||||||||||||||||||||||||||||||||||
| 1 | Gold demand excluding central banks. | |
| 2 | Provisional. | |
| 3 | Percentage change, 12 months ended Sep 2011 vs 12 months ended Sep 2010. | |
| 4 | Exchange Traded Funds and similar products including: Gold Bullion Securities (London), Gold Bullion Securities (Australia), SPDR® Gold Shares (formerly streetTRACKS Gold Shares), NewGold Gold Debentures, iShares Comex Gold Trust, ZKB Gold ETF, GOLDIST, ETF Securities Physical Gold, ETF Securities (Tokyo), ETF Securities (NYSE), XETRA-GOLD, Julius Baer Physical Gold, Central Fund of Canada and Central Gold Trust, Swiss Gold, Claymore Gold Bullion ETF, Sprott Physical Gold Trust, ETF Securities Glitter, Mitsubushi Physical Gold ETF, Credit Suisse Xmtch and Dubai Gold Securities. |
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Gold Demand Trends | Third quarter 2011
Table of Contents
Table
3: Total investment demand1 (tonnes except where specified)
| Q3’11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| vs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Q3’10 | 4-quarter | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2009 | 2010 | Q4’09 | Q1’10 | Q2’10 | Q3’10 | Q4’10 | Q1’11 | Q2’11 | Q3’112 | % chg | % chg3 | |||||||||||||||||||||||||||||||||||||||||||
Investment |
1,393.2 | 1,517.2 | 250.6 | 247.8 | 574.2 | 352.1 | 343.0 | 313.9 | 373.7 | 468.1 | 33 | 5 | ||||||||||||||||||||||||||||||||||||||||||
Total bar and coin demand |
776.1 | 1,149.5 | 208.8 | 243.0 | 282.6 | 303.0 | 320.8 | 375.9 | 322.0 | 390.5 | 29 | 36 | ||||||||||||||||||||||||||||||||||||||||||
Physical bar demand |
483.1 | 848.6 | 132.9 | 175.2 | 197.9 | 222.1 | 253.4 | 292.4 | 245.4 | 294.2 | 32 | 49 | ||||||||||||||||||||||||||||||||||||||||||
Official coin |
234.1 | 212.5 | 55.7 | 45.3 | 68.8 | 56.6 | 41.9 | 61.8 | 51.5 | 76.2 | 35 | 2 | ||||||||||||||||||||||||||||||||||||||||||
Medals/imitation coin |
58.9 | 88.3 | 20.3 | 22.5 | 16.0 | 24.3 | 25.5 | 21.7 | 25.1 | 20.0 | -18 | 11 | ||||||||||||||||||||||||||||||||||||||||||
ETFs and similar products4 |
617.1 | 367.7 | 41.7 | 4.7 | 291.6 | 49.1 | 22.3 | -62.1 | 51.7 | 77.6 | 58 | -77 | ||||||||||||||||||||||||||||||||||||||||||
OTC investment and stock flows5 |
464.3 | 151.1 | 130.1 | 2.6 | -4.5 | -0.1 | 153.2 | -119.3 | 72.6 | -36.7 | — | -45 | ||||||||||||||||||||||||||||||||||||||||||
Total investment |
1,857.6 | 1,668.3 | 380.6 | 250.4 | 569.7 | 352.0 | 496.2 | 194.5 | 446.3 | 431.4 | 23 | 1 | ||||||||||||||||||||||||||||||||||||||||||
Total investment US$mn |
58,071 | 65,679 | 13,456 | 8,927 | 21,920 | 13,884 | 21,805 | 8,670 | 21,610 | 23,609 | 70 | 30 | ||||||||||||||||||||||||||||||||||||||||||
| 1 | Total investment demand excluding central banks. | |
| 2 | Provisional. | |
| 3 | Percentage change, 12 months ended Sep 2011 vs 12 months ended Sep 2010. | |
| 4 | Exchange Traded Funds and similar products including: Gold Bullion Securities (London), Gold Bullion Securities (Australia), SPDR® Gold Shares (formerly streetTRACKS Gold Shares), NewGold Gold Debentures, iShares Comex Gold Trust, ZKB Gold ETF, GOLDIST, ETF Securities Physical Gold, ETF Securities (Tokyo), ETF Securities (NYSE), XETRA-GOLD, Julius Baer Physical Gold, Central Fund of Canada and Central Gold Trust, Swiss Gold, Claymore Gold Bullion ETF, Sprott Physical Gold Trust, ETF Securities Glitter, Mitsubushi Physical Gold ETF, Credit Suisse Xmtch and Dubai Gold Securities. | |
| 5 | This includes institutional investment (other than ETFs and similar), stock movements and other elements as well as any residual error. |
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Table 4: Gold supply and demand World Gold Council presentation
| Q3’11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| vs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Q3’10 | 4-quarter | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2009 | 2010 | Q4’09 | Q1’10 | Q2’10 | Q3’10 | Q4’10 | Q1’11 | Q2’11 | Q3’111 | % chg | % chg2 | |||||||||||||||||||||||||||||||||||||||||||
Supply |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mine production |
2,589.1 | 2,685.8 | 677.5 | 619.3 | 656.7 | 710.9 | 698.9 | 646.6 | 693.8 | 746.2 | 5 | 5 | ||||||||||||||||||||||||||||||||||||||||||
Net producer hedging |
-236.4 | -108.4 | -108.9 | -18.7 | 18.8 | -54.4 | -54.1 | 6.1 | 5.9 | 10.0 | — | — | ||||||||||||||||||||||||||||||||||||||||||
Total mine supply |
2,352.7 | 2,577.4 | 568.5 | 600.6 | 675.5 | 656.5 | 644.8 | 652.7 | 699.6 | 756.2 | 15 | 10 | ||||||||||||||||||||||||||||||||||||||||||
Official sector sales3 |
33.6 | -77.0 | -10.2 | -58.4 | -13.7 | -22.6 | 17.6 | -133.8 | -66.5 | -148.4 | — | — | ||||||||||||||||||||||||||||||||||||||||||
Recycled gold |
1,694.7 | 1,651.0 | 408.4 | 368.1 | 441.9 | 379.1 | 462.0 | 347.4 | 410.7 | 426.5 | 13 | 3 | ||||||||||||||||||||||||||||||||||||||||||
Total supply |
4,080.9 | 4,151.5 | 966.6 | 910.4 | 1,103.7 | 1,013.0 | 1,124.4 | 866.3 | 1,043.8 | 1,034.4 | 2 | 2 | ||||||||||||||||||||||||||||||||||||||||||
Demand |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fabrication |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jewellery |
1,813.6 | 2,016.8 | 473.5 | 545.9 | 417.9 | 540.9 | 512.0 | 557.6 | 480.2 | 482.8 | -11 | 3 | ||||||||||||||||||||||||||||||||||||||||||
Technology |
409.8 | 466.4 | 112.5 | 114.1 | 116.1 | 120.1 | 116.2 | 114.1 | 117.3 | 120.2 | 0 | 1 | ||||||||||||||||||||||||||||||||||||||||||
Sub-total above fabrication |
2,223.3 | 2,483.2 | 586.0 | 660.0 | 534.0 | 661.0 | 628.2 | 671.8 | 597.5 | 602.9 | -9 | 2 | ||||||||||||||||||||||||||||||||||||||||||
Total bar and coin demand4 |
776.1 | 1,149.5 | 208.8 | 243.0 | 282.6 | 303.0 | 320.8 | 375.9 | 322.0 | 390.5 | 29 | 36 | ||||||||||||||||||||||||||||||||||||||||||
ETFs and similar |
617.1 | 367.7 | 41.7 | 4.7 | 291.6 | 49.1 | 22.3 | -62.1 | 51.7 | 77.6 | 58 | -77 | ||||||||||||||||||||||||||||||||||||||||||
Gold demand (fabrication basis) |
3,616.6 | 4,000.4 | 836.6 | 907.8 | 1,108.2 | 1,013.2 | 971.2 | 985.6 | 971.2 | 1,071.1 | 6 | 3 | ||||||||||||||||||||||||||||||||||||||||||
OTC investment and stock flows5 |
464.3 | 151.1 | 130.1 | 2.6 | -4.5 | -0.1 | 153.2 | -119.3 | 72.6 | -36.7 | — | -45 | ||||||||||||||||||||||||||||||||||||||||||
Total demand |
4,080.9 | 4,151.5 | 966.6 | 910.4 | 1,103.7 | 1,013.0 | 1,124.4 | 866.3 | 1,043.8 | 1,034.4 | 2 | 2 | ||||||||||||||||||||||||||||||||||||||||||
London PM fix (US$/oz) |
972.3 | 1,224.5 | 1,099.6 | 1,109.1 | 1,196.7 | 1,226.8 | 1,366.8 | 1,386.3 | 1,506.1 | 1,702.1 | 39 | 29 | ||||||||||||||||||||||||||||||||||||||||||
| 1 | Provisional. | |
| 2 | Percentage change, 12 months ended Sep 2011 vs 12 months ended Sep 2010. | |
| 3 | Excluding any delta hedging of central bank options. | |
| 4 | Total bar and coin demand combines the investment categories previously identified as relating to ‘retail’ demand. | |
| 5 | This includes institutional investment (other than ETFs and similar), stock movements and other elements as well as any residual error. |
Source: LBMA, Thomson Reuters GFMS, World Gold Council. Data in this table are consistent with
those published by GFMS in their Gold Survey but adapted to the World Gold Council’s presentation
and take account of the additional demand data now available. The “OTC investment and stock flows”
figure differs from the “implied net (dis)investment” figure in GFMS’ supply and demand table as it
excludes “ETFs and similar”. ‘Total bar and coin demand’ is equal to GFMS’ ‘Physical bar
investment’ plus the ‘Official coin’ and ‘Medals/imitation coin’ categories. Note that jewellery
data refer to fabrication and quarterly data differ from those for consumption in Tables 1 and 2.
Table of Contents
Table 5: Consumer demand in selected countries: Q3 2011 (tonnes)
| Q3’10 | Q3’11* | Q3’11* vs Q3’10, % chg | ||||||||||||||||||||||||||||||||||||
| Total bar | Total bar | Total bar | ||||||||||||||||||||||||||||||||||||
| and coin | and coin | and coin | ||||||||||||||||||||||||||||||||||||
| Jewellery | invest | Total | Jewellery | invest | Total | Jewellery | invest | Total | ||||||||||||||||||||||||||||||
India |
168.4 | 95.5 | 263.9 | 125.3 | 78.0 | 203.3 | -26 | -18 | -23 | |||||||||||||||||||||||||||||
Greater China |
122.9 | 49.3 | 172.2 | 138.6 | 62.2 | 200.7 | 13 | 26 | 17 | |||||||||||||||||||||||||||||
China |
116.3 | 48.6 | 164.9 | 131.0 | 60.2 | 191.2 | 13 | 24 | 16 | |||||||||||||||||||||||||||||
Hong Kong |
5.0 | 0.3 | 5.3 | 6.4 | 0.5 | 6.9 | 28 | 52 | 29 | |||||||||||||||||||||||||||||
Taiwan |
1.6 | 0.4 | 2.0 | 1.2 | 1.5 | 2.7 | -24 | 275 | 37 | |||||||||||||||||||||||||||||
Japan |
4.4 | -9.6 | -5.3 | 4.5 | -17.9 | -13.4 | 3 | — | — | |||||||||||||||||||||||||||||
Indonesia |
10.8 | 3.5 | 14.3 | 9.1 | 5.1 | 14.2 | -16 | 46 | -1 | |||||||||||||||||||||||||||||
South Korea |
3.4 | 1.3 | 4.7 | 2.8 | 1.5 | 4.3 | -19 | 15 | -10 | |||||||||||||||||||||||||||||
Thailand |
1.5 | 20.0 | 21.5 | 1.1 | 21.5 | 22.6 | -25 | 7 | 5 | |||||||||||||||||||||||||||||
Vietnam |
2.9 | 19.0 | 21.9 | 2.5 | 33.8 | 36.3 | -14 | 78 | 66 | |||||||||||||||||||||||||||||
Middle East |
53.7 | 8.9 | 62.6 | 38.5 | 9.7 | 48.1 | -28 | 9 | -23 | |||||||||||||||||||||||||||||
Saudi Arabia |
17.2 | 4.8 | 22.0 | 13.4 | 4.8 | 18.2 | -22 | 0 | -17 | |||||||||||||||||||||||||||||
Egypt |
15.5 | 0.5 | 16.0 | 8.8 | 0.8 | 9.6 | -43 | 60 | -40 | |||||||||||||||||||||||||||||
UAE |
14.4 | 2.8 | 17.2 | 11.0 | 3.1 | 14.1 | -24 | 12 | -18 | |||||||||||||||||||||||||||||
Other Gulf |
6.6 | 0.8 | 7.3 | 5.3 | 0.9 | 6.2 | -20 | 21 | -16 | |||||||||||||||||||||||||||||
Turkey |
29.4 | 16.2 | 45.7 | 26.5 | 26.0 | 52.6 | -10 | 60 | 15 | |||||||||||||||||||||||||||||
Russia |
15.5 | — | 15.5 | 18.3 | — | 18.3 | 18 | — | 18 | |||||||||||||||||||||||||||||
USA |
35.0 | 24.6 | 59.6 | 30.9 | 21.5 | 52.4 | -12 | -13 | -12 | |||||||||||||||||||||||||||||
Italy |
5.3 | — | 5.3 | 4.2 | — | 4.2 | -22 | — | -22 | |||||||||||||||||||||||||||||
UK |
4.6 | — | 4.6 | 3.9 | — | 3.9 | -15 | — | -15 | |||||||||||||||||||||||||||||
Europe ex CIS |
— | 50.3 | 50.3 | — | 118.1 | 118.1 | — | 135 | 135 | |||||||||||||||||||||||||||||
France |
— | 0.3 | 0.3 | — | 4.9 | 4.9 | — | — | — | |||||||||||||||||||||||||||||
Germany |
— | 24.1 | 24.1 | — | 59.3 | 59.3 | — | 146 | 146 | |||||||||||||||||||||||||||||
Switzerland |
— | 16.8 | 16.8 | — | 37.2 | 37.2 | — | 121 | 121 | |||||||||||||||||||||||||||||
Other Europe |
— | 9.1 | 9.1 | — | 16.7 | 16.7 | — | 83 | 83 | |||||||||||||||||||||||||||||
Total above |
457.6 | 279.0 | 736.7 | 406.1 | 359.5 | 765.6 | -11 | 29 | 4 | |||||||||||||||||||||||||||||
Other |
61.3 | 24.0 | 85.2 | 59.5 | 31.0 | 90.5 | -3 | 29 | 6 | |||||||||||||||||||||||||||||
World total |
518.9 | 303.0 | 821.9 | 465.6 | 390.5 | 856.1 | -10 | 29 | 4 | |||||||||||||||||||||||||||||
| * | Provisional. | |
| Source: | Thomson Reuters GFMS, World Gold Council |
Gold
Demand Trends | Third quarter 2011
Table of Contents
Table 6: Indian supply estimates (tonnes)
| Figures in tonnes | Q3’10 | Q4’10 | Q1’11 | Q2’11 | Q3’111 | 2010 | ||||||||||||||||||||
Supply |
||||||||||||||||||||||||||
Net imports, available for domestic consumption |
250 | 281 | 286 | 267 | 200 | 958 | ||||||||||||||||||||
Domestic supply from recycled gold |
22 | 25 | 10 | 10 | 15 | 81 | ||||||||||||||||||||
Domestic supply from other sources2 |
3 | 2 | 3 | 3 | 2 | 10 | ||||||||||||||||||||
Equals total supply3 |
272 | 306 | 313 | 280 | 213 | 1042 | ||||||||||||||||||||
| 1 | Provisional. | |
| 2 | Domestic supply from local mine production, recovery from imported copper concentrates and disinvestment. | |
| 3 | This supply can be consumed across the three sectors — jewellery, investment and technology. Consequently, the total supply figure in the table will not add to jewellery plus investment demand for India. |
Source: Thomson Reuters GFMS
Table 7: Consumer demand in selected countries: Q3 2011 (value, US$mn)
| Q3’10 | Q3’11* | Q3’11* vs Q3’10, % chg | ||||||||||||||||||||||||||||||||||||
| Total bar | Total bar | Total bar | ||||||||||||||||||||||||||||||||||||
| and coin | and coin | and coin | ||||||||||||||||||||||||||||||||||||
| Jewellery | invest | Total | Jewellery | invest | Total | Jewellery | invest | Total | ||||||||||||||||||||||||||||||
India |
6,642 | 3,767 | 10,408 | 6,857 | 4,269 | 11,125 | 3 | 13 | 7 | |||||||||||||||||||||||||||||
Greater China |
4,845 | 1,944 | 6,790 | 7,584 | 3,402 | 10,986 | 57 | 75 | 62 | |||||||||||||||||||||||||||||
China |
4,587 | 1,916 | 6,503 | 7,169 | 3,293 | 10,461 | 56 | 72 | 61 | |||||||||||||||||||||||||||||
Hong Kong |
197 | 13 | 210 | 350 | 27 | 378 | 78 | 110 | 80 | |||||||||||||||||||||||||||||
Taiwan |
61 | 16 | 77 | 65 | 82 | 147 | 6 | 420 | 91 | |||||||||||||||||||||||||||||
Japan |
172 | -380 | -209 | 246 | -980 | -733 | 44 | — | — | |||||||||||||||||||||||||||||
Indonesia |
424 | 138 | 562 | 496 | 279 | 775 | 17 | 102 | 38 | |||||||||||||||||||||||||||||
South Korea |
134 | 51 | 185 | 150 | 82 | 233 | 12 | 60 | 25 | |||||||||||||||||||||||||||||
Thailand |
58 | 790 | 848 | 60 | 1,179 | 1,239 | 5 | 49 | 46 | |||||||||||||||||||||||||||||
Vietnam |
116 | 749 | 865 | 138 | 1,850 | 1,988 | 19 | 147 | 130 | |||||||||||||||||||||||||||||
Middle East |
2,118 | 350 | 2,468 | 2,104 | 529 | 2,633 | -1 | 51 | 7 | |||||||||||||||||||||||||||||
Saudi Arabia |
678 | 189 | 868 | 733 | 263 | 996 | 8 | 39 | 15 | |||||||||||||||||||||||||||||
Egypt |
613 | 20 | 632 | 482 | 44 | 525 | -21 | 122 | -17 | |||||||||||||||||||||||||||||
UAE |
568 | 110 | 678 | 602 | 171 | 773 | 6 | 55 | 14 | |||||||||||||||||||||||||||||
Other Gulf |
259 | 31 | 289 | 287 | 51 | 339 | 11 | 68 | 17 | |||||||||||||||||||||||||||||
Turkey |
1,161 | 640 | 1,801 | 1,452 | 1,425 | 2,877 | 25 | 123 | 60 | |||||||||||||||||||||||||||||
Russia |
611 | — | 611 | 1,001 | — | 1,001 | 64 | — | 64 | |||||||||||||||||||||||||||||
USA |
1,380 | 972 | 2,352 | 1,694 | 1,177 | 2,870 | 23 | 21 | 22 | |||||||||||||||||||||||||||||
Italy |
209 | — | 209 | 227 | — | 227 | 9 | — | 9 | |||||||||||||||||||||||||||||
UK |
180 | — | 180 | 213 | — | 213 | 18 | — | 18 | |||||||||||||||||||||||||||||
Europe ex CIS |
— | 1,984 | 1,984 | — | 6,460 | 6,460 | — | 226 | 226 | |||||||||||||||||||||||||||||
France |
— | 12 | 12 | — | 268 | 268 | — | — | — | |||||||||||||||||||||||||||||
Germany |
— | 951 | 951 | — | 3,245 | 3,245 | — | 241 | 241 | |||||||||||||||||||||||||||||
Switzerland |
— | 663 | 663 | — | 2,036 | 2,036 | — | 207 | 207 | |||||||||||||||||||||||||||||
Other Europe |
— | 359 | 359 | — | 911 | 911 | — | 154 | 154 | |||||||||||||||||||||||||||||
Total above |
18,049 | 11,006 | 29,055 | 22,223 | 19,672 | 41,895 | 23 | 79 | 44 | |||||||||||||||||||||||||||||
Other |
2,416 | 946 | 3,362 | 3,257 | 1,697 | 4,954 | 35 | 79 | 47 | |||||||||||||||||||||||||||||
World total |
20,466 | 11,952 | 32,417 | 25,480 | 21,370 | 46,849 | 24 | 79 | 45 | |||||||||||||||||||||||||||||
| * | Provisional. |
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Table of Contents
Table 8: Consumer demand in selected countries: four-quarter totals (tonnes)
| 12 months ended Q3’10 | 12 months ended Q3’11* | Year on Year % chg | ||||||||||||||||||||||||||||||||||||
| Total bar | Total bar | Total bar | ||||||||||||||||||||||||||||||||||||
| and coin | and coin | and coin | ||||||||||||||||||||||||||||||||||||
| Jewellery | invest | Total | Jewellery | invest | Total | Jewellery | invest | Total | ||||||||||||||||||||||||||||||
India |
618.9 | 305.3 | 924.2 | 649.9 | 409.1 | 1,059.0 | 5 | 34 | 15 | |||||||||||||||||||||||||||||
Greater China |
448.0 | 153.2 | 601.2 | 541.5 | 267.2 | 808.7 | 21 | 74 | 35 | |||||||||||||||||||||||||||||
China |
420.6 | 158.3 | 578.8 | 508.9 | 260.8 | 769.7 | 21 | 65 | 33 | |||||||||||||||||||||||||||||
Hong Kong |
19.7 | 1.0 | 20.7 | 25.6 | 1.7 | 27.3 | 30 | 62 | 32 | |||||||||||||||||||||||||||||
Taiwan |
7.8 | -6.1 | 1.7 | 7.0 | 4.8 | 11.7 | -11 | — | 580 | |||||||||||||||||||||||||||||
Japan |
19.9 | -63.9 | -43.9 | 17.3 | -42.4 | -25.2 | -14 | — | — | |||||||||||||||||||||||||||||
Indonesia |
34.5 | 4.0 | 38.5 | 30.5 | 22.1 | 52.6 | -11 | 453 | 37 | |||||||||||||||||||||||||||||
South Korea |
17.0 | -1.0 | 16.0 | 14.9 | 2.2 | 17.1 | -12 | — | 7 | |||||||||||||||||||||||||||||
Thailand |
6.6 | 62.7 | 69.2 | 5.5 | 54.6 | 60.0 | -17 | -13 | -13 | |||||||||||||||||||||||||||||
Vietnam |
14.9 | 58.4 | 73.3 | 14.5 | 83.4 | 97.9 | -3 | 43 | 34 | |||||||||||||||||||||||||||||
Middle East |
211.2 | 27.3 | 238.5 | 172.1 | 31.9 | 204.0 | -19 | 17 | -14 | |||||||||||||||||||||||||||||
Saudi Arabia |
69.8 | 13.6 | 83.4 | 57.0 | 15.3 | 72.3 | -18 | 13 | -13 | |||||||||||||||||||||||||||||
Egypt |
54.5 | 2.2 | 56.7 | 36.2 | 2.4 | 38.6 | -34 | 11 | -32 | |||||||||||||||||||||||||||||
UAE |
64.2 | 9.8 | 74.0 | 59.0 | 11.5 | 70.5 | -8 | 18 | -5 | |||||||||||||||||||||||||||||
Other Gulf |
22.8 | 1.7 | 24.5 | 19.9 | 2.7 | 22.6 | -12 | 57 | -8 | |||||||||||||||||||||||||||||
Turkey |
72.1 | 38.2 | 110.2 | 71.2 | 69.0 | 140.2 | -1 | 81 | 27 | |||||||||||||||||||||||||||||
Russia |
66.1 | — | 66.1 | 70.0 | — | 70.0 | 6 | — | 6 | |||||||||||||||||||||||||||||
USA |
137.7 | 116.2 | 253.8 | 119.3 | 94.2 | 213.5 | -13 | -19 | -16 | |||||||||||||||||||||||||||||
Italy |
38.6 | — | 38.6 | 31.9 | — | 31.9 | -17 | — | -17 | |||||||||||||||||||||||||||||
UK |
30.6 | — | 30.6 | 25.2 | — | 25.2 | -18 | — | -18 | |||||||||||||||||||||||||||||
Europe ex CIS |
— | 252.5 | 252.5 | — | 323.3 | 323.3 | — | 28 | 28 | |||||||||||||||||||||||||||||
France |
— | 0.4 | 0.4 | — | 6.6 | 6.6 | — | — | — | |||||||||||||||||||||||||||||
Germany |
— | 117.3 | 117.3 | — | 154.2 | 154.2 | — | 31 | 31 | |||||||||||||||||||||||||||||
Switzerland |
— | 85.8 | 85.8 | — | 112.3 | 112.3 | — | 31 | 31 | |||||||||||||||||||||||||||||
Other Europe |
— | 49.0 | 49.0 | — | 50.2 | 50.2 | — | 3 | 3 | |||||||||||||||||||||||||||||
Total above |
1,716.0 | 952.8 | 2,668.9 | 1,763.7 | 1,314.7 | 3,078.4 | 3 | 38 | 15 | |||||||||||||||||||||||||||||
Other |
261.3 | 84.7 | 346.0 | 254.6 | 94.5 | 349.1 | -3 | 12 | 1 | |||||||||||||||||||||||||||||
World total |
1,977.4 | 1,037.5 | 3,014.9 | 2,018.2 | 1,409.2 | 3,427.4 | 2 | 36 | 14 | |||||||||||||||||||||||||||||
| * | Provisional. |
Source: Thomson Reuters GFMS, World Gold Council
Gold
Demand Trends | Third quarter 2011
Table of Contents
Table 9: Consumer demand in selected countries: four-quarter totals (value, US$mn)
| 12 months ended Q3’10 | 12 months ended Q3’11* | Year on Year % chg | ||||||||||||||||||||||||||||||||||||
| Total bar | Total bar | Total bar | ||||||||||||||||||||||||||||||||||||
| and coin | and coin | and coin | ||||||||||||||||||||||||||||||||||||
| Jewellery | invest | Total | Jewellery | invest | Total | Jewellery | invest | Total | ||||||||||||||||||||||||||||||
India |
22,999 | 11,399 | 34,397 | 30,706 | 19,398 | 50,104 | 34 | 70 | 46 | |||||||||||||||||||||||||||||
Greater China |
16,678 | 5,736 | 22,414 | 25,889 | 12,713 | 38,603 | 55 | 122 | 72 | |||||||||||||||||||||||||||||
China |
15,656 | 5,921 | 21,577 | 24,331 | 12,402 | 36,734 | 55 | 109 | 70 | |||||||||||||||||||||||||||||
Hong Kong |
732 | 38 | 770 | 1,229 | 80 | 1,309 | 68 | 110 | 70 | |||||||||||||||||||||||||||||
Taiwan |
290 | -223 | 67 | 329 | 231 | 560 | 13 | — | 740 | |||||||||||||||||||||||||||||
Japan |
740 | -2,353 | -1,614 | 828 | -2,097 | -1,269 | 12 | — | — | |||||||||||||||||||||||||||||
Indonesia |
1,284 | 165 | 1,450 | 1,468 | 1,057 | 2,526 | 14 | 539 | 74 | |||||||||||||||||||||||||||||
South Korea |
625 | -34 | 591 | 701 | 117 | 818 | 12 | — | 38 | |||||||||||||||||||||||||||||
Thailand |
243 | 2,363 | 2,606 | 258 | 2,721 | 2,979 | 6 | 15 | 14 | |||||||||||||||||||||||||||||
Vietnam |
551 | 2,186 | 2,736 | 683 | 4,101 | 4,784 | 24 | 88 | 75 | |||||||||||||||||||||||||||||
Middle East |
7,878 | 1,021 | 8,899 | 8,231 | 1,542 | 9,773 | 4 | 51 | 10 | |||||||||||||||||||||||||||||
Saudi Arabia |
2,619 | 509 | 3,128 | 2,752 | 739 | 3,491 | 5 | 45 | 12 | |||||||||||||||||||||||||||||
Egypt |
2,025 | 81 | 2,106 | 1,727 | 117 | 1,844 | -15 | 44 | -12 | |||||||||||||||||||||||||||||
UAE |
2,385 | 367 | 2,751 | 2,794 | 555 | 3,350 | 17 | 52 | 22 | |||||||||||||||||||||||||||||
Other Gulf |
849 | 65 | 914 | 958 | 130 | 1,088 | 13 | 101 | 19 | |||||||||||||||||||||||||||||
Turkey |
2,724 | 1,441 | 4,165 | 3,505 | 3,401 | 6,907 | 29 | 136 | 66 | |||||||||||||||||||||||||||||
Russia |
2,457 | — | 2,457 | 3,359 | — | 3,359 | 37 | — | 37 | |||||||||||||||||||||||||||||
USA |
5,091 | 4,316 | 9,407 | 5,686 | 4,475 | 10,161 | 12 | 4 | 8 | |||||||||||||||||||||||||||||
Italy |
1,409 | — | 1,409 | 1,472 | — | 1,472 | 5 | — | 5 | |||||||||||||||||||||||||||||
UK |
1,118 | — | 1,118 | 1,170 | — | 1,170 | 5 | — | 5 | |||||||||||||||||||||||||||||
Europe ex CIS |
— | 9,473 | 9,473 | — | 15,772 | 15,772 | — | 66 | 66 | |||||||||||||||||||||||||||||
France |
— | 18 | 18 | — | 345 | 345 | — | — | — | |||||||||||||||||||||||||||||
Germany |
— | 4,406 | 4,406 | — | 7,542 | 7,542 | — | 71 | 71 | |||||||||||||||||||||||||||||
Switzerland |
— | 3,218 | 3,218 | — | 5,445 | 5,445 | — | 69 | 69 | |||||||||||||||||||||||||||||
Other Europe |
— | 1,832 | 1,832 | — | 2,440 | 2,440 | — | 33 | 33 | |||||||||||||||||||||||||||||
Total above |
63,795 | 35,714 | 99,508 | 83,957 | 63,201 | 147,158 | 32 | 77 | 48 | |||||||||||||||||||||||||||||
Other |
9,694 | 3,162 | 12,856 | 12,122 | 4,612 | 16,733 | 25 | 46 | 30 | |||||||||||||||||||||||||||||
World total |
73,489 | 38,876 | 112,365 | 96,078 | 67,813 | 163,891 | 31 | 74 | 46 | |||||||||||||||||||||||||||||
| * | Provisional. |
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Table of Contents
Historical data for gold demand
Table 10: Historical data for gold demand1
| Tonnes | US$bn | ||||||||||||||||||||||||||||||||||||||||
| Total bar | Total bar | ||||||||||||||||||||||||||||||||||||||||
| and coin | ETFs and | and coin | ETFs and | ||||||||||||||||||||||||||||||||||||||
| Jewellery | invest | similar | Technology | Total | Jewellery | invest | similar | Technology | Total | ||||||||||||||||||||||||||||||||
2001 |
3,009 | 357 | — | 363 | 3,729 | 26.2 | 3.1 | — | 3.2 | 32.5 | |||||||||||||||||||||||||||||||
2002 |
2,662 | 352 | 3 | 358 | 3,374 | 26.5 | 3.5 | 0.0 | 3.6 | 33.6 | |||||||||||||||||||||||||||||||
2003 |
2,484 | 304 | 39 | 386 | 3,213 | 29.0 | 3.6 | 0.5 | 4.5 | 37.5 | |||||||||||||||||||||||||||||||
2004 |
2,616 | 355 | 133 | 419 | 3,523 | 34.4 | 4.7 | 1.7 | 5.5 | 46.3 | |||||||||||||||||||||||||||||||
2005 |
2,719 | 396 | 208 | 438 | 3,761 | 38.9 | 5.7 | 3.0 | 6.3 | 53.7 | |||||||||||||||||||||||||||||||
2006 |
2,300 | 417 | 260 | 468 | 3,446 | 44.6 | 8.1 | 5.1 | 9.1 | 66.9 | |||||||||||||||||||||||||||||||
2007 |
2,423 | 434 | 253 | 476 | 3,586 | 54.2 | 9.7 | 5.7 | 10.6 | 80.2 | |||||||||||||||||||||||||||||||
2008 |
2,304 | 875 | 321 | 461 | 3,962 | 64.6 | 24.5 | 9.0 | 12.9 | 111.1 | |||||||||||||||||||||||||||||||
2009 |
1,814 | 776 | 617 | 410 | 3,617 | 56.7 | 24.3 | 19.3 | 12.8 | 113.1 | |||||||||||||||||||||||||||||||
2010 |
2,017 | 1,149 | 368 | 466 | 4,000 | 79.4 | 45.3 | 14.5 | 18.4 | 157.5 | |||||||||||||||||||||||||||||||
Q3’05 |
613 | 88 | 38 | 108 | 847 | 8.7 | 1.2 | 0.5 | 1.5 | 12.0 | |||||||||||||||||||||||||||||||
Q4’05 |
673 | 71 | 84 | 107 | 934 | 10.5 | 1.1 | 1.3 | 1.7 | 14.5 | |||||||||||||||||||||||||||||||
Q1’06 |
492 | 93 | 113 | 112 | 810 | 8.8 | 1.7 | 2.0 | 2.0 | 14.4 | |||||||||||||||||||||||||||||||
Q2’06 |
530 | 97 | 49 | 115 | 792 | 10.7 | 2.0 | 1.0 | 2.3 | 16.0 | |||||||||||||||||||||||||||||||
Q3’06 |
558 | 112 | 19 | 116 | 804 | 11.1 | 2.2 | 0.4 | 2.3 | 16.1 | |||||||||||||||||||||||||||||||
Q4’06 |
708 | 114 | 79 | 116 | 1,018 | 14.0 | 2.3 | 1.6 | 2.3 | 20.1 | |||||||||||||||||||||||||||||||
Q1’07 |
566 | 117 | 36 | 117 | 836 | 11.8 | 2.4 | 0.8 | 2.4 | 17.5 | |||||||||||||||||||||||||||||||
Q2’07 |
666 | 135 | -3 | 119 | 918 | 14.3 | 2.9 | -0.1 | 2.6 | 19.7 | |||||||||||||||||||||||||||||||
Q3’07 |
604 | 112 | 139 | 117 | 974 | 13.2 | 2.5 | 3.1 | 2.6 | 21.3 | |||||||||||||||||||||||||||||||
Q4’07 |
578 | 65 | 80 | 111 | 834 | 14.6 | 1.6 | 2.0 | 2.8 | 21.1 | |||||||||||||||||||||||||||||||
Q1’08 |
484 | 101 | 73 | 122 | 779 | 14.4 | 3.0 | 2.2 | 3.6 | 23.2 | |||||||||||||||||||||||||||||||
Q2’08 |
559 | 149 | 4 | 124 | 837 | 16.1 | 4.3 | 0.1 | 3.6 | 24.1 | |||||||||||||||||||||||||||||||
Q3’08 |
694 | 283 | 149 | 119 | 1,245 | 19.4 | 7.9 | 4.2 | 3.3 | 34.9 | |||||||||||||||||||||||||||||||
Q4’08 |
567 | 346 | 95 | 96 | 1,104 | 14.5 | 8.8 | 2.4 | 2.5 | 28.2 | |||||||||||||||||||||||||||||||
Q1’09 |
356 | 147 | 465 | 88 | 1,056 | 10.4 | 4.3 | 13.6 | 2.6 | 30.8 | |||||||||||||||||||||||||||||||
Q2’09 |
445 | 210 | 68 | 102 | 825 | 13.2 | 6.2 | 2.0 | 3.0 | 24.5 | |||||||||||||||||||||||||||||||
Q3’09 |
492 | 210 | 42 | 107 | 852 | 15.2 | 6.5 | 1.3 | 3.3 | 26.3 | |||||||||||||||||||||||||||||||
Q4’09 |
521 | 209 | 42 | 113 | 884 | 18.4 | 7.4 | 1.5 | 4.0 | 31.2 | |||||||||||||||||||||||||||||||
Q1’10 |
521 | 243 | 5 | 114 | 883 | 18.6 | 8.7 | 0.2 | 4.1 | 31.5 | |||||||||||||||||||||||||||||||
Q2’10 |
417 | 283 | 292 | 116 | 1,107 | 16.0 | 10.9 | 11.2 | 4.5 | 42.6 | |||||||||||||||||||||||||||||||
Q3’10 |
519 | 303 | 49 | 120 | 991 | 20.5 | 12.0 | 1.9 | 4.7 | 39.1 | |||||||||||||||||||||||||||||||
Q4’10 |
560 | 321 | 22 | 116 | 1,019 | 24.6 | 14.1 | 1.0 | 5.1 | 44.8 | |||||||||||||||||||||||||||||||
Q1’11 |
539 | 376 | -62 | 114 | 967 | 24.0 | 16.8 | -2.8 | 5.1 | 43.1 | |||||||||||||||||||||||||||||||
Q2’11 |
454 | 322 | 52 | 117 | 945 | 22.0 | 15.6 | 2.5 | 5.7 | 45.8 | |||||||||||||||||||||||||||||||
Q3’112 |
466 | 390 | 78 | 120 | 1,054 | 25.5 | 21.4 | 4.2 | 6.6 | 57.7 | |||||||||||||||||||||||||||||||
| 1 | See footnotes to Table 1 for definitions and notes. | |
| 2 | Provisional. |
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Gold
Demand Trends | Third quarter 2011
Table of Contents
Appendix
Chart 10: Gold demand in tonnes and the gold price (US$/oz)
|
Chart 11: Gold demand in tonnes and value (US$bn) | |
|
 |
|
Source: LBMA, Thomson Reuters GFMS, World Gold Council
|
Source: LBMA, Thomson Reuters GFMS, World Gold Council |
Chart 12: Gold demand by category in tonnes and the gold price (US$/oz)
|
Chart 13: Jewellery demand in tonnes and value (US$bn) | |
|
 |
|
Source: LBMA, Thomson Reuters GFMS, World Gold Council
|
Source: LBMA, Thomson Reuters GFMS, World Gold Council |
Table of Contents
Chart 14: Holdings in Exchange Traded Funds (tonnes)
and the gold price (US$/oz)
|
Chart 15: Jewellery demand by country, % change (Q3 2011 vs Q3 2010, tonnage basis) |
|
|
 |
|
Source: LBMA, Thomson Reuters GFMS, www.exchangetradedgold.com,
World Gold Council
|
Source: Thomson Reuters GFMS, World Gold Council |
Chart 16: Jewellery demand in tonnes
(Q3 2011 vs Q2 2011) |
Chart 17: Jewellery demand by country, % change
(Q3 2011 vs Q3 2010, US$ basis) |
|
|
 |
|
Source: Thomson Reuters GFMS, World Gold Council
|
Source: Thomson Reuters GFMS, World Gold Council |
Gold Demand Trends | Third quarter 2011
Table of Contents
| Chart 18: Jewellery demand by country, % change | ||
(4-quarter rolling total, tonnage basis)
|
Chart 19: Total investment demand in tonnes | |
|
 |
|
Source: Thomson Reuters GFMS, World Gold Council
|
Source: Thomson Reuters GFMS, World Gold Council | |
Chart 20: Total bar and coin demand by category in tonnes |
Chart 21: Total bar and coin demand in tonnes
(Q3 2011 and Q2 2011) |
|
|
 |
|
Source: Thomson Reuters GFMS, World Gold Council
|
Source: Thomson Reuters GFMS, World Gold Council |
Table of Contents
Chart 22: Total bar and coin demand in tonnes
(Q3 2011 and Q3 2010) |
Chart 23: European total bar and coin demand in tonnes |
|
|
 |
|
Source: Thomson Reuters GFMS, World Gold Council
|
Source: Thomson Reuters GFMS, World Gold Council | |
Chart 24: Technology demand by category in tonnes
|
Chart 25: Quarterly supply in tonnes | |
|
 |
|
Source: Thomson Reuters GFMS, World Gold Council
|
Source: Thomson Reuters GFMS, World Gold Council |
Gold Demand Trends | Third quarter 2011
Table of Contents
Notes and definitions
All statistics (except where specified) are in
weights of fine gold “—”
Not applicable or Not available
Not applicable or Not available
Consumer demand
The sum of jewellery and total bar and coin purchases for
a country i.e. the amount of gold acquired directly by
individuals.
Dental
The first transformation of raw gold into intermediate or
final products destined for dental applications such as
dental alloys.
London PM fix
Unless described otherwise, gold price values are based on
the London PM fix.
Jewellery
All newly-made carat jewellery and gold watches, whether
plain gold or combined with other materials. It excludes
second-hand jewellery, other metals plated with gold, coins
and bars used as jewellery and purchases funded by the
trading in of existing jewellery.
Mine production
Formal and informal output.
N/A
Not available
Net producer hedging
The change in the physical market impact of mining
companies’ gold loans, forwards and options positions.
Official sector sales
Gross sales less gross purchases by central banks and
other official institutions. Swaps and the effects of
delta hedging are excluded.
OTC investment and stock flows
Partly a statistical residual, this data is largely
reflective of demand in the opaque over-the-counter
(OTC) market, with an additional contribution
occasionally from changes to fabrication inventories.
Physical bar demand
Global investment in physical gold in bar form.
Recycled gold (previously gold scrap)
Gold sourced from old fabricated products which has
been recovered and refined back into bars.
Technology
This captures all gold used in the fabrication of
electronics, dental, medical, industrial, decorative and
other technological applications, with electronics
representing the largest component of this category.
This includes gold destined for plating jewellery.
Tonne
1,000 kg or 32,151 troy oz of fine gold.
Total bar and coin demand
This comprises individuals’ purchases of coins and bars,
defined according to the standard adopted by the European
Union for investment gold, but includes demand for coins
and bars in both the western and non-western markets.
Medallions of at least 99% purity, wires and lumps sold in
small quantities are also included. In practice this
includes the initial sale of many coins destined ultimately
to be considered as numismatic rather than bullion. It
excludes second-hand coins and is measured as net
purchases.
Total investment
Represents the amalgamation of all components of
investment demand, including all demand for physical
bars and coins, demand for ETFs and similar products,
and OTC investment and stock flows.
Revisions to data
All data may be subject to revision in the light
of new information.
Historical data
Data covering a longer time period will be available on
Bloomberg after initial publication of this report;
alternatively, contact GFMS Ltd (+44 20 7478 1777;
gold@gfms.co.uk).
Table of Contents
Sources, copyright and disclaimers
© 2011 World Gold Council. Where expressly identified as
such, the gold supply and demand statistics contained in
this report were compiled by GFMS Ltd. GFMS Ltd retains
all rights in such statistics © 2011.
All rights reserved. Save for the following, no
organisation or individual is permitted to reproduce,
distribute or otherwise use the statistics relating to
gold supply and demand in this report without the written
agreement of the copyright owners. The use of the
statistics in this report is permitted for the purposes
of review and commentary (including media commentary),
subject to the two pre-conditions that follow. The first
pre-condition is that only limited data extracts be used.
The second precondition is that all use of these
statistics is accompanied by a clear acknowledgement of
the World Gold Council and, where appropriate, of GFMS
Ltd, as their source. Brief extracts from the commentary
and other World Gold Council material are permitted
provided World Gold Council is cited as the source. It is
not permitted to reproduce, distribute or otherwise use
the whole or a substantial part of this report or the
statistics contained within it.
Whilst every effort has been made to ensure the accuracy
of the information in this document, neither World Gold
Council nor GFMS Ltd can guarantee such accuracy.
Furthermore, the material contained herewith has no
regard to the specific investment objectives, financial
situation or particular needs of any specific recipient or
organisation. It is published solely for informational
purposes. It does not purport to make any recommendations
and is not to be construed as a solicitation or an offer
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No representation or warranty, either express or implied,
is provided in relation to the accuracy, completeness or
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This report contains forward-looking statements. The use
of the words “believes,” “expects,” “may,” or “suggests,”
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“forward-looking.” The forward-looking statements included
herein are based on current expectations that involve a
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based on statistics compiled by GFMS Ltd. Assumptions
relating to the foregoing involve judgments with respect
to, among other things, future economic, competitive and
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for gold and the international gold markets are subject to
substantial risks which increase the uncertainty inherent
in the forward-looking statements. In light of the
significant uncertainties inherent in the forward-looking
information included herein, the inclusion of such
information should not be regarded as a representation by
the World Gold Council that the forward-looking
statements will be achieved. We caution you not to place
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Gold Demand Trends | Third quarter 2011
Table of Contents
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Table of Contents
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Published: November 2011
Table of Contents
SPDR® GOLD TRUST has filed a registration statement (including a prospectus) with
the SEC for the offering to which this communication relates. Before you invest, you should read
the prospectus in that registration statement and other documents the issuer has filed with the
SEC for more complete information about the Trust and this offering. You may get these documents
for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the Trust or any
Authorized Participant will arrange to send you the prospectus if you request it by calling toll
free at 1-866-320-4053 or contacting State Street Global Markets, LLC, One Lincoln Street, Attn:
SPDR® Gold Shares, 30th Floor, Boston, MA 02111.