Global gold market dominated by Chinese production

Press Release   •   Jun 19, 2013 09:55 BST

The global gold market has been forecast to increase at a compound annual growth rate (CAGR) of 12.7% over the next five years, increasing from revenues of $103.4bn in 2012, to a value of $187.7 billion by the end of 2017.

Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or harbour against economic, political, or social fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest). The gold market is subject to speculation as are other markets, especially through the use of futures contracts and derivatives.

The global gold market has recently attracted a lot of attention and the price of gold is relatively higher than its historical trend. For mining companies to mitigate risk and uncertainty in gold price fluctuations, make hedging, future investment and evaluation decisions, depend on forecasting future price trends.

Today, like most commodities, the price of gold is driven by supply and demand as well as speculation. However unlike most other commodities, saving and disposal plays a larger role in affecting its price than its consumption.

Most of the gold ever mined still exists in accessible form, such as bullion and mass-produced jewellery, with little value over its fine weight -- and is thus potentially able to come back onto the gold market for the right price.

China is now the biggest gold mining and producing country on the planet. For more than 100 years, the country that dominated the gold mining market was South Africa. Blessed with large reserves of ore, an entrepreneurial mining culture and a strategic geographic location, South Africa was for centuries the world's leader in gold production.

That all came to a crashing halt in 2007, when China overtook South Africa as the No. 1 gold producer globally. What's remarkable is the speed and scale with which China has been able to take the top spot. In 2006, China produced 248 tons versus South Africa's 272 tons.

Now, China produces more than 370 tons per year and may in fact reach 400 tons very shortly. What's even more impressive is that China has been able to ramp up production while all the other top-producing countries (such as South Africa, Australia and the United States) decreased production.

As other countries have scaled back production due to labor, environmental and logistical issues, the Chinese gold industry went into a consolidation phase and now produces more than 60 percent of its gold from only five provinces.

For more information on the global gold market, see the latest research: Global Gold Market

Follow us on Twitter @CandMResearch issues news updates and report summaries covering all major industries and sectors. The service provides additional client monitoring and timely alerts to breaking industry and sector news leading the day's business headlines. News articles, written by our staff, contain additional analyst insight, providing value added insight for our readers. News updates and real-time alerts on newly-released market reports are also available from our Facebook page, Twitter feed @CandMResearch and RSS links. We also welcome inquiries from business journalists and the news media.