Global Gold Demand Up; World Gold Council Establishes Conflict-Free Gold Standard, proposes gold collateral plan for Eurozone members
The global demand for gold in 2012 has remained more consistent as compared to 2011. The demand for the yellow metal in the third quarter of 2012 was significantly higher than the quarterly average of the past five years, according to the Gold Demand Trends Report released by the World Gold Council.
Worldwide demand for ETFs in Q3 2012 rose by a whopping 56% as compared to Q3 2011. To take things further, there was a substantially higher demand for gold as an investment option rather than jewellery. While investment demand spiked by 12% in 2012 as compared to 2011, jewellery demand went up by 7% in the same time frame.
The story, however, was different in China. Gold demand decreased by 8% in Q3 2012 as compared to Q3 2011. The cause of this was the largely negative outlook on the nation’s economy.
In other news, the World Gold Council recently published the Conflict-Free Gold Standard with comprehensive inputs by gold mining conglomerates, supply chain representatives, members of civil society, and governments. This was undertaken in an effort to address and combat the misuse of mined gold being used to fund civil unrest and conflict in politically unstable regions.
The Conflict-Free Gold Standard strives to ensure transparency and institute trust in gold supply chains. It also outlines principles that require mining companies to refrain from causing or escalating violent, armed conflict and other human rights atrocities. The Standard elaborates on the fact that gold mining can contribute to social and economic development worldwide if undertaken responsibly.
Gold demand in Q3 2012 increased by a notable 10% compared to Q2, but dipped in comparison to Q3 2011. Furthermore, investment options like gold coins and bars or bullion also witnessed a decline of 16% as compared to Q3 2011.
The trend which stood out in Q3 when it came to investments was that of gold ETFs, all while the demand for gold jewellery and its use for technology saw a downward trend, that is 2% and 6% respectively, in the same time frame.
The gold supply in 2012 waned, with a yield of 1188.3 tons. Despite this, a majority of individual buyers continued buying the metal as an investment even though investment demand was lower than in Q3 2011. The diminishing demand for gold bullions and coins was reflected in the 30% decline as compared to the previous year. However, it is to be noted that demand for these instruments had touched exceedingly high levels in 2011 relative to the preceding five years.
The best performing gold market in Q3 2012 was India, which witnessed a 7% and 12% increase in gold jewellery and investment demand respectively. The Indian market alone accounted for about 30% of the total consumer demand for the yellow metal in 2011, due to the festive season and positive outlook on the economy and gold prices.
The converse, however, was apparent in China. China’s gold market took a beating due to a relatively negative outlook on economy and slower growth at present, represented by a 12% decline in demand for gold coins and bars (on a year on year basis). That said, this pattern is believed to be just temporary, and the Chinese gold demand and supply statistics are expected to improve in the long term.
Last but not least, central banks, which have increased their purchases of gold reserves in the past few years, accounted for approximately 9% of the total gold demand in the Q3 2012 phase.