Page 40 - Bullion World Volume 03 Issue 6 June 2023

Bullion World | Volume 3 | Issue 6 | June 2023

Gold: A scarce asset with a large market-

World Gold Council

Gold production is The total amount of gold above ground is estimated at 209,000t worth
geographically well diversified, US$12tn*
with no single region producing
more than a quarter of the
world's total mine production
This lessens the possibility of
supply shocks and adds to gold's
comparatively low volatility
compared to other commodities
with less dispersed mining

Gold has been coveted for a very
long time. Over the course of human
history, over 209,000 tonnes of gold
have been extracted, with about
two-thirds of it occurring since 1950.
Gold is practically unbreakable; it
is still accessible in almost all of
its original forms. To put this into Source: Metals Focus, Refinitiv GFMS, US Geological Survey, World Gold
perspective, the above-ground gold Council
hoard, valued at US$12 trillion, could *As of the end of 2022. Value calculated using the LBMA Gold Price at the
be contained in a cube with sides end of the year.
measuring roughly 22 metres (73
feet) in height. Note: Proven reserves as defined by the US Geological Survey.

To give a break up - The Gold's liquidity is on par with other major assets
percentage of jewellery is 46% Only a small amount of gold is lost due to technical and industrial use. Since
(95,547t, or US$6tn). Reserves held gold can be recycled indefinitely, a sizable portion of the above-ground
by central banks total 17% (35,715t, stocks may be mobilised and sold at the secondary market. As a result, few
$2 trillion), and 21% (43,044t, $3tn) financial assets have the same level of liquidity as the gold market. Apart
are bars and coins, 2% (3,473t, from actual gold holdings exchange derivatives and OTC markets increase
US$0.2tn) in the form of gold ETFs overall liquidity
which are physically backed. The
remainder, which is 15% (31,096t, Gold trades more than many other major financial assets-
US$2tn), is primarily industrial
applications and holdings by financial
institutions. Importantly, gold is a
scarce element, and above-ground
stocks grow slowly. Mine production
adds approximately 3,500t per
year, equivalent to an annual 2%
increment.

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