Thursday, 6 Aug 2020

Is Gold A Sunset Industry?

In recent times it has been said the gold mining is facing its sunset, that miners are in trouble and fighting hard to survive. That may be true but are times as dark as everybody seems to make out? Are we facing the end of an industry? Gold is still very important to the economy of most countries. However, for gold producing countries the industry has been losing favour with investors because of falling emolument generation, high environmental costs, low production and low profits. With that said, there is still a growing demand for gold. At the beginning of the year, the World Gold Council released its annual outlook report and in it, they outlined the key reasons that will bolster demand in 2018.

According to the council, there are four key trends that will drive the demand for gold. Economic growth is one of them, followed by shrinking central bank debt, increase in interest rates and market transparency.

When economic growth improves, income rises and the demand for things like gold jewellery and technology containing gold like high-end smart phones will also rise. Gold buyers Brisbane will not only get customers seeking to sell old jewellery but newer gold jewellery that people will be selling for reasons other than needing quick cash. People may sell their jewellery to make space for newer pieces.

Economic growth and income improvement may also spur savings and investment, spurring the demand for investment grade gold products like gold bars and coins.

The world gold council also expected the Chinese economy to expand even further driving the demand for more gold in a country that is already the biggest consumer of the yellow precious metal. The Chinese aren’t backing down with their One Belt One Road global initiative which means that they will have an impact in the countries they wish to expand their initiative to.

So, let’s look at where the demand for gold comes from

  • Jewellery fabrication

Jewellery accounts for a sizeable percentage of gold demand in the world. The demand for jewellery grade gold alone, exceeds what the mines are able to produce annually. The gold buyers Brisbane make up the shortfall by reclaiming gold from old jewellery and other scrap material.

  • Industrial applications

Jewellery is used in a variety of industries besides the jewellery industry. Gold is used in the aerospace industry, in medicine, electronics, dentistry and others. Gold’s unique electrical conducting qualities makes it the ideal material to use in electronic circuitry found in equipment like cellphones.

Gold does not tarnish or corrode which is why it is used for crowns, gold inlays and other dental applications.

  • Governments

Governments and their central banks also affect the demand for gold. They buy up gold to increase  their official reserves.

  • Private investors

Private investors invest in gold as part of their investment portfolios. The demand for gold by private investors often depends on the economy and market circumstances.

Gold production may wane, but the demand for this precious metal will always be there unless better materials are found to do what gold is able to do. On the contrary, the application of gold has expanded to other industries, which means demand will keep growing, which means demand will keep growing therefore gold buyers Brisbane will continue to recycle gold to meet demand.

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