Filed Pursuant To Rule 433
Registration No. 333-180974
August 15, 2013
WORLD GOLD COUNCIL
Gold Demand Trends
Second quarter 2013
August 2013 www.gold.org
Tonnes
1,600
1,400 + 221.7
1,200 + 154.7 +0.9
974.6
1,000
-402.2 856.3
800 -93.4 -118.2 600 400 200
0
Q2’12 Jewellery Technology Total bar ETFs and Central Q2’13 Net change and coin similar bank net Q2’13 – Q2’12 demand products purchases Source: Thomson Reuters GFMS, World Gold Council
Contents
Executive summary 02
Global gold market – second quarter 2013 review 06
Jewellery 06
Investment 08
Central banks 10
Technology 10
Supply 11
Gold demand statistics 13
Appendix 21
Notes and definitions 25
Contributors
Louise Street louise.street@gold.org
Krishan Gopaul krishan.gopaul@gold.org
Johan Palmberg johan.palmberg@gold.org
Juan Carlos Artigas juancarlos.artigas@gold.org
Marcus Grubb
Managing Director, Investment marcus.grubb@gold.org
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Executive summary
In a turbulent quarter, demand fell by 12% to 856.3 tonnes (t). A wave of outflows from ETFs was the principal cause of the decline, although this was mitigated by record demand for gold bars and coins. Continuing the theme of the previous quarter, demand for jewellery grew significantly to reach multi-year highs. Supply declined by 6%, the primary reason being a marked contraction in recycling.
Table 1: Q2 2013 gold demand overview
Tonnes US$mn
Q2’12
Q2’13
5-year average
Year on Year % change
Q2’12
Q2’13
5-year average
Year on Year % change
Jewellery 420.8 575.5 503.9 37 21,775 26,179 20,854 20
Technology 103.3 104.3 108.8 1 5,348 4,743 4,528 -11
Investment 285.9 105.4 374.5 -63 14,794 4,794 15,779 -68
Total bar and coin demand 285.9 507.6 297.7 78 14,795 23,091 12,968 56
ETFs and similar products 0.0 -402.2 76.8 - -1 -18,297 2,809 -
Central bank net purchases 164.5 71.1 49.9 -57 8,514 3,236 2,776 -62
Gold demand 974.6 856.3 1,037.1 -12 50,430 38,952 43,936 -23
Source: Thomson Reuters GFMS, World Gold Council
The 12% decline in tonnage demand translated into a 23% drop in value to US$39bn – its lowest level for more than three years (Table 1). Q2 saw an absolute drop in the gold price of more than US$400/oz – a double-digit decline in the average quarterly price compared with both Q1 2013 and Q2 2012 (Table 2). In the context of this price move, the decline in value terms is unsurprising. That total bar and coin demand was able to reach a record value of US$23.1bn in spite of such a sizeable price move is testament to the strength of demand in that sector.
The price action also had an impact on the supply side of the gold market resulting in a sharp contraction in recycling. In what
is a normal reaction to sharply weaker prices, recycling activity shrank – primarily due to consumers in developing markets holding onto their stocks of old gold as the profit motive waned along with the gold price. Please see the section on supply for a more in depth discussion of recycling.
The second quarter saw: 1) a continuation of the strong recovery in consumer demand for jewellery; 2) the prominent role of India and China on the global stage; 3) a divergence between different elements of investment; and 4) a shift in focus from West to East – all of which were amplified compared to last quarter.
Table 2: Average gold prices in various currencies
2011 2012 Q2’12 Q3’12 Q4’12 Q1’13 Q2’13 Q2’13 vs Q2’12 % chg
US$/oz 1,571.5 1,669.0 1,609.5 1,652.0 1,721.8 1,631.8 1,414.8 -12
€/oz 1,129.9 1,298.7 1,254.7 1,320.2 1,328.8 1,235.6 1,083.2 -14
Ł/oz 980.8 1,053.0 1,016.6 1,045.3 1,072.6 1,051.6 921.4 -9
CHF/kg 44,649.6 50,323.7 48,464.7 51,088.5 51,603.7 48,792.5 42,865.7 -12
Ą/g 4,015.8 4,278.2 4,144.4 4,174.8 4,478.6 4,834.7 4,492.5 8
Rs/10g 23,624.1 28,639.4 28,004.8 29,302.1 29,964.7 28,420.8 25,381.0 -9
RMB/g 326.3 338.5 327.6 337.3 345.7 326.5 280.0 -15
TL/g 85.4 96.6 93.5 95.8 99.3 93.6 83.6 -11
Source: LBMA, Thomson Reuters Datastream, World Gold Council
The great gold jewellery rush
Having flexed their muscles in the first quarter, jewellery consumers were out in force again in Q2, pushing the value of demand to near-record levels. Tonnage surged to such an extent – far outweighing the decline in the average gold price – that demand in value terms was up 20%.
Although jewellery demand is influenced by a wide set of factors, including economic growth, consumer sentiment and disposable income, to name a few, all were eclipsed by the effect of the drop in the gold price. The resultant buying frenzy caused a huge rise in regional premiums on gold, as supply chain bottlenecks caused delays in meeting demand.
The upward trend was almost universal, with the most notable year-on-year improvements occurring in India, China, the Middle East and smaller Asian countries. The focus in most markets was on higher carat jewellery with its connotations as an investment proxy. Europe was the only region not to see an improvement in jewellery demand, unsurprisingly in light of continued concerns over the region’s economic wellbeing. As we had expected, the US delivered a second consecutive quarter of growth, with lower jewellery price points well received. Although demand was again healthiest at the high end of the US market, there was also evidence of a slowdown in the shift to lower carat items in the middle segment. Demand was augmented by growth at the wholesale level, with lower prices presenting a favourable opportunity to embark on early stock building in preparation for the seasonally strong fourth-quarter.
India and China still lead the field
The consumer market for gold was once again dominated by global leaders India and China, which together accounted for almost 60% of the global jewellery sector and around half of total bar and coin demand. On a year-to-date basis, total consumer demand (for jewellery, bars and coins) in each country is almost 50% ahead of the same period in 2012.
In both markets, the strength in second quarter demand was indicative of opportunistic buying not only at the consumer level but also by the trade, which used the opportunity to bolster stocks. This attitude among consumers is perhaps a more surprising result for China, where the historical tendency has been to buy into a rising trend, and is more remarkable for the fact that the second quarter is traditionally a seasonal low point for gold, coming as it does after the Q1 peak of Chinese New Year-related purchases. However, the response in part reflects the strength of positive price expectations in the market, a view that was replicated in India and which is borne out by World Gold Council survey results, as discussed overleaf.
Chart 1 depicts an increasing conviction among Indian and Chinese consumers that gold prices will be stable or higher in the future, with particular positivity around longer-term expectations for the gold price. What is notable is that positive price expectations appeared to have increased with subsequent drops in the price, illustrating extremely resilient sentiment around the future trajectory of gold.
The strength of growth confirms that gold jewellery remains highly desirable, with consumers committed to spending their allocated budget rather than taking advantage of lower prices to spend less: indeed, both markets saw an increase in the value of jewellery demand (in local currency terms) in excess of 30%, suggesting that budgets were increased to make the most of the opportunity. The positive response to the price drop was enhanced by supportive conditions in both countries: a growing middle class and relatively high inflation/inflation expectations, combined with the ingrained cultural significance of gold.
The Q2 data also confirms that the investment case for gold in China remains compelling: the poorly performing stock market is not an attractive alternative investment; concern lingers over the possibility of a domestic credit crisis and economic slowdown; inflation, although much less of an issue than in previous years, is creeping higher; and gold investment products are increasingly available and easily accessible to a captive domestic audience.
The second quarter in India, where bar and coin demand reached a record high, clearly needs to be considered in the context of domestic developments, given government efforts to curb gold imports and their contribution to the current account deficit. The introduction of restrictions on payment terms for gold imports in May and an increase in import duties in early June created uncertainty in the market but had a limited impact on end-user demand, which was met by stocks that had been built up to healthy levels following the April price drop. Nevertheless, imports tailed off in June with demand slowing sharply as the market entered its seasonal quiet period and as the government extended the restrictions on gold imports as well as further raising import duties to 8%.
In more recent weeks, the change in emphasis from restricting payment terms to linking import quotas to exports is likely to create further confusion and exaggerate the normal Q3 lull in Indian demand ahead of the Q4 festival and wedding season. However, it is interesting to note that price premiums in India have recently spiked higher again, suggesting that demand is healthy. A good monsoon season so far also bodes well for demand later in the year, with the assumption that the market will by then have had time to digest and acclimatise to the recent restrictions imposed by the Reserve Bank of India (RBI).
Chart 1: Survey of Indian and Chinese consumers: Over the next five years, what do you think will happen to the gold price?
May 2013 (Average price of gold during fieldwork: US$1,461/oz)
It will increase 62%
It will remain stable 20%
It will decrease 13%
Don’t know 5%
July 2013 (Average price of gold during fieldwork: US$1,235/oz)
It will increase 66%
It will remain stable 19%
It will decrease 11%
Don’t know 4%
Survey results reveal positive future price expectations among Indian and Chinese consumers following the April price pullback.
These results help to explain the strength of the demand response.
Note: Survey of 1,000 Indian and 1,000 Chinese consumers and their attitudes towards gold conducted by the World Gold Council during May – July 2013.
Source: World Gold Council
Gold Demand Trends | Second quarter 2013
Investment forces counterbalance
As we discussed in the previous issue of Gold Demand Trends, ETF outflows accelerated during the second quarter as a number of hedge funds and speculative investors exited their positions in reaction to predictions of US economic recovery. The prospect of the US government tapering quantitative easing by the end of 2013 had a disproportionate downward impact on the gold price as some investors in ETFs saw their key rationale for seeking a safe haven in gold fade (for a fuller discussion on the factors that affect gold’s performance, please see Gold Investor, Volume 3 ).1 The net result was a more-than 400-tonne reduction in ETF holdings in Q2.
Conversely, the precipitous price drop elicited an unprecedented response from ‘retail’ buyers of gold bars and coins – a phenomenon examined in our recent Market Update.2 Demand in this sector of the market mushroomed as strategic investors – focused on gold’s core qualities as an inflation-hedge and store of wealth – took advantage of lower prices to add to their long-term holdings.
These two sectors deviated more widely in the second quarter, with record demand for gold bars and coins moderately exceeding record ETF outflows (Chart 2). However, while ETFs may continue to contract, we expect the pace to slow as the holder base becomes stickier. Bar and coin demand may struggle to maintain the exceptional levels of the past quarter, however it has solid underpinnings – most notably in the Asian markets.
Focus shifts Eastwards
The divergence between ETF demand and bar/coin demand is illustrative of another shift within the investment segment: a geographical swing from West to East.
The 2008 crisis caused a shift in the investment pendulum towards western markets: gold investment in Europe and the US was reinvigorated as the crisis unfolded. A reversal of this shift will be a likely feature in the coming quarters, with the focus for demand moving from the west back to the east, particularly as India and China cement their dominant position.
There is evidence to suggest that this is an increasingly widely held view: Australia and New Zealand Banking Group (ANZ) is the latest bank to have opened gold vaulting facilities in Singapore – a market that is on its way to becoming a trading hub for the Asia-Pacific region – in order to satisfy growing demand from the region. That Japanese gold ETFs saw a counter-trend rise in holdings during the second quarter, albeit representing a fraction of global holdings, underscores the geographical flow.
Chart 2: Investment demand by category
Tonnes
800 600 400 200 0 -200 -400 -600
Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12 Q2’13
Physical bar demand Official coin Medals/imitation coin ETFs and similar products
Record demand for gold bars and coins compensates for ETF outflows in the second quarter.
Source: Thomson Reuters GFMS, World Gold Council
1 World Gold Council, Gold Investor, Volume 3, What drives gold? Factors that influence gold and its role in a portfolio, July 2013
2 World Gold Council, Market Update, Second quarter 2013.
04_05
Global gold market – second quarter 2013 review
Jewellery
Quarterly jewellery volume rose to its highest level for five years as the sharp drop in prices met with a very positive reception across the globe. Despite the lower prices, demand in value terms was the fourth highest on record.
India and China generated the largest volume increase – almost 120t of the 155t increase in demand was from the two Asian giants. We see a notable dampening of Indian demand over the coming months, more than would normally be expected during the usual Q3 slowdown, as the market digests import regulation changes. Indications for the fourth quarter so far remain positive. In China, continued expansion of the domestic jewellery retail network and growth in production
capacity has positive longer-term implications for jewellery demand, but the market faces possible shorter-term headwinds from a more material economic slowdown. Please refer to the Executive Summary for a more detailed look at these markets.
Hong Kong generated the strongest percentage growth in demand, surging to a record 12.1t (Chart 3). Similar conditions to those in mainland China were experienced: jewellery retailers were swarmed and stocks were exhausted with notable time delays in replenishing showrooms. Mainland consumers accounted for much of the growth in demand as tourist numbers swelled. Domestic consumers focused their attention on wedding jewellery, taking advantage of the favourable price environment.
Chart 3: Jewellery demand by country in volume (Q2’13 vs Q2’12, % change)
% change
80 70 60 50 40 30 20 10 0 -10 -20 -30
Other Gulf UAE Taiwan USA Japan Italy UK
Hong Kong China India Egypt Thailand Turkey Indonesia Vietnam Saudi Arabia South Korea Russia
• Lower prices saw consumers across Asia and the Middle East clamouring to buy.
• The double-digit growth in jewellery demand seen in most markets was bolstered by replenishment of stocks at the trade level.
Source: Thomson Reuters GFMS, World Gold Council
Gold Demand Trends | Second quarter 2013
Double-digit growth was commonplace among the smaller Asian markets, although Japan was a notable outlier, being unchanged from the previous year as consumers focused instead on investment products. In Indonesia, demand of 7.8t was the strongest second quarter since Q2 2009. Domestic demand was particularly responsive to the April price drop. Demand was more subdued in June, however there were signs of a renewed pick-up in July. Stock replenishment at the trade level also contributed to growth.
Turkish jewellery demand hit a record high in terms of local currency value at TL2.2bn, well above its 21t five-year quarterly average. As well as the expected bargain hunting among consumers (which was concentrated in 22-carat due to the investment overlap of that segment), trade demand was also a key feature of this market. The opportunity to build inventories at lower prices ahead of the summer sales peak proved attractive to the trade.
Growth across the Middle Eastern region was almost purely price-related and we have commented previously on the extreme impact on price premiums in Dubai. Demand in the UAE was heavily buttressed by the substantial ex-pat Indian community, which favours 22-carat items.
Western consumers did not respond with quite the same relish to the lower price environment. As discussed in the Executive Summary, the US market saw an improvement that was not replicated in the western European markets, where negative economic conditions overwhelmed the positive impact of lower prices. Italian consumers expressed an increasing interest in silver and non-precious alternatives. In the UK, the 9-carat segment was one of the worst hit, losing out to the high-volume fashion market. UK hallmarking statistics also reveal a relatively healthy quarter for the high-end 22-carat segment, indicating a relative increase in the gold content of each piece being hallmarked.
Jewellery demand in Russia continued to normalise towards pre-crisis levels. Reports suggest a growing divergence in the market, with demand being concentrated in both the high and low ends of the market. While the prospects for 2013 as a whole are good, the softening of domestic economic conditions suggests a tempering of growth in this segment further out.
06_07
Investment
As discussed in the Executive Summary, the notable decline in demand for gold investment products in Q2 conceals a less clear-cut picture: one of professional investors liquidating ETFs, while investors in Asian and Middle Eastern markets eagerly absorbed the gold coming onto the market in the form of bars and coins. This divergent picture highlights the unique balance in the gold market, which sees demand from one sector compensating for declines elsewhere.
Total investment demand (which includes OTC investment and stock flows – the element of investment capturing less visible investment flows and possible stock changes, as well as any statistical residual) also showed a notable year-on-year decline. In value terms, total investment was at a two-year low.
The 151.5t of OTC investment and stock flows demand was made up of inflows from a number of different sources, including investment in gold deposit accounts (not captured in total bar and coin demand): growing interest in such investment vehicles was notable in China, Turkey and Japan. The numbers are also thought to reflect a continued shift into allocated accounts by some investors who sold out of their ETF positions.
During the first half of the year, bar and coin demand has reached 913.2t, around three-quarters of the 2012 annual total (Chart 4). The extent of demand is supported by recent statistics released by the LBMA, showing a second consecutive 12-year high in the monthly volume of gold transferred between accounts held by bullion clearers in June. Transactions averaged 29.0 million ounces per day during the month ‘buoyed by strong physical demand, particularly from China and India’ according to the LBMA.3
The global response to the price decline was almost universally positive – France being the sole exception among the individual countries that we monitor. Excluding India and China (which are discussed in detail in the Executive summary), the 262.7t of demand from the rest of the world has been exceeded on only two previous occasions: in Q4 2008, the aftermath of the financial crisis; and Q3 2011 as Europe was engulfed by the sovereign debt crisis.
Chart 4: Total bar and coin demand
Tonnes
1,600
1,400
1,200
1,000
800
600
400
200
0
2009 2010 2011 2012 2013
January – June July – December
Total bar and coin demand for the first half year is running at 76% of the average annual total from 2009 – 2012.
Source: Thomson Reuters GFMS, World Gold Council
3 http://www.lbma.org.uk/pages/index.cfm?page_id=51&title=clearing_-_most_recent_figures
Gold Demand Trends | Second quarter 2013
For the most part, investors were encouraged by the price fall, viewing it as an opportunity to add to their holdings more cheaply. The resultant increase in net investment was magnified as lower prices also discouraged profit-taking on existing investment; Japan was a prime example of this. Gross new investment outweighed selling by 4.5t in Japan, a market that has seen virtually continuous disinvestment since 2006 (with the exception of the somewhat anomalous Q4 2008, when volatile currency and stock markets generated a temporary surge in investment). The younger generation in Japan was the main source of demand, representing a source of new investment in the market. At the same time, profit taking among the older generation, which had been triggered by the almost ¥5,000/g peak early in the quarter, dropped markedly in line with the price.
We have previously commented on the possibility of Asian investors absorbing the gold flowing out of ETFs in recent months and this would seem to be the case. The high - in some cases record - gold price premiums that were reached during the second quarter in a number of markets were the result of bottle-necks in the supply chain as refiners, even working at full capacity, struggled to convert larger gold bars (London Good Delivery bars and 100-oz bars) into smaller bars fast enough to meet the needs of Asian consumers. Growth in the smaller markets – Thailand, Vietnam and Indonesia – underscores this theme. Year-to-date, the combined demand from these three markets is up 46% with premiums on gold sold by Vietnam’s central bank at times exceeding US$200/oz.
The jump in investment across the European region was dominated by Germany and other German-speaking countries. Demand was heavily concentrated in bars rather than coins; 250g bars in particular were reported as being the most popular. Switzerland’s healthy investment number masked a decent amount of selling as well as robust net new investment.
US investors were similarly inspired by the opportunity to add to their bar and coin holdings at lower prices. American eagle coins flew off the shelves, to such an extent that stocks of the one-tenth ounce coins – which had been built up prior to mid-April – sold out and sales of that denomination were briefly halted.
Investment in Turkey hit new quarterly records for both volume (37.9t) and Lira value (TL3.2bn). Advanced purchasing of coins for gifting during the summer wedding season made a notable contribution to the numbers, which largely reflected strategic investment purchases. The opening weeks of the third quarter saw a strike at the Turkish mint, which may have generated a spike in unofficial flows during the current quarter.
Turkey’s strong quarter was mirrored in the regional total for the Middle East, which was a record 11.6t. Demand in the UAE was again heavily influenced by the non-resident Indian population.
While the April price correction generated a strong surge in demand, the initial response to the June price fall was somewhat more cautious in a number of markets. However, anecdotal evidence suggests that interest subsequently revived during the opening weeks of July as price volatility subsided. While indications are that some of the recent surge in demand was tactical in nature – and therefore could result in a degree of profit-taking should higher prices materialise during the remainder of the year – the bulk was from long-term investors adding to their physical holdings of gold.
08_09
Central banks
The rate at which central banks added gold to their reserves stayed within the broad 70-160t range we have previously cited (Chart 5). Although the pace of demand slowed, the year-on-year comparison is made with a record quarter in Q2 2012. The lower rate of purchasing is likely a result of a number of factors: the volatile price moves during the quarter; weakness in emerging market currencies; and the declining rate of growth in foreign exchange reserves among some banks.
Purchases were concentrated among countries in the CIS region, the largest being Russia with 15 tonnes over the quarter. Year-to-date, Russian gold reserves have grown by almost 39t. Germany’s small sale in June (of less than 1 tonne) was the latest in a series of regular sales to the finance ministry for the purpose of minting coins.
We expect central banks to remain net buyers of gold, although there may be a slight drop-off in annual demand to between 300-350t. This is still roughly in line with the average for the last three years. The fundamental arguments for central bank buying remain in place; allocations to gold are still largely far below ‘optimal’ in many emerging markets; and the desire to diversify away from an over-dependence on the US dollar continues to inform asset allocation strategy at many central banks.
Technology
The use of gold in technological applications was marginally higher in Q2, the first – albeit modest – quarter of year-on-year growth for two years. Marginal growth in electronics and ‘other industrial and decorative’ was partially eroded by continued decline in dental demand.
Inventory build in the electronics supply chain contributed to growth in the sector. The gold price correction provided a much needed boost to the sector as manufacturers took advantage of lower prices to replenish previously liquidated assets. Growth was concentrated in the semi-conductor space (dominated by mobile phones and tablets as well automotive-specific applications). Migration from gold to copper in the production of bonding wire remains a significant threat to demand in this area.
Other industrial and decorative demand for gold also benefited from the lower price environment. India as usual dominated the segment (primarily through demand for jari – gold thread used in the weaving of saris) as the price sensitive market rushed to replenish stocks.
Dental demand was unable to reverse its long term decline, slipped to a new all-time low. Increasing use of ceramics, base metals and palladium further eroded gold’s share of this market.
Chart 5: Central bank contributions to demand in tonnes
Tonnes
175
150
125
100
75
50
25
0
-25
Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12 Q2’13
Net sales Net purchases 3-year quarterly average
Central banks complete their tenth consecutive quarter of net purchases.
Purchases were concentrated among central banks in the CIS region.
Source: Thomson Reuters GFMS, World Gold Council
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Gold Demand Trends | Second quarter 2013
Supply
A 62.4t decrease in the supply of gold during the second quarter was almost solely due to reduced quantities of recycling coming onto the market (Chart 6).
As briefly discussed earlier, a fall in the supply of recycling was heavily influenced by the developing world, where well-informed consumers are able to respond at speed to changes in the gold price. Recycling in those markets dropped 25% compared with Q2 2012 and, given price expectations among consumers in China and India (Chart 1), a resurgence in supply would likely require a significant recovery in the price.
The 672.1t of recycling supply in the first six months of the year was the lowest first-half total since 2007. The fact that this element has subsided to pre-crisis levels is a function not just of lower prices but of a lower need for ‘distress selling’ among consumers in developed markets, particularly the US. Recycled gold supplied by industrialised countries was 14% below the same period a year earlier and there is little scope for any material growth from this quarter, given further signs of economic recovery in a number of markets and the severe depletion of stocks of old gold available for sale.
Recycling has generated, on average, 40% of total supply over the last five years. Supply from this sector, particularly in the developing markets, is highly price sensitive; as such, the immediate and notable contraction in the second quarter – to 30% of total supply – was to be expected.
This is broadly borne out by historical precedent: Table 3 summarises a simple analysis between gold prices and recycling. It highlights the change in recycling (in US$ value terms) during previous periods in which the annual average gold price declined in at least two consecutive years, with a cumulative decline of at least 10%.
The data shows a correlation between recycling activity and the gold price, with a 10% decline in price on average corresponding with a 14% decline in the value of recycled gold when periods of substantial and sustained price pullbacks occur. It is worth noting, however, that gold prices are not the only driver of recycling. Economic and income growth as well as price volatility can also have an effect.
Table 3: Value of recycling during prolonged price declines
Cumulative decline in annual average gold price (London PM fix) Q2’12
Cumulative reduction in of recycling (US$ value)
1980–1982
-38.9%
-69.8%
1983–1985
-25.1%
-15.5%
1987–1989
-14.7%
-27.4%
1990–1992
-10.3%
-17.6%
1996–1999
-28.2%
-30.8%
Average
-23.4%
-32.2%
Chart 6: Quarterly supply in tonnes
Tonnes
1,400 1,200 1,000 800 600 400 200 0 -200
Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12 Q2’13
Mine production Net producer hedging Recycled gold
Recycling activity subsided to pre-crisis levels largely in reaction to the price pullback.
Mine production expanded modestly, with largest contribution to year-on-year growth coming from China.
Source: Thomson Reuters GFMS, World Gold Council
10_11
There are a number of reasons for this relationship between recycling and the gold price: not only are consumers less likely to part with their old gold at lower prices (the profit motive being less appealing), but improving economic sentiment also makes recycling less necessary for consumers in need of funds. Add in the fact that the process of recycling gold becomes less economically viable at lower prices and you have the makings of a smaller contribution from this sector of the market as the price declines.
The second quarter saw an extension of the upward drift in mine production, which has been relatively stable with a moderate upward bias since Q1 2008. Main contributors to growth in the sector were little changed from last quarter, with China generating the bulk of the increase thanks to expansion among a number of small- to medium-sized operations. Production at Pueblo Viejo in the Dominican Republic continued to ramp up and in Brazil, three new operations have come on stream since Q2 2012, boosting the year-on-year comparison.
Peru and Ghana were joined by Indonesia on the list of regions that saw a year-on-year decline in mine production.
While mine production historically has been slow to react to changes in the price, the extent of the fall in the second quarter has elicited a swift response from gold producers. Recent spending cuts and the closure of costly operations across the industry may start to have an impact on the supply pipeline by the end of this year.
De-hedging of 15t was indicative of a continued desire among producers to reduce further their outstanding hedge positions. Interest in taking out fresh hedging positions was virtually non-existent and any such activity was confined largely to guarding against price volatility rather than insuring against an extended down trend in the price.
Gold demand statistics
Table 4: Gold demand (tonnes)
2011 2012 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’131 Q2’13 vs Q2’12 % chg 4-quarter % chg2
Jewellery 1,975.1 1,896.1 457.0 472.5 490.8 420.8 462.1 522.5 551.4 575.5 37 15
Technology 451.7 407.5 115.2 103.4 105.8 103.3 102.1 96.2 102.2 104.3 1 -5
Electronics 319.9 284.5 82.7 72.7 73.8 71.4 72.3 67.0 71.8 72.8 2 -6
Other industrial 88.9 84.4 22.1 20.3 22.0 22.1 20.5 19.9 21.5 22.3 1 -3
Dentistry 42.9 38.6 10.5 10.4 10.0 9.8 9.3 9.4 8.8 9.2 -6 -10
Investment 1,703.8 1,534.7 508.9 462.4 397.9 285.9 425.3 425.6 229.1 105.4 -63 -28
Total bar and coin demand 1,518.7 1,255.6 421.5 358.0 344.7 285.9 287.5 337.4 405.6 507.6 78 9
Physical bar demand 1,185.8 944.6 327.0 281.3 265.4 211.7 213.9 253.7 294.7 370.7 75 4
Official coin 245.2 197.5 74.5 58.7 52.8 51.4 43.9 49.4 80.1 98.6 92 15
Medals/imitation coin 87.8 113.4 20.0 18.1 26.5 22.8 29.7 34.3 30.8 38.4 68 52
ETFs and similar products3 185.1 279.1 87.4 104.4 53.2 0.0 137.8 88.1 -176.5 -402.2 - -
Central bank net purchases 456.8 544.4 140.8 112.8 115.2 164.5 113.3 151.4 109.7 71.1 -57 -16
Gold demand 4,587.4 4,382.7 1,221.9 1,151.1 1,109.7 974.6 1,102.8 1,195.6 992.4 856.3 -12 -7
London PM fix (US$/oz) 1,571.5 1,669.0 1,702.1 1,688.0 1,690.6 1,609.5 1,652.0 1,721.8 1,631.8 1,414.8 -12 -4
1 Provisional.
2 Percentage change, 12 months ended June 2013 vs 12 months ended June 2012.
3 For a listing of the Exchange Traded Funds and similar products, please see the Notes and definitions.
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Table 5: Gold demand (US$mn)
2011 2012 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’131 Q2’13 vs Q2’12 % chg 4-quarter % chg2
Jewellery 99,794 101,745 25,007 25,641 26,676 21,775 24,543 28,923 28,927 26,179 20 10
Technology 22,823 21,865 6,306 5,611 5,752 5,348 5,423 5,325 5,362 4,743 -11 -9
Electronics 16,164 15,266 4,523 3,946 4,010 3,696 3,841 3,708 3,769 3,310 -10 -10
Other industrial 4,493 4,530 1,207 1,103 1,196 1,142 1,087 1,100 1,130 1,012 -11 -7
Dentistry 2,166 2,069 576 563 546 509 495 518 462 421 -17 -14
Investment 86,085 82,350 27,847 25,097 21,628 14,794 22,589 23,559 12,017 4,794 -68 -30
Total bar and coin demand 76,735 67,375 23,067 19,431 18,736 14,795 15,272 18,680 21,278 23,091 56 3
Physical bar demand 59,911 50,689 17,897 15,267 14,424 10,954 11,360 14,044 15,463 16,863 54 -1
Official coin 12,388 10,600 4,076 3,184 2,870 2,661 2,333 2,735 4,202 4,484 68 8
Medals/imitation coin 4,436 6,086 1,094 980 1,442 1,180 1,579 1,901 1,614 1,745 48 46
ETFs and similar products3 9,350 14,975 4,780 5,666 2,892 -1 7,317 4,879 -9,261 -18,297 - -
Central bank net purchases 23,081 29,211 7,708 6,121 6,259 8,514 6,020 8,379 5,756 3,236 -62 -18
Gold demand 231,783 235,171 66,869 62,470 60,315 50,430 58,575 66,185 52,061 38,952 -23 -10
1 Provisional.
2 Percentage change, 12 months ended June 2013 vs 12 months ended June 2012.
3 For a listing of the Exchange Traded Funds and similar products, please see the Notes and definitions.
Source: LBMA, Thomson Reuters GFMS, World Gold Council
12_13
Table 6: Total investment demand (tonnes except where specified)
2011 2012 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’131 Q2’13 vs Q2’12 % chg 4-quarter % chg2
Investment 1,703.8 1,534.7 508.9 462.4 397.9 285.9 425.3 425.6 229.1 105.4 -63 -28
Total bar and coin demand 1,518.7 1,255.6 421.5 358.0 344.7 285.9 287.5 337.4 405.6 507.6 78 9
Physical bar demand 1,185.8 944.6 327.0 281.3 265.4 211.7 213.9 253.7 294.7 370.7 75 4
Official coin 245.2 197.5 74.5 58.7 52.8 51.4 43.9 49.4 80.1 98.6 92 15
Medals/imitation coin 87.8 113.4 20.0 18.1 26.5 22.8 29.7 34.3 30.8 38.4 68 52
ETFs and similar products3 185.1 279.1 87.4 104.4 53.2 0.0 137.8 88.1 -176.5 -402.2 - -
OTC investment and stock flows4 -88.4 30.3 -30.8 21.3 -73.9 110.9 50.9 -57.5 65.5 151.5 37 667
Total investment 1,615.4 1,565.0 478.0 483.7 324.0 396.8 476.2 368.0 294.6 256.9 -35 -17
Total investment US$mn 81,617 83,976 26,160 26,250 17,608 20,535 25,291 20,373 15,455 11,688 -43 -20
1 Provisional.
2 Percentage change, 12 months ended June 2013 vs 12 months ended June 2012.
3 For a listing of the Exchange Traded Funds and similar products, please see the Notes and definitions.
4 For an explanation of OTC investment and stock flows, please see the Notes and definitions.
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Table 7: Gold supply and demand World Gold Council presentation
2011 2012 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’131 Q2’13 vs Q2’12 % chg 4-quarter % chg2
Supply
Mine production 2,838.8 2,862.5 742.1 725.1 666.2 706.9 744.1 745.3 676.5 732.2 4 2
Net producer hedging 10.8 -40.2 3.7 -15.2 -1.3 -8.0 1.3 -32.2 -11.0 -15.0 - -
Total mine supply 2,849.6 2,822.3 745.8 709.9 664.9 699.0 745.4 713.1 665.5 717.2 3 1
Recycled gold 1,649.4 1,590.7 460.5 422.3 382.8 389.0 433.3 385.6 363.8 308.3 -21 -10
Total supply 4,499.0 4,413.0 1,206.3 1,132.2 1,047.7 1,087.9 1,178.7 1,098.7 1,029.3 1,025.5 -6 -3
Demand
Fabrication
Jewellery3 1,975.1 1,896.1 472.2 432.3 502.7 423.2 487.1 483.1 522.8 593.1 40 14
Technology 451.7 407.5 115.2 103.4 105.8 103.3 102.1 96.2 102.2 104.3 1 -5
Sub-total above fabrication 2,426.8 2,303.6 587.4 535.7 608.5 526.6 589.2 579.3 625.0 697.4 32 10
Total bar and coin demand 1,518.7 1,255.6 421.5 358.0 344.7 285.9 287.5 337.4 405.6 507.6 78 9
ETFs and similar 185.1 279.1 87.4 104.4 53.2 0.0 137.8 88.1 -176.5 -402.2 - -
Central bank net purchases4 456.8 544.4 140.8 112.8 115.2 164.5 113.3 151.4 109.7 71.1 -57 -16
Gold demand 4,587.4 4,382.7 1,237.1 1,111.0 1,121.6 977.0 1,127.8 1,156.3 963.8 874.0 -11 -7
OTC investment and stock flows5 -88.4 30.3 -30.8 21.3 -73.9 110.9 50.9 -57.5 65.5 151.5 37 667
Total demand 4,499.0 4,413.0 1,206.3 1,132.2 1,047.7 1,087.9 1,178.7 1,098.7 1,029.3 1,025.5 -6 -3
London PM fix (US$/oz) 1,571.5 1,669.0 1,702.1 1,688.0 1,690.6 1,609.5 1,652.0 1,721.8 1,631.8 1,414.8 -12 -4
1 Provisional.
2 Percentage change, 12 months ended June 2013 vs 12 months ended June 2012.
3 Jewellery fabrication. The quarterly data differ from those for jewellery consumption shown in Table
4. Fabrication is the first transformation of gold bullion into a semi-finished or finished product. Jewellery consumption is equal to fabrication plus/minus jewellery imports/exports plus/minus stocking/de-stocking by distributors and manufacturers. On an annual basis, the consumption and fabrication data series will reconcile.
4 Excluding any delta hedging of central bank options.
5 For an explanation of OTC investment and stock flows, please see the Notes and definitions.
Source: LBMA, Thomson Reuters GFMS, World Gold Council. Data in the table are consistent with those published by Thomson Reuters GFMS in their Gold Survey but adapted to the World Gold Council’s presentation.
Gold Demand Trends | Second quarter 2013
Table 8: Indian supply estimates
Figures in tonnes Q2’12 Q3’12 Q4’12 Q1’13 Q2’131 2012
Supply
Net imports, available for domestic consumption 153 223 255 215 338 860
Domestic supply from recycled gold 30 34 28 21 10 117
Domestic supply from other sources2 2 2 3 2 2 10
Equals total supply3 185 260 286 238 349 987
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, World Gold Council
Table 9: Top 40 reported official gold holdings (as at June 2013)
Tonnes % of reserves
Tonnes % of reserves
1 United States 8,133.5 70%
2 Germany 3,390.6 66%
3 IMF 2,814.0 -
4 Italy 2,451.8 65%
5 France 2,435.4 65%
6 China 1,054.1 1%
7 Switzerland 1,040.1 8%
8 Russia 996.4 7%
9 Japan 765.2 2%
10 Netherlands 612.5 52%
11 India 557.7 7%
12 ECB 502.1 27%
13 Turkey 441.5 14%
14 Taiwan 423.6 4%
15 Portugal 382.5 84%
16 Venezuela 365.8 66%
17 Saudi Arabia 322.9 2%
18 United Kingdom 310.3 12%
19 Lebanon 286.8 22%
20 Spain 281.6 23%
21 Austria 280.0 48%
22 Belgium 227.4 33%
23 Philippines 192.7 9%
24 Algeria 173.6 3%
25 Thailand 152.4 3%
26 Kazakhstan 130.9 19%
27 Singapore 127.4 2%
28 Sweden 125.7 7%
29 South Africa 125.1 10%
30 Mexico 123.9 3%
31 Libya 116.6 4%
32 BIS 115.0 -
33 Greece 112.0 76%
34 Korea 104.4 1%
35 Romania 103.7 9%
36 Poland 102.9 4%
37 Australia 79.9 6%
38 Kuwait 79.0 9%
39 Indonesia 75.9 3%
40 Egypt 75.6 21%
For information on the methodology behind this data, as well as footnotes for specific countries, please see our table of Latest World Official Gold Reserves, at http://www.gold.org/government_affairs/gold_reserves/ Source: IMF, World Gold Council
14_15
Table 10: Consumer demand in selected countries: Q2’13 (tonnes)
Q2’12 Q2’13* Q2’13* vs Q2’12, % change
Jewellery Total bar and coin invest Total Jewellery Total bar and coin invest Total Jewellery Total bar and coin invest Total
India 124.6 56.5 181.1 188.0 122.0 310.0 51 116 71
Greater China 108.8 50.1 158.9 167.3 127.3 294.6 54 154 85
China 99.5 47.9 147.4 152.8 122.9 275.7 54 157 87
Hong Kong 7.3 0.5 7.8 12.1 1.0 13.1 66 83 67
Taiwan 2.0 1.7 3.6 2.4 3.5 5.8 21 107 61
Japan 4.5 2.1 6.6 4.5 4.5 9.0 0 114 36
Indonesia 5.8 4.8 10.6 7.8 8.6 16.4 35 79 55
South Korea 2.0 0.8 2.8 2.1 1.1 3.2 7 40 17
Thailand 0.7 16.1 16.8 1.0 25.6 26.6 46 59 58
Vietnam 2.6 16.2 18.8 3.2 20.0 23.2 25 23 24
Middle East 42.0 7.0 49.1 55.7 11.6 67.4 33 66 37
Saudi Arabia 15.3 3.9 19.2 18.8 4.9 23.7 23 26 23
Egypt 8.4 0.5 8.8 12.5 0.9 13.4 50 84 52
UAE 14.2 2.1 16.3 18.8 4.0 22.8 32 90 40
Other Gulf 4.2 0.5 4.7 5.6 1.8 7.5 35 247 58
Turkey 19.1 18.0 37.1 26.4 37.9 64.3 38 111 73
Russia 15.8 - 15.8 16.5 - 16.5 4 - 4
USA 19.8 12.4 32.3 20.3 24.3 44.5 2 95 38
Europe ex CIS 8.3 75.6 83.9 7.1 85.8 92.9 -14 14 11
Italy 4.6 - 4.6 4.2 - 4.2 -9 - -9
UK 3.8 - 3.8 3.0 - 3.0 -21 - -21
France - 0.6 0.6 - 0.3 0.3 - -50 -50
Germany - 33.5 33.5 - 40.6 40.6 - 21 21
Switzerland - 17.3 17.3 - 20.4 20.4 - 18 18
Other Europe - 24.2 24.2 - 24.5 24.5 - 1 1
Total above 353.9 259.7 613.6 499.8 468.8 968.7 41 81 58
Other 66.9 26.2 93.1 75.7 38.8 114.5 13 48 23
World total 420.8 285.9 706.7 575.5 507.6 1,083.2 37 78 53
*Provisional.
Source: Thomson Reuters GFMS, World Gold Council
Gold Demand Trends | Second quarter 2013
Table 11: Consumer demand in selected countries: Q2 2013 (value, US$mn)
Q2’12
Q2’13*
Q2’13* vs Q2’12, % change
Jewellery Total bar and coin invest Total Jewellery Total bar and coin invest Total Jewellery Total bar and coin invest Total
India 6,448 2,924 9,371 8,552 5,549 14,101 33 90 50
Greater China 5,627 2,592 8,220 7,608 5,792 13,400 35 123 63
China 5,149 2,479 7,627 6,950 5,591 12,541 35 126 64
Hong Kong 378 27 405 550 43 594 46 61 47
Taiwan 101 87 188 107 159 265 6 82 41
Japan 233 109 342 205 205 409 -12 88 20
Indonesia 298 248 546 355 391 746 19 57 37
South Korea 101 41 143 96 51 146 -6 23 3
Thailand 35 835 870 45 1,167 1,211 29 40 39
Vietnam 134 838 972 147 910 1,057 10 9 9
Middle East 2,175 363 2,539 2,535 529 3,065 17 46 21
Saudi Arabia 792 202 994 855 223 1,078 8 10 9
Egypt 432 25 457 569 41 610 32 61 33
UAE 735 109 843 855 182 1,037 16 67 23
Other Gulf 217 27 244 257 84 340 18 205 39
Turkey 988 931 1,920 1,199 1,724 2,924 21 85 52
Russia 818 - 818 751 - 751 -8 - -8
USA 1,026 644 1,670 921 1,104 2,025 -10 71 21
Europe ex CIS 431 3,912 4,343 324 3,903 4,227 -25 0 -3
Italy 235 - 235 189 - 189 -20 - -20
UK 195 - 195 135 - 135 -31 - -31
France - 31 31 - 14 14 - -56 -56
Germany - 1,734 1,734 - 1,847 1,847 - 7 7
Switzerland - 895 895 - 929 929 - 4 4
Other Europe - 1,252 1,252 - 1,114 1,114 - -11 -11
Total above 18,314 13,439 31,753 22,737 21,325 44,062 24 59 39
Other 3,461 1,356 4,817 3,443 1,766 5,209 -1 30 8
World total 21,775 14,795 36,570 26,179 23,091 49,270 20 56 35
*Provisional.
Source: LBMA, Thomson Reuters GFMS, World Gold Council
16_17
Table 12: Consumer demand in selected countries: four-quarter totals (tonnes)
12 months ended Q2’12 12 months ended Q2’13* Year on Year % change
Jewellery
Total bar and coin invest
Total
Jewellery
Total bar and coin invest
Total
Jewellery
Total bar and coin invest
Total
India 503.2 270.3 773.5 636.6 411.9 1,048.5 27 52 36
Greater China 555.6 270.6 826.2 640.7 357.6 998.3 15 32 21
China 521.2 261.6 782.8 601.5 345.2 946.7 15 32 21
Hong Kong 27.4 1.9 29.3 31.8 2.5 34.2 16 29 17
Taiwan 7.0 7.1 14.2 7.5 9.9 17.3 6 39 23
Japan 17.0 -33.1 -16.1 17.7 -7.0 10.7 4 - -
Indonesia 31.3 27.0 58.3 33.4 22.8 56.2 7 -16 -4
South Korea 11.1 2.8 13.9 9.9 3.2 13.2 -11 17 -5
Thailand 3.4 104.3 107.7 3.2 92.2 95.4 -6 -12 -11
Vietnam 12.1 93.2 105.3 11.4 66.0 77.4 -5 -29 -26
Middle East 152.0 33.4 185.3 172.5 35.2 207.7 14 5 12
Saudi Arabia 48.8 17.5 66.3 51.2 17.5 68.7 5 0 4
Egypt 35.2 2.3 37.5 47.0 2.5 49.5 34 12 32
UAE 50.3 10.6 60.9 56.0 11.2 67.2 11 5 10
Other Gulf 17.6 3.0 20.6 18.3 4.0 22.3 4 33 8
Turkey 63.4 74.2 137.6 69.9 83.2 153.1 10 12 11
Russia 66.8 - 66.8 70.9 - 70.9 6 - 6
USA 112.2 68.8 181.0 109.2 71.2 180.4 -3 3 0
Europe ex CIS 47.7 368.6 416.2 41.8 270.6 312.4 -12 -27 -25
Italy 25.9 - 25.9 21.5 - 21.5 -17 - -17
UK 21.8 - 21.8 20.3 - 20.3 -6 - -6
France - 6.9 6.9 - 2.2 2.2 - -68 -68
Germany - 153.8 153.8 - 116.3 116.3 - -24 -24
Switzerland - 111.5 111.5 - 71.1 71.1 - -36 -36
Other Europe - 96.3 96.3 - 80.9 80.9 - -16 -16
Total above 1,575.9 1,279.9 2,855.8 1,817.3 1,406.8 3,224.1 15 10 13
Other 265.1 130.3 395.4 294.1 131.5 425.6 11 1 8
World total 1,841.0 1,410.2 3,251.2 2,111.5 1,538.2 3,649.7 15 9 12
*Provisional.
Source: Thomson Reuters GFMS, World Gold Council
Gold Demand Trends | Second quarter 2013
Table 13: Consumer demand in selected countries: four-quarter totals (value, US$mn)
12 months ended Q2’12
12 months ended Q2’13*
Year on Year % change
Total bar and coin invest Jewellery Total Jewellery Total bar and coin invest Total Jewellery Total bar and coin invest Total
India 27,063 14,567 41,631 32,618 21,127 53,745 21 45 29
Greater China 29,957 14,595 44,552 32,956 18,089 51,045 10 24 15
China 28,107 14,109 42,216 30,970 17,463 48,433 10 24 15
Hong Kong 1,472 103 1,575 1,604 125 1,729 9 21 10
Taiwan 378 383 760 382 501 883 1 31 16
Japan 914 -1,811 -897 910 -413 497 0 - -
Indonesia 1,691 1,457 3,148 1,723 1,153 2,876 2 -21 -9
South Korea 601 147 748 514 163 677 -14 10 -10
Thailand 185 5,636 5,820 163 4,711 4,874 -12 -16 -16
Vietnam 650 5,034 5,684 583 3,380 3,963 -10 -33 -30
Middle East 8,162 1,798 9,960 8,784 1,793 10,578 8 0 6
Saudi Arabia 2,619 942 3,561 2,589 900 3,489 -1 -4 -2
Egypt 1,894 121 2,015 2,419 127 2,546 28 5 26
UAE 2,700 572 3,271 2,841 566 3,407 5 -1 4
Other Gulf 949 163 1,112 936 200 1,136 -1 23 2
Turkey 3,406 3,991 7,397 3,516 4,127 7,642 3 3 3
Russia 3,594 - 3,594 3,673 - 3,673 2 - 2
USA 6,055 3,713 9,768 5,726 3,620 9,345 -5 -3 -4
Europe ex CIS 2,569 19,878 22,447 2,212 13,833 16,045 -14 -30 -29
Italy 1,396 - 1,396 1,131 - 1,131 -19 - -19
UK 1,173 - 1,173 1,081 - 1,081 -8 - -8
France - 376 376 - 116 116 - -69 -69
Germany - 8,291 8,291 - 5,913 5,913 - -29 -29
Switzerland - 6,026 6,026 - 3,655 3,655 - -39 -39
Other Europe - 5,184 5,184 - 4,148 4,148 - -20 -20
Total above 84,847 69,004 153,851 93,377 71,583 164,960 10 4 7
Other 14,252 7,024 21,276 15,194 6,739 21,933 7 -4 3
World total 99,099 76,029 175,128 108,572 78,322 186,893 10 3 7
*Provisional.
Source: LBMA, Thomson Reuters GFMS, World Gold Council
18_19
Historical data for gold demand
Table 14: Historical data for gold demand1
Tonnes US$bn
Jewellery
Total bar and coin invest
ETFs and similar
Technology
Central banks
Total
Jewellery
Total bar and coin invest
ETFs and similar
Technology
Central banks
Total
2003 2,484 304 - 386 -620 2,594 29.0 3.6 - 4.5 -7.2 30.3
2004 2,616 354 133 419 -479 3,043 34.4 4.7 1.7 5.5 -6.3 40.0
2005 2,719 398 208 438 -663 3,100 38.9 5.7 3.0 6.3 -9.5 44.3
2006 2,300 417 260 468 -365 3,080 44.6 8.1 5.1 9.1 -7.1 59.8
2007 2,423 438 253 476 -484 3,106 54.2 9.8 5.7 10.6 -10.8 69.4
2008 2,304 875 321 461 -235 3,726 64.6 24.5 9.0 12.9 -6.6 104.4
2009 1,816 791 623 410 -34 3,606 56.8 24.7 19.5 12.8 -1.0 112.7
2010 2,020 1,218 382 465 77 4,163 79.5 47.9 15.0 18.3 3.0 163.9
2011 1,975 1,519 185 452 457 4,587 99.8 76.7 9.4 22.8 23.1 231.8
2012 1,896 1,256 279 407 544 4,383 101.7 67.4 15.0 21.9 29.2 235.2
Q2’07 666 135 -3 119 -145 773 14.3 2.9 -0.1 2.6 -3.1 16.6
Q3’07 604 112 139 117 -170 804 13.2 2.5 3.1 2.6 -3.7 17.6
Q4’07 578 65 80 111 -97 737 14.6 1.6 2.0 2.8 -2.4 18.6
Q1’08 484 101 73 122 -76 703 14.4 3.0 2.2 3.6 -2.3 20.9
Q2’08 559 149 4 124 -68 770 16.1 4.3 0.1 3.6 -1.9 22.2
Q3’08 694 283 149 119 -76 1,169 19.4 7.9 4.2 3.3 -2.1 32.7
Q4’08 567 346 95 96 -12 1,092 14.5 8.8 2.4 2.5 -0.3 27.9
Q1’09 356 147 465 88 -62 994 10.4 4.3 13.6 2.6 -1.8 29.0
Q2’09 445 210 68 102 9 834 13.2 6.2 2.0 3.0 0.3 24.7
Q3’09 492 210 42 107 10 861 15.2 6.5 1.3 3.3 0.3 26.6
Q4’09 522 211 42 113 10 897 18.5 7.5 1.5 4.0 0.4 31.7
Q1’10 528 252 6 114 58 958 18.8 9.0 0.2 4.1 2.1 34.2
Q2’10 415 307 296 116 14 1,147 16.0 11.8 11.4 4.5 0.5 44.1
Q3’10 514 313 50 120 23 1,019 20.3 12.3 2.0 4.7 0.9 40.2
Q4’10 564 346 30 116 -17 1,038 24.8 15.2 1.3 5.1 -0.8 45.6
Q1’11 555 401 -61 115 137 1,146 24.7 17.9 -2.7 5.1 6.1 51.1
Q2’11 491 339 54 118 66 1,068 23.8 16.4 2.6 5.7 3.2 51.7
Q3’11 457 422 87 115 141 1,222 25.0 23.1 4.8 6.3 7.7 66.9
Q4’11 472 358 104 103 113 1,151 25.6 19.4 5.7 5.6 6.1 62.5
Q1’12 491 345 53 106 115 1,110 26.7 18.7 2.9 5.8 6.3 60.3
Q2’12 421 286 0 103 165 975 21.8 14.8 0.0 5.3 8.5 50.4
Q3’12 462 288 138 102 113 1,103 24.5 15.3 7.3 5.4 6.0 58.6
Q4’12 522 337 88 96 151 1,196 28.9 18.7 4.9 5.3 8.4 66.2
Q1’13 551 406 -177 102 110 992 28.9 21.3 -9.3 5.4 5.8 52.1
Q2’132 576 508 -402 104 71 856 26.2 23.1 -18.3 4.7 3.2 39.0
1 See footnotes to Table 4 for definitions and notes.
2 Provisional.
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Gold Demand Trends | Second quarter 2013
Appendix
Chart 7: Gold demand in tonnes and the gold price (US$/oz)
Chart 8: Gold demand in tonnes and value (US$bn)
Tonnes, US$/oz Tonnes US$bn
1,800 1,400 80 1,600 1,200 70 1,400 60 1,000 1,200 50 1,000 800 40 800 600 30 600 400 400 20 200 200 10 0 0 0
Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12 Q2’13 Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12 Q2’13
Tonnes (Q2 darker colour) London PM fix (US$/oz) Tonnes (Q2 darker colour) Value (US$bn, rhs)
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Chart 9: Gold demand by category in tonnes and
Chart 10: Jewellery demand in tonnes and value (US$bn)
the gold price (US$/oz)
Tonnes, US$/oz Tonnes US$bn 2,000 700 35 1,800 600 30 1,600 1,400 500 25 1,200 1,000 400 20 800 300 15 600 400 200 10 200 100 5 0
-200 0 0
Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12 Q2’13 Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12 Q2’13
Jewellery Technology Investment Tonnes (Q2 darker colour) Value (US$bn, rhs)
Central bank net purchases London PM fix (US$/oz)
Source: LBMA, Thomson Reuters GFMS, World Gold Council Source: LBMA, Thomson Reuters GFMS, World Gold Council
20_21
Chart 11: Holdings in Exchange Traded Funds (tonnes) and the gold price (US$/oz)
Tonnes 3,000 2,500 2,000 1,500 1,000 500 0
Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12 Q2’13
ETFs (ex GLD) GLD London PM fix (US$/oz, rhs)
Source: Thomson Reuters GFMS, www.exchangetradedgold.com, World Gold Council
US$/oz 1,800 1,600 1,400 1,200 1,000 800 600
Chart 12: Jewellery demand in tonnes (Q2’13 vs Q1’13)
Tonnes 200 180 160 140 120 100 80 60 40 20 0
India China Hong Kong Taiwan Japan Indonesia South Korea Thailand Vietnam Saudi Arabia Egypt UAE Other Gulf Turkey Russia USA Italy UK
Q1’13 Q2’13
Source: Thomson Reuters GFMS, World Gold Council
Chart 13: Jewellery demand by country in US$ (Q2’13 vs Q2’12, % change)
% change 50 40 30 20 10 0 -10 -20 -30 -40
India China Hong Kong Taiwan Japan Indonesia South Korea Thailand Vietnam Saudi Arabia Egypt UAE Other Gulf Turkey Russia USA Italy UK
Source: Thomson Reuters GFMS, World Gold Council
Chart 14: Jewellery demand by country in tonnes (4-quarter rolling total, % change)
% change 40 30 20 10 0 -10 -20
India China Hong Kong Taiwan Japan Indonesia South Korea Thailand Vietnam Saudi Arabia Egypt UAE Other Gulf Turkey Russia USA Italy UK
Source: Thomson Reuters GFMS, World Gold Council
Gold Demand Trends | Second quarter 2013
Chart 15: Total investment demand in tonnes
Tonnes 700 600 500 400 300 200 100 0 -100 -200
Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12 Q2’13
Investment OTC Investment and stock flows
Source: Thomson Reuters GFMS, World Gold Council
Chart 16: Total bar and coin demand by category in tonnes
Tonnes 400 350 300 250 200 150 100 50 0
Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12 Q2’13
Physical bar demand Official coin Medals/imitation coin
Source: Thomson Reuters GFMS, World Gold Council
Chart 17: Total bar and coin demand in tonnes
(Q2’13 and Q1’13)
Tonnes 140 120 100 80 60 40 20 0 -20
India China Hong Kong Taiwan Japan Indonesia South Korea Thailand Vietnam Middle East Saudi Arabia Egypt UAE Other Gulf Turkey USA Europe ex CIS France Germany Switzerland
Q1’13 Q2’13
Source: Thomson Reuters GFMS, World Gold Council
Chart 18: Total bar and coin demand in tonnes
(Q2’13 and Q2’12)
Tonnes 140 120 100 80 60 40 20 0
India China Hong Kong Taiwan Japan Indonesia South Korea Thailand Vietnam Middle East Saudi Arabia Egypt UAE Other Gulf Turkey USA Europe ex CIS France Germany Switzerland
Q2’12 Q2’13
Source: Thomson Reuters GFMS, World Gold Council
22_23
Chart 19: European total bar and coin demand in tonnes
Chart 20: Technology demand by category in tonnes
Tonnes
Tonnes
160
140
140
120
120
100
100
80
80
60
60
40
40
20
20
0
0
Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12 Q2’13
Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12 Q2’13
Switzerland
Germany
Electronics
Other industrial
Dentistry
France
Other Europe
Source: Thomson Reuters GFMS, World Gold Council
Source: Thomson Reuters GFMS, World Gold Council
Chart 21: Q2’13 average gold price (% change)
% change
10
5
0
-5
-10
-15
-20
US$/oz Rs/10g ¥/g TL/g RMB/g €/oz £/oz
CHF/kg
YoY
QoQ
Source: LBMA, Thomson Reuters Datastream, World Gold Council
Gold Demand Trends | Second quarter 2013
Notes and definitions
All statistics (except where specified) are in weights of fine gold
“–”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.
ETFs and similar products
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, iShares Gold Bullion Fund (formerly Claymore Gold Bullion ETF), Sprott Physical Gold Trust, ETF Securities Glitter, Mitsubishi Physical Gold ETF, CS ETF II (formerly Credit Suisse Xmtch II) and Dubai Gold Securities.
Fabrication
Fabrication is the first transformation of gold bullion into a semi-finished or finished product.
Jewellery
All newly-made carat jewellery and gold watches, whether plain gold or combined with other materials. Excluded are: second-hand jewellery; other metals plated with gold; coins and bars used as jewellery; and purchases funded by the trading-in of existing jewellery.
London PM fix
Unless described otherwise, gold price values are based on the London PM fix.
Mine production
Formal and informal output.
Net producer hedging
This measures the impact in the physical market of mining companies’ gold forward sales, loans and options positions. Hedging accelerates the sale of gold, a transaction which releases gold (from existing stocks) to the market. Over time, hedging activity does not generate a net increase in the supply of gold. De-hedging, the process of closing out hedged positions, has the opposite impact and will reduce the amount of gold available to the market in any given quarter.
Central bank net purchases
Gross purchases less gross sales 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 Thomson Reuters GFMS Ltd (+44 20 7369 7015; jadwiga.zajac@thomsonreuters.com).
24_25
THOMSON REUTERS
Sources, copyright and disclaimers
© 2013 World Gold Council. Where expressly identified as such, the gold supply and demand statistics contained in this report were compiled by Thomson Reuters GFMS. Thomson Reuters GFMS retains all rights in such statistics © 2013.
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 Thomson Reuters GFMS, 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 Thomson Reuters GFMS 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 to buy or sell gold, any gold-related products, commodities, securities or related financial instruments.
No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. The World Gold Council and Thomson Reuters GFMS do not accept responsibility for any losses or damages arising directly, or indirectly, from the use of this document.
This report contains forward-looking statements. The use of the words “believes,” “expects,” “may,” or “suggests,” or words of similar import, identifies a statement as “forward-looking.” The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties. These forward-looking statements are based on the analysis of World Gold Council based on statistics compiled by Thomson Reuters GFMS. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions all of which are difficult or impossible to predict accurately. In addition, the demand 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 undue reliance on our forward-looking statements. Except in the normal course of our publication cycle, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and we assume no responsibility for updating any forward-looking statements.
Gold Demand Trends | Second quarter 2013
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Published: August 2013
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