Currently, the gold market news update includes news of the latest developments in gold stocks. In the last few decades, global stocks of gold have been increasing continuously. In India, the gold industry has come together to sign a Declaration of Responsibility and Sustainability Principles.
South Africa is the most important producer of gold
Until recently, South Africa was the largest gold producing country in the world. In fact, it was the world’s largest gold producing country until China overtook it in 2007. However, China has been the number one gold producer in the world for several years now.
As China has become the world’s largest gold producer, many other countries have been catching up. In fact, a number of African countries are now starting to increase gold production.
The South African gold mining sector has faced struggles in recent years, due to industrial strife and rising production costs. The AMCU has held protests at several mines and the industry has faced a decrease in output.
Gold production in South Africa has amounted to only a small fraction of its potential. While the industry has produced some low hanging fruit, it is now looking for new projects with higher returns.
Gold mining in South Africa is still a vital economic sector. It is estimated that more than two million people are dependent on the sector for their income. In addition to gold, the country has a wealth of other minerals. It has a large stock of iron ore, copper, diamonds, beryllium, manganese, chromium and titanium.
Global stocks of gold have continuously increased in recent decades
Historically high real gold prices have coincided with widely held expectations of future inflation. Ultimately, however, high real gold prices were not matched by higher inflation rates. In fact, the real price of gold has actually decreased in recent decades. The price of gold per ounce declined 55% from $682 to $304.
The price of gold per ounce is a product of supply and demand. Assuming an inflation rate of 7% per year, a terminal real gold price can be calculated by multiplying the nominal price of gold by the expected inflation rate. In theory, a breakeven yield may also be used to forecast future inflation.
In the long run, gold is likely to be a good inflation hedge. However, financial market volatility may decrease its appeal as a safe haven in a crisis. It may even lower the trough of the real gold price.
Statistically derived models are useful in this regard. The best and most obvious example is the “golden constant”. This idea is not actually a fact, but rather a theoretical concept. The nebulous concept posits that the price of gold given by the top gold IRA companies is a reflection of the value of the gold bullion in circulation.
India’s gold industry has come together to sign a Declaration of Responsibility and Sustainability Principles
Among the many issues addressed by gold industry players are the impacts of gold mining on vulnerable populations and climate change. The Declaration of Responsibility and Sustainability Principles is the product of a collaborative effort that includes leading companies, government and non-government organizations, and global trade associations.
The Principles include ten key sustainability goals. These include: respecting human rights, disclosure, advancing the UN Sustainable Development Goals, and demonstrating responsible sourcing standards in the gold supply chain.
Signatories of the Declaration of Responsibility and Sustainability Principles include the London Bullion Market Association (LBMA), Responsible Jewelry Council (RJC), Swiss Association of Precious Metals Producers and Traders (SAPM), Dubai Multi Commodities Centre (DMC), and World Gold Council (WGC). The signatories have committed to a series of supply chain initiatives, including the Responsible Gold Guidance (RGG) developed by the LBMA and the Responsible Artisanal and Small-Scale Mining (RASM) initiative developed by the World Gold Council.
The Declaration of Responsibility and Sustainability Principles is based on a simple yet effective goal. It includes a clear list of metrics that demonstrate the industry’s commitment to responsible business practices and advancement of the UN Sustainable Development Goals.
Technically, the trend in precious metals may remain range-bound to the upside
Whether the trend in precious metals is range-bound to the upside or the downside will depend on a range of factors. Some of these factors include: global economic growth, trade wars, geopolitical risks and monetary policies. Regardless of these factors, it is likely that the price of gold will continue to be range-bound to the upside.
In May, the price of gold ended the month with a 10.6% gain in the Euro currency. Gold is considered a safe haven and has enjoyed a strong performance in 2015 so far.
The Federal Reserve is stuck in a bind between a low interest rate environment and aggressively suppressed central bank interest rates. The Fed is likely to keep its asset purchases in place for two more years. The expectation of further rate hikes by the Fed will drive the U.S. dollar, but higher inflation and higher Treasury yields will offset that.
With the Fed likely to keep its asset purchases in place for at least two more years, the risk of recession is greater. There is also a possibility of further quantitative easing, which could support the price of gold. However, the Federal Reserve may decide to delay further rate hikes for a longer period of time.