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Gold Supply and Demand 2012-2021 (in tonnes) The |
following table sets forth a summary of the world gold supply and demand for the period from 2012 to 2021 and is based on information |
reported by the World Gold Council. (tonnes) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Supply Mine production 2,957 3,167 3,270 3,361 3,510 3,573 3,655 3,595 3,472 3,569 Recycling 1,637 1,195 1,130 1,067 1,232 1,112 1,132 1,276 1,293 1,136 Net Hedging Supply (45) (28) 105 13 38 (26) (12) 6 (39) (23) Total supply 4,549 4,334 4,505 4,441 4,779 4,660 4,775 4,876 4,726 4,682 Demand Jewelry Fabrication 2,141 2,735 2,544 2,479 2,019 2,257 2,290 2,152 1,324 2,231 Jewelry Consumption 2,157 2,728 2,534 2,461 2,105 2,242 2,250 2,127 1,398 2,148 Jewelry Inventory (16) 7 10 18 (86) 15 40 25 (74) 83 Technology 382 356 348 332 323 333 335 326 303 330 Electronics 289 279 278 262 256 266 268 262 249 272 Dentistry 28 23 20 19 18 16 15 14 12 11 Other Industrial 65 54 51 51 50 51 51 50 42 47 Investment 1,621 798 901 967 1,614 1,315 1,164 1,271 1,796 1,002 Total bar and coin 1,322 1,730 1,067 1,091 1,073 1,044 1,090 871 904 1,191 Bars 1,023 1,357 781 790 797 780 776 583 542 811 Official Coins 187 271 205 224 208 188 242 221 293 295 Medals/Imitation Coins 112 101 81 76 68 76 73 67 69 85 ETFs & similar products 299 (932) (166) (124) 541 271 74 400 892 (189) Central banks & other inst. 569 629 601 580 395 379 656 605 255 450 Gold Demand 4,713 4,518 4,395 4,357 4,351 4,284 4,445 4,355 3,678 4,013 OTC and other* (165) (184) 110 84 428 376 330 522 1,048 670 Total Demand 4,549 4,334 4,505 4,441 4,779 4,660 4,775 4,876 4,726 4,682 LBMA Gold Price (US$/oz) 1,669 1,411 1,266 1,160 1,251 1,257 1,268 1,393 1,770 1,799 Sour |
World Gold Council Gold Survey 2022 (Metals Focus, Refinitiv GFMS, ICE Benchmark Administration, World Gold Council) *This |
number captures demand in the OTC market (for which data is not readily available), changes to inventories on commodity exchanges, any |
unobserved changes in fabrication inventories and any statistical residual. It is the difference between total supply and gold demand. The |
following are some of the main characteristics of the gold market illustrated by the tab One factor which separates gold from other precious metals is that |
there are large above-ground stocks which can be quickly mobilized. As a result of gold’s liquidity, gold often acts more like a |
currency than a commodity. Over the past ten years, (new) mine production of gold has experienced |
a modest rise of an average of 2.3% per annum. Of the three sources of supply, mine production accounted for 76.3% in 2021. Recycled gold |
volumes have ranged from 1,067 tonnes to 1,637 tonnes over the past 10 years. On the demand side, jewelry is clearly the greatest source of demand. Industrial |
demand has fluctuated between 7.4% and 8.3% of total demand over the past 10 years. Exchange traded product inventory build had seen strong |
growth through 2012, followed by outflows in 2013, 2014 and 2015 as the price of gold fell by a cumulative 30% between 2013 and 2015. |
Exchange traded product inventory build has been positive each year from 2016 to 2020, but fell in 2021. During the 2013 price crash, |
retail coin and bar demand rose to a 10-year high as retail investors, especially from China, were enticed by the falling prices. Retail |
coin and bar demand had tapered off into 2019 but picked up in 2020 and 2021. Investor inflows into ETFs returned in 2019 and 2020 amid |
heightened market uncertainty but saw 189 tonnes of outflows in 2021. Historical |
Chart of the Price of Gold The |
price of gold is volatile and fluctuations are expected to have a direct impact on the value of the Shares. However, movements |
in the price of gold in the past are not a reliable indicator of future movements. Movements may be influenced by various factors, |
including announcements from central banks regarding a country’s reserve gold holdings, agreements among central banks, |
political uncertainties around the world, and economic concerns. 4 The |
following chart illustrates the movements in the price of an ounce of gold in U.S. Dollars from December 31, 2012 to December |
31, 2022: Sour |
Bloomberg, abrdn. Chart data from 12/31/2012 to 12/31/2022. Gold Price = GOLDLNPM Index. The price of gold tends to rise during periods of low real interest |
rates and high monetary expansion, as they are often associated with currency debasement and systemic financial failures. The price of |
gold peaked at $1,943.20 per ounce in January 2021 as the uncertainties regarding the pandemic drove prices higher. 2021 proved to be |
a volatile year for gold as major market events and continued pandemic uncertainty, coupled with new variants, allowed gold to remain |
in the investment picture during the year. Additionally, the trends of 3 years of investor outflows in global ETFs and net negative investor |
sentiment in gold futures positioning reversed in 2016 and continued through 2021. Continued low real interest rates, tepid economic growth, |
and concerns regarding the recovery of the pandemic were key tailwinds for gold that sparked a return of investor interest. 2022 proved |
to be another volatile year for gold as the price climbed as high as $2,039.05 per ounce in the weeks following Russia’s invasion |
of Ukraine. Aggressive interest rate hikes by the U.S. Federal Reserve coupled and a strengthening of the US Dollar saw ETF holders liquidate |
as the price of gold dropped as low as $1,628.75 per ounce on November 3, 2022. However, increased demand from central banks, along with |
the weakening of the U.S. Dollar, sparked a Q4 rally that saw the price of gold climb to $1,813.75 per ounce to close the year. Operation |
of the Gold Bullion Market The |
global trade in gold consists of Over-the-Counter (“OTC”) transactions in spot, forwards, and options and other |
derivatives, together with exchange-traded futures and options. Global |
Over-The-Counter Market The |
OTC market trades on a 24-hour per day continuous basis and accounts for most global gold trading. Market |
makers, as well as others in the OTC market, trade with each other and with their clients on a principal-to-principal basis. All |
risks and issues of credit are between the parties directly involved in the transaction. Market makers include the market-making |
members of the London Bullion Market Association (“LBMA”), the trade association that acts as the coordinator for |
activities conducted on behalf of its members and other participants in the London bullion market. The twelve market-making members |
of the LBMA BNP Paribas SA, Citibank N.A., Credit Suisse AG Zurich, HSBC, Goldman Sachs International, ICBC Standard Bank |
Plc, JPMorgan Chase Bank, Merrill Lynch International, Morgan Stanley & Co. International Plc, Standard Chartered Bank, Toronto-Dominion |
Bank and UBS AG. The |
main centers of the OTC market are London, Zurich and New York. Mining companies, central banks, manufacturers of jewelry and |
industrial products, together with investors and speculators, tend to transact their business through one of these market centers. |
Centers such as Dubai and several cities in the Far East also transact substantial OTC market business, typically involving jewelry |
and small gold bars (1 kilogram or less) and will hedge their exposure by selling into one of these main OTC centers. Bullion |
dealers have offices around the world and most of the world’s major bullion dealers are either members or associate members |
of the LBMA. In |
the OTC market, the standard size of gold trades between market makers ranges between 5,000 and 10,000 ounces. Bid-offer spreads |
are typically 50 US cents per ounce. Certain dealers are willing to offer clients competitive prices for much larger volumes, |
including trades over 100,000 ounces, although this will vary according to the dealer, the client and market conditions, as transaction |
costs in the OTC market are negotiable between the parties and therefore vary widely. Cost indicators can be obtained from various |
information service providers as well as dealers. Liquidity |
in the OTC market can vary from time to time during the course of the 24-hour trading day. Fluctuations in liquidity are reflected |
in adjustments to dealing spreads—the differential between a dealer’s “buy” and “sell” prices. |
The period of greatest liquidity in the gold market generally occurs at the time of day when trading in the European time zones |
overlaps with trading in the United States, which is when OTC market trading in London, New York and other centers coincides with |
futures and options trading on the Commodity Exchange, Inc. (“COMEX”), a designated contract market within the CME |
Group. This period lasts for approximately four hours each New York business day morning. 5 The |
London Gold Bullion Market Although |
the market for physical gold is distributed globally, most OTC market trades are cleared through London. In addition to coordinating |
market activities, the LBMA acts as the principal point of contact between the market and its regulators. A primary function of |
the LBMA is its involvement in the promotion of refining standards by maintenance of the “Good Delivery List,” which |
is a list of LBMA accredited refiners of gold. The LBMA also coordinates market clearing and vaulting, promotes good trading practices |
and develops standard documentation. The |
terms “loco London” gold and “loco Zurich” gold refer to gold physically held in London and Zurich, respectively, |
that meets the specifications for weight, dimensions, fineness (or purity), identifying marks (including the assay stamp of a |
LBMA acceptable refiner) and appearance set forth in “The Good Delivery Rules for Gold and Silver Bars” published |
by the LBMA. Gold bars meeting these requirements are described in this annual report from time to time as “London Good |
Delivery Bars.” The unit of trade in London is the troy ounce, whose gram conversion is: 1,000 grams equals 32.1507465 troy |
ounces and 1 troy ounce equals 31.1034768 grams. A London Good Delivery Bar is acceptable for delivery in settlement of a transaction |
on the OTC market. Typically referred to as 400-ounce bars, a London Good Delivery Bar must contain between 350 and 430 fine troy |
ounces of gold, with a minimum fineness (or purity) of 995 parts per 1,000 (99.5%), be of good appearance and be easy to handle |
and stack. The fine gold content of a gold bar is calculated by multiplying the gross weight of the bar (expressed in units of |
0.025 troy ounces) by the fineness of the bar. A London Good Delivery Bar must also bear the stamp of one of the refiners who |
are on the LBMA approved list. Unless otherwise specified, the gold spot price always refers to that of a London Good Delivery |
Bar. Business is generally conducted over the phone and through electronic dealing systems. On |
March 20, 2015, ICE Benchmark Administration (“IBA”) began administering the operation of an “equilibrium auction,” |
which is an electronic, tradable and auditable, over-the-counter auction market with the ability to settle trades in US Dollars |
(“USD”), Euros or British Pounds for LBMA-authorized participating gold bullion banks or market makers (“gold |
participants”) that establishes a reference gold price for that day’s trading. IBA’s equilibrium auction is |
the gold valuation replacement selected by the LBMA for the London gold fix previously determined by the London Gold Market Fixing |
Ltd. that was discontinued on March 19, 2015. IBA’s equilibrium auction, like the previous gold fixing process, establishes |
and publishes fixed prices for troy ounces of gold twice each London trading day during fixing sessions beginning at 10:30 a.m. |
London time (the “LBMA AM Gold Price”) and 3:00 p.m. London time (the “LBMA PM Gold Price”). Daily |
during London trading hours the LBMA AM Gold Price and the LBMA PM Gold Price each provide reference gold prices for that day’s |
trading. Many long-term contracts will be priced on either the basis of the LBMA AM Gold Price or the LBMA PM Gold Price, and |
market participants will usually refer to one or the other of these prices when looking for a basis for valuations. The LBMA AM |
Gold Price and the LBMA PM Gold Price, determined according to the methodologies of IBA and disseminated electronically by IBA |
to selected major market data vendors, such as Refinitiv and Bloomberg, are widely used benchmarks for daily gold prices and are |
quoted by various financial information sources as the London gold fix was previously. The Trust values its gold on the basis |
of the LBMA PM Gold Price. The |
LBMA PM Gold Price is the result of an “equilibrium auction” because it establishes a price for a troy ounce of gold |
that clears the maximum amount of bids and offers for gold entered by order-submitting gold participants each day. The opening |
bid and subsequent bid prices are generated by an algorithm based method, and each auction is actively supervised by IBA staff. |
Subsets and Splits