WORLD GOLD COUNCIL : Global gold-backed ETF flows are now positive in 2018

Holdings in global gold-backed ETFs and similar products rose in November by 21.2 tonnes(t) to 2,365t, equivalent to US$804mn in inflows, marking the second consecutive month of net inflows. Global gold-backed ETF flows are now positive in US dollar terms on the year.** The price of gold was little changed (+0.2%) and global assets under management (AUM) rose by 1.1% in US dollars relative to October.

**See note on tonnage/ flows differences below. ** 

Global stock markets remained volatile, although they ultimately ended the month mixed. Oil performance was a key story as the commodity fell more than 22% on the month amidst supply concerns. The US 2/10 Treasury yield curve flattened to near-low prices on the year as investors became concerned that US economic conditions may have peaked and could be showing potential for a recession in either 2019 or 2020. Long-dollar hedged gold is now higher on the year, rallying over 6% in Q3 with the improving gold and US dollar pricing.

November flows were positive across all regions. European funds led global inflows, with strong flows into UK-based funds as Brexit concerns increased and sterling weakened. North American funds saw inflows for a second straight month but remain negative on the year. Asian funds reversed two months of weak performance adding 2.3% to their assets.

Overall, gold trading volumes remained flat m-o-m, 10% below the y-t-d average. The LBMA announced a new reporting system for gold OTC trading volume (LBMA-i), which provides improved transparency into the liquidity of the gold market. Sentiment and positioning in COMEX futures remain bearish, well below historical averages. As discussed in our recent note Gold recoils amid selloff but may rebound, extreme bearish positioning in futures has historically preceded strong rallies in the price of gold.

Regional flows 

  • • Holdings in European funds rose by 10.5t (US$372mn, 0.9%)
  • • North American funds had inflows of 8.4t (US$353mn, 0.8% AUM)
  • • Funds listed in Asia increased by 2.1t (US$72mn, 2.3%)
  • • Other regions saw a small increase in holdings of 0.2t (US$7mn, 0.6%)

Individual flows 

  • • SPDR® Gold Shares led global inflows, gaining 7.7t (US$309mn, 1.1%), followed by iShares Physical Gold which gained 5.4t (US$207mn, 6.3%), and Gold Bullion Securities 2.1t (US$82mn, 2.7%)–both in the UK–as well as Huaan Yifu Gold, in China, which added 2.7t (US$104mn, 13.3%)
  • • Low-cost gold-backed ETFs in the US continue to add assets as strategic holders increase holdings***
  • • Funds with outflows were few but were led by Invesco Physical Gold, which lost 2.0t (US$ 78mn, 1.8%) and Bosera Gold, which was down 1.1t (US$45mn, 9.5%)

Y-t-d flows 

  • • Collectively, US dollar flows in gold-backed ETFs are now positive having raised US$354mn (40bps), despite the recent trend driven by a strong US dollar and bearish gold market sentiment**
  • • North America reported a second monthly inflow after six consecutive months of outflows but remain negative on the year by 50.0t (US$2.1bn, 4.6% AUM)
  • • By contrast, European funds continue to see net positive inflows with $2.9bn coming in (7.1% AUM) y-t-d
  • • After starting the year strong, Asian funds have given up all their gains and are now negative losing 1.5% of their assets y-t-d

**Note: We calculate gold-backed ETF flows both in ounces/tonnes of gold and in US dollars because these two metrics are relevant in understanding funds’ performance. The change in tonnes gives a direct measure of how holdings evolve, while the dollar value of flows is a finance industry standard that gives a perspective of how much investment reaches the funds. This month, the reported flows measured in tonnes of gold and their dollar value equivalent seem inconsistent across regions. Both figures are correct. The disparity due to the interaction between the performance of the gold price intra-month, the direction of the dollar, and the timing of the flows. For example, Europe experienced outflows early in the month when the price of gold was low but gained assets later in month when the price of gold increased. 

***Low-cost US-based gold backed ETFs are defined as gold-backed ETFs that trade on US markets with annual management fees of 20bps or less


Top 20 World Gold Producers 2017 – Countries and companies

A couple of tables from articles published on the Sharps Pixley website last week.

The first is from the article : World Top 20 Gold producing nations in 2017 – not peak gold yet!

Top 20 Gold Producing Nations 2016/2017 (Tonnes)

Rank Country 2017 Output 20 16 Output %  Change
1 China 429 464 -7.9%
2 Australia 289 288 +0.5%
3 Russia 272 253 +7.6%
4 USA 244 229 +6.3%
5 Canada 171 163 +5.0%
6 Peru 167 166 +0.3%
7 South Africa 157 163 -3.6%
8 Ghana 130 131 -0.8%
9 Mexico 122 128 -4.7%
10 Indonesia 114 109 +4.8%
11 Brazil 92 97 -5.1%
12 Uzbekistan 89 87 +2,6%
13 Argentina 65 58 +10.9%
14 Papua New Guinea 63 63 -0.1%
15 Kazakhstan 56 53 +7.1%
16 Mali 51 50 +1.2%
17 Tanzania 53.2 55.3 +4%
18 Colombia 49.2 51.8 +5%
19 Philippines 40 40 +0.6%
20 Sudan 40 37 +7.3%
Others 607 508 +3.1%
  Total 3,292 3,275 +0.5%

Source: Metals Focus

and the second looks at the world’s top producing gold miners: Top 20 Global Gold Miners – Newmont narrows the No. 1 gap

Top 20 Gold Mining Companies 2016/2017 (Tonnes) (1 tonne= 32150.7 troy ounces)

Rank Company 2017 Output 2016 Output %  Change
1 Barrick Gold 165.6 171.7 -4%
2 Newmont Mining 163.8 158.1 +4%
3 AngloGold Ashanti 116.8 112.8 +4%
4 Goldcorp 79.9 89.4 -11%
5 Kinross Gold 78.6 83.3 -6%
6 Navoi MMC (est) 75.5 75.5
7 Newcrest Mining 71.1 76.7 -7%
8 Polyus Gold 67.2 61.2 +10%
9 Gold Fields 62.6 63.0 -1%
10 Agnico Eagle Mines 53.3 51.7 +3%
11 Freeport McMoran 49.1 33.8 +45%
12 Shandong Gold 43.9 37.0 +19%
13 Sibanye Gold 43.6 47.0 -7%
14 China National Gold 42.4 42.0 +1%
15 Randgold Resources 40.9 39.0 +5%
16 Zijin Mining 35.8 42.6 -16%
17 Harmony Gold 34.0 33.2 +2%
18 Polymetal 33.5 27.7 +21%
19 Glencore 32.1 31.9 +1%
20 Yamana Gold 30.4 39.5 -23%

Source: Metals Focus,

a third article published on Seeking Alpha looks specifically at the top North American gold mining companies with notes on their individual performance: Mixed Results And Prospects For North America’s Top Gold Miners

WGC – Global gold demand in Q3 seen at eight-year low

The latest Gold Demand Trends report from the World Gold Council is now out and the full report can be downloaded from the WGC website –

World Gold Council Report Highlights as follows:

  • Gold jewellery demand fell in Q3. Jewellery volumes continue to languish below longer-term average levels. Indian weakness was the main reason for the y-o-y decline. Tax and regulatory changes in India weighed on domestic gold demand. The new tax regime deterred consumers, as did anti-money laundering measures governing jewellery retail transactions.
  • Inflows into gold-backed ETFs stalled: holdings grew by just 18.9t. Investors continued to favour gold’s risk-hedging properties, but the greater focus was on rampaging stock markets.
  • Gold bar and coin demand growth was driven by China. Global investment in bars and coins rose 17% from relatively weak year-earlier levels. Chinese investors bought on price dips, to notch up a fourth consecutive quarter of growth.
  • Volumes of gold used in technology increased for the fourth consecutive quarter. Demand for memory chips continued to soar thanks to the persistent popularity of high-end smartphones.
  • Total supply fell 2% in Q3. Mine production fell 1% y-o-y in Q3, which was also the fifth consecutive quarter of net dehedging. Recycling activity (-6%) continued to normalise after jumping in 2016

World Gold Council: Gold demand at record levels in Q1 2016

World gold demand, as assessed by consultancy Metals Focus on behalf of the World Gold Council (WGC), rose 21% as investors surged into gold ETFs.  Key figures on global demand and supply for the quarter as released by the WGC are set out below:

According to the WGC figures, global gold demand reached 1,290 tonnes in the first quarter of  2016, a 21% increase compared to the same period last year, making it the second largest quarter on record. This increase was driven by huge inflows into exchange traded funds (ETFs), fuelled by investor concerns regarding economic fragility and an uncertain financial landscape. It was all the more remarkable in that Asian demand, primarily from China and India, has been weak so far this year. thus, global demand for jewellery was down 19%, as higher prices and industrial action in India and a softening of the economy in China meant many consumers delayed making purchases.

Inflows into ETFs totalled a massive  364 tonnes in the quarter – the highest quarterly level since Q1 2009 – and compares with 26 tonnes in Q1 a year ago. The WGC reckons that gold found favour as a risk diversifier due to the negative interest rate environment in Europe and Japan, combined with uncertainty over the Chinese economy, anticipation of slower interest rate rises in the US and global stock market turmoil.

Total bar and coin demand, even in Asia,  was stronger by some 254 tonnes, marginally higher than the same period last year. Weakness in price sensitive markets was offset by strength elsewhere with 5% growth in China (62 tonnes) and strong demand in the US and the UK, which grew by 55% and 61% respectively. In total, investment demand was 618 tonnes, up 122% from 278 tonnes in the same period last year, igniting a rally in the gold price which appreciated by 17% in dollar terms during the quarter.

This strong investment performance was not reflected in the bigger jewellery sector though, with demand levels sharply down in India and China. While both countries had a slow start to the year as a result of consumer uncertainty and rising gold prices, the situation was greatly exacerbated by the industrial action in India.

Central banks remained strong buyers, purchasing 109 tonnes in the quarter. This represents the 21st consecutive quarter that central banks have been net purchasers of gold as they continue to diversify away from the US dollar.

Alistair Hewitt, Head of Market Intelligence at the World Gold Council, said: “Two major themes emerged in the first quarter of 2016. Spurred on by the uncertainty raised by negative interest rates, the investment sector was the dominant driver of gold demand, helping to push prices up 17% over the course of the quarter, as ETF inflows swelled. Conversely, jewellery demand endured a difficult quarter due to a continued lack of consumer confidence in the face of a weakening Chinese economy and a 42 day strike by jewellers in India. But we believe Indian demand has simply been postponed, with buying likely to increase for Akshaya Tritiya [Akshaya Tritya demand, which was a few days ago, turned out to be disappointing] and the wedding season.

“Looking ahead we anticipate that ongoing market uncertainty and unconventional monetary policies will continue to support both investment and central bank demand. This, combined with an expected recovery in India, should see gold demand remain healthy over the course of 2016.”

Total supply for Q1 2016 saw an increase of 5% to 1,135 tonnes compared with 1,081 tonnes in the first quarter of 2015. Increased hedging of 40 tonnes, coupled with slightly higher mine production of 734 tonnes (729 tonnes in Q1 2015), outweighed a marginal decline in recycling.

The key findings from the report for Q1 2016 are as follows:

  • Overall demand for Q1 2016 increased by 21% to 1,290 tonnes, up from 1,070 tonnes in Q1 2015.
  • Total consumer demand was 736 tonnes down 13% compared to 849 tonnes in Q1 2015.
  • Global investment demand was 618 tonnes, up 122% from 278 tonnes in the same period last year.
  • Global jewellery demand fell 19% to 482 tonnes versus 597 tonnes in the first quarter of 2015.  
  • Central bank demand dipped slightly to 109 tonnes in Q1 2016, compared to 112 tonnes in the same period last year.
  • Demand in the technology sector fell 3% to 81 tonnes in Q1 2016.
  • Total supply was up 5% to 1,135 tonnes in Q1 2016, from 1,081 tonnes in the first quarter of 2015. Mine supply was up 8% to 774 tonnes.

The Q1 2016 Gold Demand Trends report, which includes comprehensive data provided by Metals Focus, can be viewed  here  and on the WGCs iOS and Android apps. Gold Demand Trends data can also be explored using the WGC interactive charting tool 

 Mining Journal going fortnightly after 181 years – sad news

I was saddened to hear that the mining and metals industry’s only truly global weekly business-oriented paper publication, Mining Journal has been relegated to fortnightly, having been a weekly for over 180 years, including maintaining weekly publication through two world wars.  As a former CEO of Mining Journal I feel deeply that this is a retrograde step and is a direct result of a failed attempt to transform a publishing company run by people whose hearts and souls were steeped in the mining industry to what is nowadays in effect a conference company run by professional event organisers and publishers.  The publications are now seemingly primarily a means for promoting the company’s various events.  Perhaps this is necessary for a specialist publishing company to stay afloat in this day and age, but its whole ethos has changed as a consequence.

Time was when Mining Journal Limited under Michael West’s guidance from the 1960-90s and then later under my own for the final decade of the 20th Century and into the beginning of the 21st, employed no less than 15 qualified and experienced mining engineers, geologists, metallurgists and mineral economists to run the publications and its various divisions – more than most London-based mining consultancies at that time. We would not take editorial staff on unless they had prior mining, geological or metallurgical industry experience.  It was very much an integral part of the industry we served rather than a publishing company which just happened to have an interest in mining.

In the latter part of the 20th Century, the company published Mining Journal (weekly), Mining Magazine (monthly), Mining Annual Review and Metals & Minerals Annual Review (both once per year),  Mining Environmental Management (quarterly), International Gold Mining Newsletter (monthly) which became World Gold under Paul Burton, World Gold Analyst (quarterly), Geodrilling International (bi-monthly) and the two allied underground construction titles –  World Tunnelling and No-Dig International (which was subsequently retitled as Trenchless World.) In short Mining Journal Limited became a pretty significant mining and associated construction oriented publishing house.  We also ran Mining Journal Research Services which undertook independent consulting work for mining and metals sector clients.

But unfortunately it was not to last.  We got into financial difficulties, in a major part due to an over-generous final salary pension scheme which we were loath to interfere with, coupled with an industry downturn and difficulties in maintaining subscription sales for our flagship Mining Journal publication under competition from new free information options (although most without the comment and analytical coverage of Mining Journal) which had become available via the internet.

We thus, after much soul-searching, eventually were forced to sell out to Venture Capitalists, who launched the hugely successful Mines & Money series of conferences, but never managed to transform the fortunes of the paper publications.  This was despite an apparent view that a bunch of mining engineers (the previous management) knew nothing about publishing and that the new owners would be able to double advertising income in a matter of months.  If anything advertising in the key publications fell despite the new company employing three or four times the number of sales people.  

Gradually all the original staff and support left for pastures new or retired.  Nowadays staff turnover seems particularly high by past standards – there is only one of Mining Journal’s pre-takeover team still with the company and, as we understand it, the whole atmosphere is hugely different from the rather pleasant working environment of its independent days.  A shame, but that is the way much of the service industry has developed.  It’s not just specific to Mining Journal.

This is not say that the new publishers did not make some positive changes.  Mining Journal itself is definitely a more attractive looking publication than in the days when we used to print on airmail paper stock to keep overseas mailing costs down.  The Mines & Money Conferences and Exhibitions have at times been enormously successful – particularly the annual London event – with Hong Kong also doing extremely well, although all are currently suffering from the industry downturn.

But all this does not stop me bemoaning what I feel is the passing of an era in which a corporate ethos directed at the industry it served was paramount.  Even though we were mining industry publishers if you asked us we would say we were part of the global mining and metals industry, not a part of the publishing industry with which we had little other contact.  A not-so-subtle distinction which we felt held us in particular strong stead amongst our mining and metals industry readers, but obviously not so much so that it prevented the company falling into the maws of the professional publishing sector which had different drivers and values.

As a weekly business-oriented international publication, Mining Journal had a unique place in the industry.  As a fortnightly I’m not so sure it will continue to do so.  How long before it merges with Mining Magazine to become a monthly?  Indeed how long will the publishers retain the broad related spectrum of publications?  Perhaps this represents the start of the end of an era, or is this just a natural progression from the time Mining Journal ceased to be run by a bunch of mining engineers?

Strong H2 uptick in gold demand in 2015 – WGC


The World Gold Council’s latest Gold Demand Trends report for full year 2015 is now out, utilising data prepared by London-based precious metals consultancy – Metals Focus.  Unlike the latest supply/demand report from rival consultancy GFMS, the WGC figures put China as firmly the World No. 1 gold consumer at 985 tonnes as compared with India’s 849 tonnes. However, as we have pointed out beforehand, we reckon that both the WGC and GFMS are missing the point in that actual physical gold flows into the Chinese jewellerey and industrial sectors, to which these figures primarily relate, ignore flows into commercial banks, and the overall Chinese total  for inputs of physical gold are far higher at perhaps 2,000 tonnes or more as represented by known gold imports, plus domestic new mined gold production, plus some element of domestic scrap supply.  In terms of gold flows from Western vaults into China this has to be a more relevant figure in assessing  global gold movements.

As with the earlier GFMS report, the WGC figures estimate global new mined gold demand beginning to contract quite sharply in Q4 2014.  This decline is likely to continue as some of the big new project deferments and cancellations start to impact as a part of the enforced capital cost cutting by the major gold mining companies necessary to bring down their debt levels and improve their balance sheets.

The WGC’s release on the latest Gold Demand Trends report follows:

Global gold demand in 2015 was virtually flat compared to 2014 at 4,212 tonnes (t), according to the World Gold Council’s latest Gold Demand Trends report. Despite a challenging start to the year, gold demand rebounded in the second half of 2015 as a result of sustainedbuying from central banks and a strong second half from China and India.

This was particularly evident in the retail investment sector, where bar and coin purchases were led by China and Europe, with strong support from the US, as investors took advantage of weaker prices amid a softening economic backdrop, financial turbulence and ongoing geopolitical tension.

Global investment demand for the full year 2015 grew by 8% to 878t from 815t in 2014. Bar and coin demand remained steady in 2015 as investors took advantage of a weaker price in Q3. The ETF market saw a slowdown in outflows: 133t in 2015, compared to 185t in 2014.  Q4 2015 witnessed a continuation of these trends with a number of key regions experiencing double digit growth.

Overall jewellery demand for the full year 2015 was down 3% to 2,415t from 2,481t in the previous year. Following a slower start to the year, the third and fourth quarters combined produced the strongest second half-year total for gold jewellery in 11 years. Q4 2015, saw steady levels of jewellery demand, at 671t compared to 677t in the same period last year, with retailers reporting an increase in sales around the Indian festival period.

Central Bank demand for the full year 2015 saw a small uptick from 584t in 2014 to 588t in 2015 as the need for further diversification was reinforced by a tumbling oil price and reduced confidence in the global economy. Demand in Q4 continued to be strong, up 25% to 167t from 134t in Q4 2014, making this the 20th consecutive quarter of net purchasing.

Gold demand in Q4 showed further positive signs, following a strong third quarter. In India both the investment (60t) and jewellery (173t) sectors were up 6%, boosted by the festival season. In China, which has witnessed economic turmoil, consumer uncertainty and currency weakness, gold demand held up well, particularly in the investment sector up 25% to 48t for the quarter.

Alistair Hewitt, Head of Market Intelligence at the World Gold Council, said:In a year that saw global economic and stock market turmoil, the first US interest rate rise in nine years and falling oil prices, demand for gold remained resilient, coming in at 4,212 tonnes for the full year. Official sector purchases, combined with strength in the Asian markets and continuing momentum in the US and Europe, reinforced gold’s credentials as a portfolio diversifier, a wealth preservation tool and a hedge against a range of risks.”

 “Looking ahead, physical demand will continue to be supported by strong central bank purchases, and continued buying of jewellery, bars and coins  by households across the world, led by India and China. If we just look at the year to date, the investment case for gold is as strong as ever. While stockmarkets have wobbled, gold has performed well.”

Full year 2015 saw China (985t) and India (849t) continue their dominance in the global gold market, accounting for close to 45% of total global gold demand during 2015, with annual consumer demand in both up 2% and 1% respectively.

Total supply for the year experienced a drop of 4% to 4,258t for the Full Year 2015 compared to 4,414t in 2014. This is reflective of both recycling hitting multi-year lows and mine production growth falling to its lowest level since 2008. Mine production contracted in Q4, the first quarterly contraction since 2008, as cost cutting took effect. Q4 2015 reported a more substantial decline of 10% to 1,037t compared to 1,152t in the same period last year as primary production slowed as a result of weaker gold prices, mine closures and project delays.

The FY 2015 Gold Demand Trends report, which includes comprehensive data provided by Metals Focus, can be viewed at and on our iOS and Android apps. Gold Demand Trends data can also be explored using our interactive charting tool


Full year 2015 figures:

  • Overall demand was 4,212t, virtually flat when compared to the 2014 figure of 4,226t
  • Total consumer demand was 3,427t, a 2% decline compared to 3,481t in 2014
  • Global investment demand was 878t a growth of 8% from 815t in 2014
  • Global jewellery demand in 2015 was down 3% to 2,415t from 2,481t in 2014
  • Central bank demand was virtually flat at 588t compared to 584t in 2014
  • Demand in the technology sector was down 5% to 331t from 346t in 2014
  • Total supply was down 4% to 4,258t compared to 4,414t in 2014 with total mine supply down 2% to 3,165t from 3,244t in 2014


Q4 2015

  • Overall demand increased 4% to 1,118t compared to 1,071t in Q4 2014
  • Total consumer demand was virtually flat at 935t compared to 938t in Q4 2014
  • Global investment demand grew by 15% to 195t from 169t in Q4 2014
  • Global jewellery demand softened to 671t down just 1% from 677t in Q4 2014
  • Central bank demand grew 25% to 167t compared to 134t in the same period last year
  • Demand in the technology sector fell 7% from 90t in Q4 2014 to 84t in Q4 2015
  • Total supply slipped  to 1,037t in Q4 2015 compared to 1,152t in the same period last year a decline of 10%, with total mine supply also decreasing by 9% to 810t from 893t in Q4 2014

Co-operation, positives and negatives at major gold event

The first full day of this year’s Denver Gold Forum opened with an announcement of a co-operative agreement between the Denver Gold Group (DGG) and the World Gold Council (WGC), followed by some extremely interesting presentations and a fascinating and informative panel discussion on paper gold, but which still left some key questions unanswered, or unclear.

Regarding the co-operation – in a joint announcement the DGG and WGC noted that between them the two groups represent almost all the world’s top gold miners in terms of production, mineral reserves and market value. Through closer co-ordination and collaboration they aim to ensure that miners are better informed on demand drivers, market trends and key developments.  While both parties may have differing outlooks on the industry, arguably their purposes do coincide.

The DGG’s Executive Director, Tim Wood commenting on the agreement noted: ““For some time the interests of our members have been aligned, so it makes strategic sense to work more closely. After nearly three decades of service to the industry, the Denver Gold Group has evolved as a significant platform for sharing ideas, information and experience. The World Gold Council produces the highest quality market data and insights, informed by its direct experience of the consumer markets. We believe this knowledge and perspective is important for our members, particularly to counter-balance the short-term, sentiment-driven commentary that often crowds the gold space.”

But back to the conference, the day opened early with two parallel keynote addresses and the writer attended the one on exploration trends and their likely impact on the industry looking ahead from David Cox of SNL Financial – which has recently been acquired by McGraw Hill.  While the overall mood of the conference may indeed be more positive than the past three years’ precious metals price performance might suggest – well the mining companies wouldn’t be in it if they didn’t think there was great excellent upside potential ahead – Cox and SNL’s analysis showed what has been in effect a pretty disastrous experience within the gold exploration space, with the majors initiating some big cutbacks, while the juniors, which had hitherto provided the largest part of exploration activity, struggling with lack of funding available to maintain a decent level of exploration activity.

What this is that global gold production is likely to move into long term decline with the mining companies no longer having the new gold resources available to them to replace aging assets due for closure or where grades are falling off.  Coupled with the huge lead times in moving a potential project from exploration through to production it could be many years, if ever, that miners get back to the gold output levels seen over the past couple of years.

Interestingly, Cox noted that SNL research suggests that global new mined gold output this year will see a small decline.  This runs counter to the forecasts from the major mainstream precious metals analysts who are all predicting a small increase.  Indeed Jeff Christian of CPM group sees production rising until 2017 before falling back sharply in 2018.  When questioned on the SNL projection Cox commented that the SNL figures are perhaps more up to date than those of the analysts which will have been calculated early in the year.

Peak gold – or crest gold as another delegate put it – may thus already have passed if SNL is correct.  The same delegate who works for one of the big mid-tier gold producers also expressed the view that although gold output may be beginning to fall it will have little impact on the metal’s price performance as this was more affected by gold trading and sentiment – although interestingly the paper gold panellists, who participated later in the day, held the opposite view and saw declining mine production of gold being key to the longer term performance of the metal price. More on this panel discussion later on.

Corporate presentations followed and the international nature of the Denver Gold Group’s membership was demonstrated here with talks from companies headquartered in the USA, Canada, China, Russia, the UK, Peru, Mexico and Australia and many of these with their operations in a number of other countries too.  With parallel sessions and various other meeting commitments one can only give a brief snapshot of the various corporate talks.

Presentations from gold, silver and other precious metals producers were almost unanimous in seeing costs still on the downwards path as they have sought to get to grips with the lower prevailing metals prices.  Those with operations in non-dollar area countries are also seeing some substantial benefits from local currency depreciation.

Of the bigger gold miners to present on the first full conference day, Gold Fields in particular has seen big benefits from the fall in the Australian dollar against its U.S. counterpart, while Russian-owned Nordgold, which will probably mine 1 million gold ounces this year at low costs and producing strong cashflows, sees the current gold price as opening up some great opportunities for acquisitions leading to further growth.

Ivanhoe’s presentation was limited to its Platreef wide reef platinum find on the northern limb of South Africa’s Bushveld Igneous Complex which could be something of a game-changer for South Africa’s beleaguered pgm sector.  Here it was good to hear a presentation by Ivanhoe’s David Broughton – free of much of the hype which normally surrounds presentations on the project by the company’s founder Robert Friedland.

Silver miner Coeur saw this as being a transformational year, while Hecla, already a low cost producer, was looking to its revitalised San Sebastian mine as the catalyst for further growth with a very low capital cost to production of a newly exposed high grade vein system suggesting a phenomenal project IRR of 444%!

Yamana’s Peter Marrone reported a much improved business model for the company with a focus on core assets and the monetization of non-core properties.  The second half of the year would see a substantial improvement over H1 with Q3 being better than Q2 and Q4 better than Q3.  There are high hopes for the developing Cerro Moro high grade gold/silver project in Argentina which is being brought to production.

A complete session was devoted to Royalty companies which have been among the best performers in what has been a difficult metal price climate.

The lunchtime panel presentation on paper gold was very well attended – with the fact that it is paper gold which appears to have been setting the price – and also responsible for some of the downward spikes seen by many gold bulls as proof of market manipulation.  None of the trading element on the panel saw manipulation as being in evidence putting these pricing anomalies down to being part of the vagaries of algorithmic high frequency trading which can hugely exaggerate market movements, although none were really able to give a convincing explanation in these terms for the big July 19 downward spike which took place almost simultaneously on COMEX and the SGE  when Western markets were closed and activity was extremely thin.  Someone had to have made the initial trades after which the algos took over and took the price down vertically before generating some partial recovery.

Interestingly even the traders on the panel all professed to be strongly bullish longer term on gold, but also all felt the price could yet fall to new lows before a strong recovery.

Nonetheless some of the explanations of how the markets actually worked were enlightening – but perhaps not so much so as to convince the out and out gold bulls that markets were not being manipulated so as to depress gold and silver prices.  There was also an explanation on  how the COMEX approved warehouse stock position worked, but not sufficiently so to clear up what proportion of eligible gold stocks is actually available to be converted to the registered category to prevent a possible default given the huge recent decline in the registered stock position.  The principal comment seemed to be that so little of COMEX trade is actually in physical metal, that the low registered stock position was largely irrelevant.

The afternoon saw presentations from a number of other gold and silver producers, including Pretium Resources developing the big high grade Brucejack gold/silver project to production over the next two years.  Pretium has just closed a $540 million financing – a probably unique feat for a junior in the current metal price and financial climate, demonstrating that there is still money available for a top of the class new mine project development.

All in all another very interesting day.  Again it is fair to say the mood was far more upbeat than the past few years’ precious metals price performance would seem to justify.  But as we have pointed out before, to be in mining at all one has to be something of an optimist – or perhaps a masochist as one Filipino mining executive once told the writer in the distant past.  But the DGG organisers should be congratulated in generating such a strong financial audience in what could at the best be described as an extremely difficult investment climate.  There’s still life in precious metals mining yet!





Gold’s global top 10 by country and company

The past year has seen some changes in global gold production rankings, both by country and by company.  Edited, expanded  and updated version of article recently published on  To read original click here.

Lawrence Williams

It is interesting to see how the major producers of gold are faring in the grand scheme of things – both nationally and by company, given the continuing lowish gold prices pertaining over the past two to three years. Currently gold is wavering around the $1260 level and while this is perhaps better than its lows of last year, it is much lower than it was a couple of years ago and is now beginning to have an impact on global gold output.

While many assumed that the lower gold prices would lead to an immediate fall in world gold production as miners struggled to remain profitable, it has to be remembered that some major new mines were already under construction having been launched when prices were much higher.  Meanwhile marginal operations have been mining higher grades, at the expense of a reduction in longer term mine life, to maintain profitability.  Higher grades at a maintained mill throughput level means higher production so we have the anomaly that falling gold prices may actually lead to increased output.

But this all takes time to filter through and we are quite probably seeing peak gold being attained this year.  Global production growth has been falling so global gold output only rose by around 2% last year according to the latest analyses, and this year production is expected to remain flat.

While one may sometimes argue with the methodology, and findings, of GFMS’ global gold supply/demand statistics the consultancy’s latest report on gold includes its estimates of the world’s top gold producing nations and companies which are not so controversial and there are some changes in position and outputs which are certainly worth noting.

We last produced a similar listing based on 2012/2013 figures from rival precious metals consultancy, Metals Focus, last May (see: World top 10 gold producers – countries and companies on Mineweb) and while some of the GFMS statistics may vary a little from those of Metals Focus they broadly follow the same pattern and the overall figures are comparable – perhaps not too surprising given that Metals Focus was started by ex GFMS analysts and marketers.

Let’s take the top 10 country-by-country producers first, showing changes in position based on GFMS 2013 figures and 2014 estimates:

Table 1. Top 10 World Gold Producing Countries 2013/2014 (tonnes) 

Rank Country 2013 output 2014e output Change Y/Y
1 China 438.2 465.7 +6%
2 Russia 248.8 272.0 +9%
3 Australia 268.1 269.7 +1%
4 USA 228.2 200.4 -12%
5 Peru 187.7 169.3 -10%
6 South Africa 177.0 164.5 -7%
7 Canada 133.3 153.1 +15%
8 Mexico 119.8 115.7 -3%
9 Indonesia 109.2 109.9 +1%
10 Ghana 107.4 106.1 -1%
World 3049.5 3109.0 2%

Source: GFMS

Notably here, according to the GFMS estimates, China has continued to see increased gold output and remains comfortably the World No. 1. But the No.2 position is now occupied by Russia, which appears to have leapfrogged over Australia to attain this ranking with 9% output growth last year. Former World No. 1 for most of the last century, South Africa, is nowadays only in sixth place – and is evenin danger of being overtaken by Canada this year, which has seen particularly strong growth in the past couple of years while South African output continues to slip. Indeed Canada provided the strongest growth (15%) amongst the major producing nations.

Among the top producing companies, there have been some substantial gold output drops from the biggest miners, mainly due to divestments and closures – see table below.  While this may mean output has fallen for the two top gold miners, Barrick and Newmont, the divested operations are still producing, but for companies further down the food chain.

Table 2.World Top 10 Gold Miners 2013/2014 (tonnes)

Rank Company 2013 output 2014e output Change Y/Y
1 Barrick Gold 222.9 194.4 -13%
2 Newmont 157.5 151.2 -4%
3 AngloGold 127.7 136.9 +7%
4 Goldcorp 82.9 89.3 +8%
5 Kinross 77.7 80.4 +3%
6 Navoi (Uzbek) 70.5 73.0 +4%
7 Newcrest 73.5 72.0 -2%
8 Gold Fields 58.1 62.6 +8%
9 Polyus Gold 51.3 50.8 -1%
10 Sibanye Gold 44.5 50.1 +13%

Source GFMS

As can be seen, Barrick has recorded the biggest fall, while Newmont is in danger of being surpassed by AngloGold Ashanti as world No. 2 if 2014’s percentage increase and decrease figures are replicated again in the current year. Others which showed good production rises are Goldcorp, Gold Fields and the latter’s South African spinoff Sibanye Gold. Indeed if these two latter miners had remained combined they would together have been comfortably in the world No. 4 slot, well ahead of Goldcorp. The only change in ranking here is that GFMS reckons Uzbekistan’s state mining company, Navoi MMC, with a 4% increase in production, mostly from its massive Muruntau operation, has moved above Australia’s Newcrest, which is estimated to have recorded a small fall in output.

With GFMS now reckoning that the pent-up growth in global gold output may well have peaked last year with the various big, and small, new gold projects in the pipeline having mostly now reached full capacity, we could well see some further production downturns from some of the big miners this year, although their financial positions could be improving regardless given the recent concentration on cutting all-in costs – aided in many cases over the past year by the big fall in oil prices and the strength of the U.S. dollar for production from outside the U.S. itself.