World Gold Resources

Introduction

This article surveys world gold resources. It overviews resources from the World Gold Council, Gold Price Group, Kitco and the World Bank and International Monetary Fund (IMF). The gold resources surveyed are gold prices and charts, gold demand and supply, gold market structure and flows, gold mining, the use of gold in various domains and countries with largest gold reserves. The article concludes with future outlook on Union of Arab Banks plans to establish the Arab Gold Gateway, a unique digital portal to knowledge about gold resources tailored and customised to the need of the Arab world.

World Gold Council Resources

The world gold council is the world gold authority. It is a membership organisation that champions the role gold plays as a strategic asset, shaping the future of a responsible and accessible gold supply chain.

The world gold council team of experts builds understanding of the use case and possibilities of gold through research, analysis, commentary and insights. This drives industry progress, shaping policy and setting the principles for a perpetual and sustainable gold market.

The World Gold Council provides knowledge and statistics about the gold market structure and flows, gold trading–over-the-counter and exchanges. The global gold market structure and flows depicts sources of gold supply and of demand, with an indication of trading volumes, and the scale and composition of above-ground stocks.

Gold Price Group Resources

Gold price group mission is to provide accurate fast loading, gold price charts in ounces, grams and kilos in a wide range of national currencies for visitors from around the world. It also aims to provide gold prices from major Gold Dealers in the United States, Canada, UK and Australia to allow our visitors to locate the best gold prices on gold bullion.

KITCO Gold Resources

Kitco is the global precious metals authority and retailer of bullion products, recognized as the leading voice in commodities information providing best-in-class news, data and insights. Kitco’s media division is a precious metals, commodities and mining global authority, generating and distributing cutting-edge news, market insights and data to a global audience.

IMF Gold Resources

The IMF holds around 90.5 million ounces (or 2,814.1 metric tons) of gold at designated depositories.

Until the early 1970s, the IMF acquired its gold holdings through four main channels:

• At the IMF’s founding in 1944, member countries paid 25 percent of their initial quotas in gold. They did the same with quota increases over the next three decades. These payments represent the largest source of the IMF’s gold.
• Members normally paid all interest owed on IMF credit in gold.
• Members also could use gold to repay credit extended by the IMF.
• Members seeking to acquire another member’s currency could do so by selling gold to the IMF, as South Africa did in 1970–71.

World Bank Gold Resources

The world bank open data portal provides various statistics about gold reserves around the world.

Gold Demand

Gold has emotional, cultural and financial value and is bought by different people across the globe for different reasons, often influenced by national socio-cultural factors, local market conditions and wider macro-economic drivers. Gold’s diverse uses in jewellery, technology and by central banks and investors, mean different sectors of the gold market rise to prominence at different points in the global economic cycle.

Gold is bought by a diverse set of consumers and investors across the globe. Gold demand is driven by:

·        Jewellery Demand: Gold jewellery represents the largest source of annual demand for gold per sector. This has declined over recent decades, but it still accounts for around 50% of total gold demand. India and China are by far the largest jewellery markets, together accounting for over 50% of the global total. The Asian and Middle Eastern markets are dominated by demand for purer, higher-carat gold.

·        Gold Investment Demand: Gold has unique properties as an asset class. Modest allocations to gold can be proven to protect and enhance the performance of an investment portfolio, reducing volatility and minimising losses during periods of market shock.

·        Central Bank Demand: Gold plays an important part in global central bank reserves, and they are significant holders of gold. The 2008 financial crisis prompted a fundamental shift in central bank behaviour towards gold, encouraging a reappraisal of its role and relevance in reserve asset management. Emerging market central banks have increased their official gold purchasing, while European banks have ceased selling, and the sector now represents a significant source of annual demand for gold.

·        Gold in Technology Demand: Gold is used as an industrial metal in a broad range of applications, but demand is driven by the electronics sector which accounts for ~80% of gold used in technology.

Use of Gold In Various Application Domains

Gold is a remarkable metal with diverse applications across various domains:

·        Jewellery Manufacturing: Approximately half of all gold mined is used in jewellery.

·        Electronics: Gold is a crucial component in electronics due to its excellent electrical conductivity and resistance to corrosion. It is used in connectors, switches, and printed circuit boards.

·        Computers: Gold is essential in computers for efficient signal transmission. It is used in connectors, relay contacts, and circuit boards.

·        Dentistry: Gold alloys are used for dental restorations, including crowns. Their biocompatibility and durability are unmatched.

·        Aerospace: Gold-coated surfaces protect spacecraft components from extreme temperatures and radiation in space.

·        Awards and Symbols: Gold medals, Oscars, and Grammys symbolize achievement and excellence.

·        Glassmaking: Gold is used for decorative glass gilding and leaf applications.

Gold Geographical Diversity

Gold is geographically spread in China, India, Turkey, and United States (US).

·        China Gold: In China, gold is often gifted to younger members of the family for special occasions, and there is a tradition of giving gold to new born babies in the form of tiny necklaces or bracelets. Gold also has a special place in the Chinese New Year when ornate pieces of jewellery in 24 carat, often featuring zodiac symbols are purchased for their investment value as well as their beauty.

·        India Gold: India is one of the largest markets for gold, and growing affluence is driving growth in demand. Gold has a central role in the country’s culture, considered a store of value, a symbol of wealth and status and a fundamental part of many rituals. Among the country’s rural population, a deep affinity for gold goes hand in hand with practical considerations of the portability and security of jewellery as an investment.

·        US Gold: Weddings are a major driver of gold jewellery demand in the US. While wedding rings have been a part of Western European culture for centuries, the modern American tradition of the gold wedding band took off during the Second World War, when soldiers fighting overseas wore rings to remind them of their loved ones back home.

·        Turkey Gold: Turkey, perhaps better than anywhere else, illustrates the broad role gold can play in modern society. Gold is embedded in Turkish life: merchants pioneered the use of gold coins in ancient Lydia, and today gold plays an important and innovative role in Turkey’s economy.

Gold Supply

Mine production accounts for the largest part of global gold supply, typically, 75% each year. However, annual demand requires more gold than is newly mined and the shortfall is made up from recycling.

Mine production does not respond to price changes quickly. There is usually a long lead time between exploring for new gold deposits and a mine entering into production. As it is virtually indestructible, nearly all of the gold ever mined is theoretically still accessible in one form or another and potentially available for recycling.

Gold mining is a global industry with operations on every continent except Antarctica, and gold is extracted from mines of widely varying types and scale.

At a country level, China was the largest producer in the world in 2022 and accounted for around 10 per cent of total global production.

Gold Mined Stock

The best estimates currently available suggest that around 212,582 tonnes of gold have been mined throughout history, of which around two-thirds has been mined since 1950. And since gold is virtually indestructible, this means that almost all of this metal is still around in one form or another.

Countries with Largest Gold Reserves

The United States holds the world’s largest stockpile of gold reserves by a considerable margin. The country’s government has almost as many reserves as the next three largest gold-holding countries combined (Germany, Italy, and France). Russia rounds out the top five. The International Monetary Fund (IMF) is one of the top gold reserve holders with 2,814.10 metric tons (3,102.01 standard tons).

Below we overview countries with the largest gold reserves in the world:

·        United States: The United States holds 8,133.46 tons of gold in its reserves. During the height of the Bretton Woods international exchange system, when the US offered to house and protect other countries’ gold in exchange for dollars, it was reported that between 90% and 95% of the entire world’s gold reserves lay in American vaults. Decades later, the U.S. still holds the most. Gold makes up over 75% of its foreign reserves.

·        Germany: As much as 3,352.65 tons of gold are held in Germany’s reserves. This represents two-thirds of its foreign reserves. The country’s government keeps its gold reserves in several locations, including: Deutsche Bundesbank in Frankfurt am Main, U.S. Federal Reserve Bank branch in New York, Bank of England in London, Banque de France in Paris.

·        Italy: Italy falls in the third spot with 2,451.84 tons of gold. The eurozone crisis led some to call for Italy’s government to sell some of its gold reserves to raise funds, but no such plans ever materialized. The country stores the majority of its gold bullion, more than 87%, in the Bank of Italy’s head office and the United States. The remainder is divided between vaults in Switzerland the United Kingdom. According to the central bank, it stores gold in different locations for historical reasons and to minimize risk.

·        France: With 2,436.97 tons, France has the fourth-largest gold reserves in the world. Former President of France Charles de Gaulle was partially responsible for the collapse of the Bretton Woods system when he called the US bluff and began trading dollars in for gold from the Fort Knox reserves. Then-president Richard Nixon, who knew that the fixed rate of $35 per gold ounce was too low, was eventually forced to take the US off the gold standard, ending the dollar’s automatic convertibility into gold.

·        Russian Federation: Russia overtook China as the fifth-largest holder of the yellow metal in 2018 with 2,332.74 tons.  Russia’s increase in its gold stores was seen as an attempt to diversify beyond American investments. Russia mainly sold US Treasury bonds to buy the bullion.

Gold Historical Value

Gold has long been viewed as one of the best stores of value. Gold is respected around the world for its value and rich history, which has been recognized by cultures for thousands of years. Throughout the centuries, people have continued to hold gold for various reasons. Societies, and now economies, have placed value on gold, thus perpetuating its worth. It is the metal we fall back on when other forms of currency don’t work, which means it always has some value as insurance against tough times.

Gold has historically been an excellent hedge against inflation because its price tends to rise when the cost of living increases. Over the past 50 years, investors have seen gold prices soar and the stock market plunge during high-inflation years. This is because when fiat currency loses its purchasing power to inflation, gold tends to be priced in those currency units and thus tends to rise along with everything else. Moreover, gold is seen as a good store of value, so people may be encouraged to buy gold when they believe that their local currency is losing value.

Gold retains its value not only in times of financial uncertainty but also in times of geopolitical uncertainty. It is often called the “crisis commodity” because people flee to its relative safety when world tensions rise. During such times, gold often outperforms other investments. Its price often rises the most when confidence in governments is low.

Weakness of the US Dollar

Although the US dollar is one of the world’s most important reserve currencies, when the value of the dollar falls against other currencies, as it did from 1998 to 2008, this often prompts people to flock to the security of gold, which raises gold prices. The price of gold nearly tripled from 1998 to 2008, reaching the $1,000-an-ounce milestone in early 2008 and nearly doubling from 2008 to 2012, rising above the $2,000 mark. The decline in the US dollar then occurred for a number of reasons, including the country’s large budget and trade deficits and a large increase in the money supply.

Union of Arab Banks Gold Gateway

The Union of Arab is establishing the Arab Gold Gateway, Arab Gold Gateway, a unique digital portal to knowledge about gold resources tailored and customised to the need of the Arab world.

The Union of Arab Banks Arab Gold Gate is a leading digital platform in the Arab world and in multiple languages

The Arab Gold Gateway is the first in the Arab world to provide gold tracking, learning and trading services and opens the door for gold syndicates and traders, mineral exploration companies and central banks to join.

The Arab Gold Gateway services include:

• Gold Price Tracking
• Monitoring gold reserves at central banks
• Tracking the volume of gold usage in various sectors
• Tracking the world’s gold production
• Gold Mine Statistics
• Tracking gold-denominated cryptocurrencies
• History of Gold Systems
• Research on the development of gold-backed digital currencies
• Development of sandboxes to develop gold-backed financial products
• Conferences and seminars
• Newsletter
• Publications
• Gold Trading
• Trading gold-backed digital currencies.