Global scrap supply of gold rose to a record high in 2008. London-based GFMS estimate that global scrap supply of gold rose by 27% in 2008 to over 1,200 tonne fuelled by rising gold prices and the economic downturn. This was one of the key conclusions reported in gold survey 2009, which was launched on Tuesday, by Philip Klapwijk, GFMS’ executive chairman, at events in London, Johannesburg and Toronto.
“Although growth in recycling was concentrated in the Middle East and East Asia, similar trends were also apparent in western markets and continued growth in recycling forecast for 2009,” he said.
The most significant increase was reported by Turkey. Every region reported higher levels of gold recycle last year, largely because of profit-taking and distress selling by individuals, although the retail trade and manufacturers also melted larger quantities of unsold jewellery.
Turning to this year, Klapwijk noted that in first quarter of 2009, scrap supply exceeded the already high levels witnessed at the end of last year.
Global gold mine supply contracted by almost 3% last year. Although output in the fourth quarter came in stronger than forecast, this heavy fall led to last year’s production level dropping to a twelve year low. “The pressure on refining capacity this year has been quite tremendous. Several key consuming countries have, at times, emerged as net exporters of gold to the international market. Turkey, the fourth largest jewellery consumer last year, is a prime example of this trend, but by no means unique,” he said.
A key feature of the report is the prospect for the gold price in the coming months and this consultancy believes could easily re-attain the $1,000 mark and may well push up towards and perhaps even through the $1,100 barrier.
The analysis revealed that the decline in jewellery fabrication demand was not limited to just historically price sensitive regions with western markets also suffering a significant downturn.