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Gold Demand TrendsFull year 201319th February 2014
Disclaimer
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Sources, copyright and disclaimer
© 2014 World Gold Council. Where expressly identified as such, the gold supply and demand statistics contained in this report were complied by Thomson Reuters GFMS. Thomson Reuters GFMS retains all rights in such statistics © 2014.
This presentation is provided solely for general information and educational purposes. It is not, and should not be construed as, an offer to buy or sell, or as a solicitation of an offer to buy or sell, gold, any gold related products or any other products, securities or investments. It does not, and should not be construed as acting to, sponsor, advocate, endorse or promote gold, any gold related products or any other products, securities or investments.
This presentation contains forward-looking statements. The use of the words “believes,” “expects,” “may,” or “suggests” or words of similar import, identifies a statement as “forward-looking.” The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties. These forward-looking statements are based on the analysis of the World Gold Council. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions all of which are difficult or impossible to predict accurately. In addition, the demand for gold and the international gold markets are subject to substantial risks which increase the uncertainty inherent in the forward-looking statements. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the World Gold Council that the forward-looking statements will be achieved. We caution you not to place undue reliance on our forward-looking statements. Except in the normal course of our publication cycle, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and we assume no responsibility for updating any forward-looking statements. Past performance is no indication of future results.
This presentation does not purport to make any recommendations or provide any investment or other advice with respect to the purchase, sale or other disposition of gold, any gold related products or any other products, securities or investments, including without limitation, any advice to the effect that any gold related transaction is appropriate for any investment objective or financial situation of a prospective investor. A decision to invest in gold, any gold related products or any other products, securities or investments should not be made in reliance on any of the statements in this presentation. Before making any investment decision, prospective investors should seek advice from their financial advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision.
No part of this presentation may be copied, reproduced, republished, sold, distributed, transmitted, circulated, modified, displayed or otherwise used for any purpose whatsoever, including, without limitation, as a basis for preparing derivative works, without the prior written authorization of the World Gold Council.
While the accuracy of any information communicated herewith has been checked, neither the World Gold Council nor any of its affiliates can guarantee such accuracy. In no event will the World Gold Council or any of its affiliates be liable for any decision made or action taken in reliance on the information in this presentation or for any consequential, special, punitive, incidental, indirect or similar damages arising from, related to or connected with this presentation even if notified of the possibility of such damages.
Expressions of opinion are those of the author and are subject to change without notice.
World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
Agenda
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• Summary of full year 2013
• Summary of India and China
• Review of demand-Jewellery- Investment-Central Banks-Technology
• Review of supply
Introduction
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Summary of the full year 2013Marcus Grubb
Summary of gold demand and supply
*ProvisionalNote: Gold prices are averaged over the period they refer to
Source: Thomson Reuters GFMS, LBMA, World Gold Council
5World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
Tonnes 2012 2013 YoY% Q1'13 Q2'13 Q3'13 Q4'13
Gold demand 4,470.4 3,744.5 -16% 1,032.2 1,007.4 898.5 806.4
OTC investment & stock flows -55.2 595.4 - 3.0 11.6 263.5 317.2
Total demand (fabrication basis) 4,415.2 4,339.9 -2% 1,035.2 1,019.0 1,162.0 1,123.6
Total supply 4,415.2 4,339.9 -2% 1,035.2 1,019.0 1,162.0 1,123.6
Gold (London PM fix, US$/oz) 1,669.0 1,411.2 -15% 1,631.8 1,414.8 1,326.3 1,276.2
World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
India and China: engines of growth
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World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
Despite strong 2013, consumers keen for more
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China insight
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World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
New market paradigm - Jewellery demand shifted to East
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World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
New market paradigm – some key indicators
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• Asia is getting richer
• Global GDP from 24% to 31% in last decade (Source: OW report : Asian Finance 2020)
• Growing middle class (Source: EY Middle Class growth in Emerging Market)
-Chinao 2010 - 150 Mno 2020 - 500 Mn
- Indiao 2010 - 50 Mno 2020 - 200 Mn
• Asia financial sector represents 37% of total world banking and insurance market capitalisation (Source: OW report : Asian Finance 2020)
World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
Benefited from growth in GDP and Western market crisis
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1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0200400600800
1,0001,2001,4001,6001,8002,000
Monthly average gold price (London PM fix, US$/oz)
Source: LBMA, World Gold Council
Financial crisis
Euro crisis
Central bank stimulus
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
F
2016
F
2018
F
0
5,000
10,000
15,000
20,000
25,000
GDP, US$tn
Source: IMF WEO, World Gold Council
12.4%
9.4%
10.4%
8.3%
CAGR 2000-12 CAGR 2012-18F
India insight
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World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
Time line of recent India gold regulations
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17 Jan 2012Import tax increased to 2%
16 Mar 2012Import tax increased from 2% to
4%
21 Jan 2013Import tax raised from 4% to 6%
13 May 2013Restrictions placed on bank
imports via consignment
4 Jun 2013Consignment restrictions extended to agencies, with imports on cash
outright basis
5 Jun 2013Import tax raised from 6% to 8%
27 Jun 2013Imports permitted only if intended
to meet needs of jewellery consumers
22 Jul 2013Restrictions on consignments removed, introduction of 80/20
policy
13 Aug 2013Increase in import tax from 8% to 10%, excise tax raised from 7% to
9%
14 Aug 2013Response from authorities to
queries on 80/20 policy; with some changes announced
World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
Supply squeeze caused elevated premiums in India
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Market dynamics – demand side
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Total gold demand
*ProvisionalNote: Gold prices are averaged over the period they refer to
Source: Thomson Reuters GFMS, LBMA, World Gold Council
16World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
Demand (tonnes) 2012 2013 YoY% Q1'13 Q2'13 Q3'13 Q4'13
Jewellery 1,896.1 2,209.5 17% 554.8 602.8 498.0 553.8
Technology 407.5 404.8 -1% 102.5 103.2 102.8 96.2
Investment 1,568.1 773.3 -51% 264.5 182.9 179.1 146.7
Central bank net purchases 544.1 368.6 -32% 129.1 82.4 96.2 61.0
Gold demand 4,415.8 3,756.1 -15% 1,050.9 971.3 876.1 857.8
Gold demand (value, US$mn) 236,946 170,422 -28% 55,134 44,181 37,358 35,195
World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
Record consumer demand offset by ETF outflows
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Market dynamics – supply side
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World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
Recycled gold continues to decline, down 14% YoY in 2013
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Conclusion
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• 2013 saw record volumes of consumer demand – 3,864 tonnes.
• Sharp drop in prices generated an unprecedented reaction, initially in the East before
filtering out to western market.
• Growth in consumer demand offset ETF outflows.
• 2013 was the fourth consecutive year of net purchases by central banks.
• Technology demand was stable, underpinned by lower prices and improved consumer
sentiment.
• Supply contracted by 2% as a drop in recycling activity outweighed mine production growth.
World Gold Council | Gold Demand Trends Full Year 2013 | February 2014
World Gold Council10 Old Bailey, London EC4M 7NGUnited Kingdom
T +44 20 7826 4700F +44 20 7826 4799W www.gold.org
Thank you
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