BofA: Global Gold & Precious Metals: Gold and Gold Industry Primer – Eighth Edition

Gold and gold industry primer - 8th edition

Intended as a desk reference for generalists or new analysts covering the precious metals space, our eighth edition Gold and Gold Industry Primer tackles subjects germane to gold and the global gold producer sector. Key sections include economic drivers, gold supply and demand trends, industry fundamentals and sector valuations. For the sake of brevity, the following sections (which were in the Seventh Edition) were excluded from this primer: 1) Maps of global gold mining regions (link); 2) KPMG insights into NAV (link); 3) Mining investor red flags (link); 4) Global gold M&A trends in 2019 (link); 5) Evolution of the global gold sector (link); 6) Global gold M&A Q1'20 - (link); and 7) North American gold producer year-end 2019 reserve analysis (link). 

Gold demand-supply trends in 2019

In 2019, the World Gold Council (WGC) reported that total gold demand was 4,812 metric-tonnes (t), +3% yoy. Demand for gold falls into five categories. Jewelry demand totaled 2,135t of gold in 2019, -7% yoy, accounting for 44% of total demand in 2019. Other fabrication was 391 tonnes in 2019, -2% yoy (7% of total demand). Bar & coin demand accounted for 871t of gold in 2019, -20% yoy and 18% of total demand. ETF demand soared 438% yoy to 404t in 2019 (comprised 8% of total demand). Central bank purchases totaled 648t in 2019, -1% yoy (13% of demand). The WGC calculated there was 428t of other buying to bring supply and demand into balance in 2019. World gold production was 3,479.6t in 2019, -1.4% yoy and the first yoy decline since 2009.
 
Fifteen fun facts about gold 

1) Gold never oxidizes, never gets rusty and is shiny forever; 2) Gold has been mined for over 5,000 years; 3) Tutankhamen's coffin contained ~1.5 tonnes of gold; 4) The WGC estimates that total above ground gold stocks stand at 197,576t, sufficient to satisfy global gold demand for 40+ years; 5) Gold is virtually indestructible. Still though, If every single ounce of this gold were placed next to each other, the resulting cube of pure gold would only measure around 21 meters on each side; 6) Illustrating how ductile gold is, a single ounce of gold can be stretched into a gold thread 5 miles long; 7) The first gold coins appeared around 700 BC; 8) If all the gold in the world was pulled into a 5 micron wire, it could wrap around the earth 11.2 million times; 9) The word "gold" comes from the Old English word "geolu," meaning yellow; 10) In every cubic mile of sea water there is 25 tons of gold, equal to around 10 billion tons of gold in the oceans; 11) Two James Bond movies have gold in the title, Goldfinger and The Man With The Golden Gun; 12) The last Olympics which awarded medals made of solid gold was during summer 1912 in Stockholm; 13) Modern day Olympic gold medals contain a minimum of six grams of gold and with the balance roughly 92.5% silver; 14) There are more than 400 references to gold in the Bible; and 15) Gold is becoming scarcer. The WGC estimates below ground gold reserves of 54,000t, which means "peak gold" was passed many years ago.