Filed Pursuant to Rule 433
Registration No. 333-180974
February 19, 2013
Filed Pursuant to Rule 433
Registration No. 333-180974
February 19, 2013
Gold Demand Trends
Full year 2012
Combined growth in jewellery and central bank demand exceeded declines in the investment and technology sectors in Q4 to generate gold demand of 1,195.9 tonnes – the highest fourth quarter total on record, worth a near-record US$66.2bn. Annual demand in 2012 reached a record value of US$236.4bn, although on a tonnage basis it declined by 4% to 4,405.5 tonnes. Read more…
Gold demand by category (tonnes) and the gold price (US$/oz)
Tonnes US$/oz
5,000 1,800
1,600
4,000
1,400
3,000 1,200
1,000
2,000
800
1,000 600
400
0
200
-1,000 0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Contents
Executive summary 02
Fourth quarter 2012 market overview 08
Global gold market – 2012 review 10
Jewellery 10
Investment 12
Technology 14
Central banks 15
Supply 16
Gold demand statistics 17
Appendix 25
Notes and de?nitions 29
Contributors
Louise Street louise.street@gold.org
Johan Palmberg johan.palmberg@gold.org
Juan Carlos Artigas juancarlos.artigas@gold.org
Marcus Grubb
Managing Director, Investment marcus.grubb@gold.org
Source: LBMA, Thomson Reuters GFMS, World Gold Council
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Executive summary
Annual gold demand measured on a value basis increased to an all-time record of US$236.4bn in 2012. On a tonnage basis, demand totalled 4,405.5 tonnes (t) in 2012, down by 4% from 2011 as an increase in demand from institutional investors and central banks only partly offset a year-on-year decline in consumer demand. Major themes from 2012 are discussed below, including a dichotomous year in India, central bank purchases reaching a 48-year high and China’s persistent devotion to gold.
The year in context
Examined in a longer term context, annual gold demand was 15% higher than the average for the previous ?ve years, with much of that growth coming from the physical bar segment of investment demand and central bank purchases, as shown in Charts 1 and 2. The long term downtrend in jewellery and technology volumes, against a backdrop of a twelve-year bull run in gold prices, has seen their share of total demand eroded – but in value terms, all sectors have experienced considerable expansion.
Chart 3 shows the ten-year rising trend in the value of consumer demand (jewellery and gold bars and coins), which clearly illustrates that gold has captured an increased share of wallet. While 2012 saw a dip in the value of investment demand, the 3% growth in the value of gold jewellery to a record US$102.4bn—during a period in which the average price in US dollars increased by over 6% – confirms the enduring desirability of gold jewellery.
Gold Demand Trends | Full year 2012
Chart 1: Gold demand breakdown (2012, tonnes)
Jewellery 43%
Technology 10%
Bar and coin 29%
ETFs and similar 6%
Central bank
net purchases 12%
Chart 2: Gold demand breakdown, 5-year average (2008-2012, tonnes)*
Jewellery 49%
Technology 11%
Bar and coin 28%
ETFs and similar 9%
Central bank
net purchases 4%
• Over the last five years, jewellery, technology and ETFs and similar products have yielded market share to bar and coin investment and central bank purchases.
*Annual average demand 2008 – 2012 inclusive. Note: Totals may not sum due to rounding. Source: Thomson Reuters GFMS, World Gold Council
Chart 3: Jewellery and investment demand (value) and the gold price (US$/oz)
US$bn US$/oz
200 1,800
180 1,600
160 1,400
140
1,200
120
1,000
100
800
| 80 |
|
600
| 60 |
|
| 40 |
|
400 |
| 20 |
|
200 |
0 0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Jewellery Bar and coin London PM fix (US$/oz, rhs)
• Jewellery demand reached a record value in 2012, extending the long term uptrend.
• Bar and coin investment in value terms, having grown from US$3.6bn in 2003 to US$76.6bn in 2011, tapered off in 2012 but remained far above historical averages.
Source: LBMA, Thomson Reuters GFMS, World Gold Council
| 2 |
|
_03 |
The value of bar and coin investment grew signi?cantly between 2003 and 2011, from just under US$3.6bn to US$76.6bn. One need look back only a few years to find investment demand at a fraction of current levels. The fact that demand for bars and coins tapered off in 2012, shrinking by 12% to US$67.4bn, is therefore perhaps not surprising in light of this remarkable historical growth. ETF demand, in contrast, was stronger in 2012 than the previous year, 2011 having witnessed net out?ows as investors took pro?ts at opportune price levels. The divergence between the institutional and more retail-oriented elements of demand highlights the differing rationale that informs the behaviour of investors in each sector and confirms our previous analysis that ‘the gold market is driven by a diverse set of factors and that the price is determined by their interaction and that investment demand is not concentrated on one particular type of investor but rather a well balanced and robust set which includes many long-term holders’.1 As 2013 unfolds, the expectation is for jewellery demand to soften in volume terms while sustaining healthy values. Investment demand, while to some extent dependent on the movement in the gold price during the year and exchange rate effects on local prices, should again exceed historical averages as investors continue to focus on gold’s role as a store of wealth. Continued innovation in the range of gold investment products available across a range of countries (for example, gold accumulation plans in India and China) con?rms the healthy appetite for gold among investors.
India’s year of two halves
2012 was a year of mixed fortunes for gold’s largest market. Following a ?rst half in which consumers faced headwinds in the form of higher import duties, market turmoil over proposed measures to curb gold imports and a sharp rise in the local price of gold, Indian demand staged a strong revival in the second half of the year. A late summer relief rally, sparked by an upturn in consumer sentiment, marked the beginning of the H2 2012 recovery. The market continued to thrive during the fourth-quarter wedding season and festive period, the highlight being Diwali when gold demand was particularly buoyant in urban areas. Demand was further stimulated, most notably during December, by expectations (which were subsequently proven to be well-founded) that the government would again increase the import duty on gold. This encouraged stock-building by bullion dealers and jewellers alike ahead of the duty hike, and consumers who had planned to buy gold in the near future brought forward their purchases to avoid paying higher duties in 2013.
| 1 |
|
World Gold Council, Gold Demand Trends, Full year 2011, February 2012. |
Gold Demand Trends | Full year 2012
Indian consumer demand (total demand for gold jewellery, bars and coins) in the ?rst half of 2012 was 36% lower than the ?rst half of 2011. However, a second half comparison shows a 23% increase over H2 2011 (although this comparison is somewhat ?attered by a relatively weak base period). The net result for the full year was a 12% decline in demand to 864.2t, which nonetheless compares favourably with the 5-year average of 845.9t. Taken in the context of a 21% increase in the annual average rupee gold price (compared with a rise of just 6% in the US$ price), this result is all the more remarkable and serves to emphasise the importance of gold to Indian consumers. The value of annual demand reached Rs2,475bn, up 6% from 2011.
Indications are that the rush to avoid the increase in gold import duties continued in the opening weeks of 2013, prior to the government’s confirmation of the increase on 21 January. The remainder of the quarter may witness something of a stagnation however, as the market digests the duty rise from 4% to 6% of the value of imported bullion.
Chart 4: India consumer demand (Q4’11, Q4’12, 5-year average, tonnes)*
Tonnes
300
261.9
250
207.0
200 108.9
185.5
67.3
150 72.0
100
| 153.0 |
|
139.8 |
| 50 |
|
113.5 |
0
Q4’11 Q4’12 5-year average
Jewellery Bar and coin
• Consumer demand revived in the third and fourth quarters following a difficult first half of 2012.
• Fourth quarter demand was 27% above the five-year quarterly average.
*Five-year quarterly average demand Q4 2007 – Q3 2012 inclusive.
Note: Please note that demand for both categories may not sum to total due to rounding. Source: Thomson Reuters GFMS, World Gold Council
04_05
China – steady as she goes
Over the last two years Chinese gold consumers have displayed a remarkably consistent attitude towards gold: demand for investment and jewellery throughout 2012 has shown little variation over 2011 quarterly levels.
Gold demand came under pressure from a variety of opposing forces in 2012, with the net result that quarterly year-on-year changes have been less than signi?cant. Tailwinds propelling Chinese demand included; the continued urbanisation of the population; the dominance of 24-carat (pure) gold and its role as a savings proxy; and increasing availability of gold investment products to a populace with a growing awareness of gold’s investment properties – particularly its role as an in?ation hedge.
On the other hand, Chinese consumers also faced headwinds as the effects of the slowdown in the domestic economy caught up with them (although there were signs that this was
reversing by the fourth quarter) and a period of broad sideways consolidation in the gold price discouraged demand from investors awaiting a clear buy signal.
In volume terms, Chinese gold demand can therefore best be described as stable; a minor increase in investment demand being slightly overshadowed by the moderation in jewellery demand. Total consumer demand was valued at RMB262.7bn, an increase of 3% over the previous year as consumers in China continue to allocate greater sums to their gold investment and jewellery purchases: demand in both sectors reached a record value in 2012.
Looking forward, the signs of economic improvement bode well for gold demand in China, although the indications are for a steady ?rming of demand rather than for strong growth. This will remain the case while the gold price continues to hold within the broad sideways range of the last 5–6 months.
Chart 5: China consumer demand (Q4’11, Q4’12, 5-year average, tonnes)*
Tonnes
250
200 199.6 202.5
| 64.0 |
|
65.5 |
150 148.5
41.7
100
| 135.6 |
|
137.0 |
| 50 |
|
106.7 |
0
Q4’11 Q4’12 5-year average
Jewellery Bar and coin
• Chinese consumers maintained steady volumes of demand compared with year-earlier levels, while demand value exceeded that of 2011.
*Five-year quarterly average demand Q4 2007 – Q3 2012 inclusive. Source: Thomson Reuters GFMS, World Gold Council
Gold Demand Trends | Full year 2012
Central banks once more unto the breach
Central banks garnered a greater share of gold demand in 2012, accounting for 12% of the total compared with a 10% share in 2011. Total net purchases by central banks of 534.6t exceeded 2011’s already strong total and signalled a return to levels of buying last seen almost 50 years ago. The year saw a number of new joiners added to the list of institutions building their gold reserves; Brazil and Paraguay were two such names, both making signi?cant purchases during the year.
Since ?rst becoming a net purchaser in Q2 2009, central banks have added almost 1,100.0t to global gold reserves, almost reversing the 1,143.0t of net sales conducted over the preceding three years. Global gold reserves, as measured by the IMF’s International Financial Statistics, have steadily increased since Q1 2009: as of November 2012 (the latest data available), total world gold reserves were 31,597.6t, an increase of 6% from the end of March 2009.
The list of countries actively adding to their of?cial gold holdings remains heavily concentrated in developing markets, which partly re?ects the scale of growth in the reserves of these markets over recent years. As the of?cial reserves of these countries swell, with their heavy emphasis on US$- and euro-denominated assets, the need for diversification also increases. With a focus on high quality, liquid assets as desirable alternatives, gold is a natural destination for a proportion of these increased reserves. A number of research papers have addressed the issue of gold’s characteristics and benefits as a reserve asset, as well as optimal allocations for gold within a standard reserve asset portfolio.2 For more discussion of central bank demand for gold in 2012, please see our commentary on central banks (page 15).
2 World Gold Council, Gold Investor, Volume 1, January 2013; World Gold Council, Optimal gold allocations for emerging-market central banks, RBS Reserve Management Trends 2012, April 2012; World Gold Council, The importance of gold in reserve asset management, June 2010.
06_07
Fourth quarter 2012 market overview
A recovery in certain elements of the gold market during the fourth quarter led to gold demand reaching 1,195.9t – its second highest quarterly total behind the record Q3 2011. Double-digit year-on-year growth in the jewellery and central bank arenas in Q4 was tempered by shrinkage in technology and investment. Demand in value terms of US$66.2bn was also a near-record, second only to Q3 2011 at US$66.7bn.
India accounted for much of the 11% year-on-year improvement in jewellery demand; festival and wedding-related purchases were supplemented by stock-building within the trade ahead of a widely-anticipated increase in import tax, which was subsequently imposed a few weeks into the new year. A recovery in jewellery demand in the Middle Eastern region, following the disruptive events of the last couple of years, also contributed towards the 52.9t growth in the sector. Globally, jewellery demand was valued at a record US$29.1bn, partly reflecting the 2% increase in the average US$ price from Q4 2011.
Central banks continued to make sizeable purchases: Brazil, Russia and South Korea made a combined contribution of 70t, accounting for almost half of the 145.0t of demand estimated for Q4 2012. As discussed previously, the factors driving central bank buying should mean that the sector continues to generate healthy demand over the coming year. For a more detailed discussion of gold demand in the of?cial sector, please refer to the section on central banks (page 15).
Investment demand, although 8% weaker year-on-year, was up marginally quarter-on-quarter and held well above its ?ve-year quarterly average in Q4. The year-on-year decline is partly a function of Q4 2011 having been a strong quarter, but also re?ects investor hesitation in identifying gold price signals during the quarter. The broad sideways consolidation in the gold price over recent months re?ected uncertainty, which was evident also in investor behaviour – particularly among the smaller, more retail-oriented investor community, where demand for bars and coins was relatively subdued in the fourth quarter. India was an exception, reacting to the aforementioned prospect of higher import duties.
Given the lack of seasonality in investment demand, the longer-term comparison is more meaningful. Bar and coin demand of 336.6t was 26% higher than the ?ve-year quarterly average of 268.1t, while ETF demand was in line with its ?ve-year quarterly average of 88.8t. This longer term analysis con?rms the relative robustness of demand for gold investment products during the closing months of 2012. Although some markets lacked the fresh impetus required to fuel a strong upsurge in demand, a general awareness of gold’s attractiveness in times of uncertainty seems to have sustained both institutional and retail elements of the market at historically elevated levels.
Gold Demand Trends | Full year 2012
A 3% year-on-year drop in technology demand to 100.9t was largely indicative of lacklustre consumer sentiment in key markets, as well as ongoing substitution to lower-priced alternatives. Weakness was most pronounced in the dental sector, where demand was 7% below Q4 2011 as gold continued to cede market share to base metals and ceramic. Demand for gold used in electronics lost 2% year-on-year, although this was as much a re?ection of the inventory cycle as of weaker demand for electrical items. Healthy demand
for tablets and smart phones was outweighed by a further deterioration in demand for PCs and ultrabooks.3 Gold continued to lose market share to copper in the production of bonding-wire, a trend that shows no sign of slowing. Other industrial demand (OID) also lost 2%; a price-related decline in Indian demand for jari (gold thread used in clothing) was the main driver of the decline in this segment.
Chart 6: Overall demand changes (Q4’12 vs Q4’11, tonnes)
| 32 |
|
29.1
| 28 |
|
| 25.6 |
|
6.0 |
| 24 |
|
Other |
| 5.2 |
|
0.8 39% |
Other 2.2
| 20 |
|
0.9 40% 19.4 |
| 1.8 |
|
2.2 |
| 1.3 |
|
Europe 4% 3.5 |
| 16 |
|
2.3 Other |
0.9
| 1.4 |
|
Europe 5% 45% |
2.8
8.1
| 12 |
|
1.4 |
| 7.9 |
|
India/ 0.6 Europe 3% |
India/ Greater
| 8 |
|
Greater China 4.7 India/ |
China 57% Greater
| 4 |
|
55% 8.5 China |
| 6.2 |
|
5.5 52% |
0
Q4’11 Q4’12 5-year average
India Greater China Europe ex CIS US Middle East/Turkey Far East Rest of World2
• Jewellery and central bank demand grew by 11% and 29% respectively, while moderate losses in investment and technology tempered gains in total demand.
• Q4 was the second highest quarter for gold demand, worth US$66.2bn in value terms.
Source: Thomson Reuters GFMS, World Gold Council
| 3 |
|
Ultrabooks are notebook computers that bridge the gap between lightweight laptops and tablets. |
08_09
Global gold market – 2012 review
Jewellery
Q4 was the strongest quarter for global jewellery demand since Q1 2011 as India, and to some extent the Middle Eastern markets, drove a recovery in the sector. The quarterly value of demand was 13% higher year-on-year at US$29.1bn. In annual terms, 2012 saw a 3% decline in demand on a volume basis to 1,908.1t, primarily due to a relatively weak year in India. Conversely, the value of jewellery demand reached a record of US$102.4bn last year, 3% above 2011 as consumers continued to allocate greater sums to gold jewellery, despite the 6% year-on-year rise in the price.
The two largest jewellery-consuming markets, India and China, together generated 56% of total annual jewellery demand. India had the greater in?uence on the year-on-year drop in jewellery demand, for reasons already discussed. For more detail on India and China, please see the Executive summary.
Most of the other Far Eastern markets generated weaker demand for gold jewellery compared with 2011. Thailand, South Korea and Vietnam all witnessed considerable double-digit declines in their annual totals, chie?y the result of consumers responding to higher prices. Vietnamese consumers in particular were burdened with high premiums in the local market, which depressed demand. Japan and Indonesia were the only positive performers within this group, although the
comparison is being made with a very weak base year for Japan due to the long-term impact of the devastating earthquake and tsunami of March 2011. Despite a 6% annual increase in Japanese jewellery demand, the market remains in a longer term downward trend.
A further erosion of tonnage in the Western markets was again caused by consumers reacting to higher prices during a prolonged period of economic distress. Italy suffered the largest decline of these markets, down 15% to 23.5t as the parlous state of the economy inevitably dented demand. Although silver tonnage has been seen gaining at the expense of gold, it is interesting to note that much of this will be in the form of gold-plated jewellery, con?rming the desirability of pure gold jewellery which is being undermined by affordability.
Russia, the fourth largest jewellery market in 2012 for the second year running, again witnessed counter-trend growth in annual demand. The market expanded by 7% to 81.9t, heralding a return to pre-global ?nancial crisis levels. The relative health of the domestic economy has insulated Russian consumers in recent years, further evidenced by a 13% increase in the value of annual demand, over a period in which average annual prices rose by 6%.
Gold Demand Trends | Full year 2012
Egypt proved to be a highlight within the Middle East, diverging sharply from the other markets in the region with a rise of 35%. However, it is important to note that, despite this strong annual growth, the market failed to recover to levels that prevailed prior to the political uprising of 2011. Double-digit contractions in each of the other Middle Eastern markets were symptomatic of higher gold prices encouraging a shift to lower-carat and gem-set items and, in some instances, cheaper alternatives such as silver.
Turkish consumers eked out modest gains in jewellery demand; a 0.4% increase in annual volume translated to a 14% increase in local currency value to a record annual total of TL6.8bn. The seasonally weak fourth quarter was 8% stronger than the previous year as corrective dips in the local gold price drew out a spate of buying in October and December. However, adverse weather conditions in the ?rst quarter limited demand growth for the full year. Demand in Turkey seems to be recuperating from the tribulations of recent years, but remains far from the heady levels of pre-crisis times. Lighter-weight, lower-carat (and therefore more affordable) items are likely to continue to attract attention, ensuring that any progress towards recovery is likely to be slow.
Chart 7: Global jewellery demand by region (Q4’11, Q4’12, 5-year average, value)1
| 32 |
|
29.1
| 28 |
|
| 25.6 |
|
6.0 |
| 24 |
|
Other |
| 5.2 |
|
0.8 39% |
Other 2.2
| 20 |
|
0.9 40% 19.4 |
| 1.8 |
|
2.2 |
| 1.3 |
|
Europe 4% 3.5 |
| 16 |
|
2.3 Other |
0.9
| 1.4 |
|
Europe 5% 45% |
2.8
8.1
| 12 |
|
1.4 |
| 7.9 |
|
India/ 0.6 Europe 3% |
India/ Greater
| 8 |
|
Greater China 4.7 India/ |
China 57% Greater
| 4 |
|
55% 8.5 China |
| 6.2 |
|
5.5 52% |
0
Q4’11 Q4’12 5-year average
India Greater China Europe ex CIS US Middle East/Turkey Far East Rest of World2
• The value of jewellery demand broke quarterly and annual records.
• Growth was concentrated in India, China and Egypt.
| 1 |
|
Five-year quarterly average demand Q4 2007 – Q3 2012 inclusive. |
| 2 |
|
Rest of World includes both Russia and ’Other‘countries. |
Source: Thomson Reuters GFMS, World Gold Council
10_11
Investment
A decline in annual investment was the result of a divergence between institutional and retail investor behaviour. A 17% drop in demand for bars and coins together with a 51% increase in ETFs and similar products created a 10% reduction in investment demand. Adding in a positive contribution from OTC investment and stock ?ows (a measure of the less transparent institutional elements of the market, as well as being a statistical residual) gives total investment of 1,582.5t, 3% lower than 2011.
Barring a ?at second quarter, ETFs bene?tted from steady in?ows throughout the rest of the year, with a wave of buying seen in Q3 on expectations of further monetary policy easing across the globe. Total demand for ETFs of 279.0t had a value of almost US$15bn. OTC investment and stock ?ows were less consistent, ?uctuating as they did throughout the year in response to a number of indicators; chief among these were gold price moves, policy announcements from various monetary authorities, and the economic situation in Europe. Over the course of the year, OTC investment and stock ?ows contributed an estimated 47.8t to total investment.
Bar and coin demand generated the lion’s share of investment in 2012, accounting for 79% of demand in the sector (exclusive of OTC investment and stock ?ows).
Demand for gold bars and coins, although below year-earlier levels, was nonetheless very healthy on a historical basis, 31% above the 5-year average of 961.0t. For a discussion of bar and coin demand in a longer term context, see the Executive summary.
Despite a strong fourth quarter for Indian investment, the full year picture shows a considerable reduction in the size of bar and coin demand in that market. As discussed above, the impact of a weaker ?rst half dominated the year-on-year comparison in India. Despite healthy levels of gross demand for bars and coins, the combination of heightened pro?t-taking activity and de-stocking by bullion dealers during the ?rst six months of the year had the largest impact on net full-year demand.
In China, investment was little changed from 2011, although 265.5t represented a very healthy level of demand. Purchases related to Chinese New Year helped to elevate demand in the ?rst and fourth quarters of the year, but investors were somewhat inhibited by the lack of a clear price signal during much of the year, given their preference to buy into a rising trend. For a discussion of gold demand in China during the year, see the Executive summary.
Gold Demand Trends | Full year 2012
Elsewhere in the region, sizeable declines in Thailand and Vietnam contrasted with a signi?cant improvement in Japanese bar and coin demand, resulting in a net decline of 15.0t for Far Eastern markets.
Turkish investment conceded a 34% decline in 2012, although the comparison is penalised by a strong base period as 2011 was a record year. The sharp run up in the local gold price during the third quarter generated a strong pro?t-taking response. This continued into the fourth quarter as prices remained relatively high, although some dip-buying emerged in December. Annual demand was fairly close to the 5-year average of 52.7t, inflated by 2011’s record total.
Europe’s share of global bar and coin demand slipped to 22% in 2012 from 25% the previous year. However, 2011 had been a record year, coinciding with the height of the sovereign debt crisis, with demand far in excess of anything previous seen in the region. Taken in the context of a stake of just 1% as recently as 2005, the region continues to
make a signi?cant contribution to bar and coin demand. While demand for bars and coins appeared to diminish among high net worth investors, smaller investors continued to increase their investment purchases in the shadow of persistent worries about the safety of the euro-area.
In the US, fourth quarter demand picked up from the disappointing third quarter, buoyed by the concerns over the ‘fiscal cliff’ and the continuation of quantitative easing by the Federal Reserve. However, for the year as a whole demand of 53.4t was down 36% year-on-year, well below the elevated levels of the post-global ?nancial crisis era.
Chart 8: Investment trends (Q4’09 – Q4’12, tonnes)
Tonnes
500
462.9
450 424.7
400 23%
| 370.5 |
|
21% |
350 8%
300
252.6
250
17%
200
92% 77% 79%
150
83%
100
| 50 |
|
0
Q4’09 Q4’10 Q4’11 Q4’12
Bar and coin ETFs and similar products
• Year-on-year comparisons of investment demand partly reflect a slowing of the tremendous growth rates since 2008.
Source: Thomson Reuters GFMS, World Gold Council
| 12 |
|
_13 |
Technology
Annual demand for gold in the technology sector contracted by 5% in 2012 to 428.2t, a 5% decline from the 5-year average of 453.1t. In value terms, demand made marginal gains over 2011 to hit a new record of US$23bn, 48% above the 5-year average of US$15.5bn) Although there were some bright spots, the general picture for the year was one of persistent decline in tonnage with values maintained at steady levels.
The electronics sector declined by 5% over the year to 302.7t. The value of demand was stable, increasing fractionally to US$16.2bn. As ever, the fortunes of the sector hinged on global economic conditions; in particular Europe’s travails and their associated impact on demand for electronic goods in these key consumer markets. Smart phones and tablets were key areas of growth, augmented by a greater use of gold in industrial and automotive applications. However, this was insuf?cient to counteract the contraction in demand for PCs and ultrabooks, sales of which considerably undershot expectations. Higher average prices generated further losses in gold bonding-wire to lower-priced alternatives (copper and copper-coated palladium), cementing the decline in sector tonnage.
2012 was a relatively soft year for other industrial and decorative (OID) demand for gold, which declined 4% to 85.7t. Tonnage in this segment has held within a fairly steady range since the turn of the century; consequently demand was 6% below the 5-year average of 90.7t. Weakness in India accounted for much of the decline, with demand for jari suffering as a result of higher prices. This negative impact outweighed growth in China and Italy, where increased demand for gold plated jewellery and accessories lifted demand for plating salts (primarily gold potassium cyanide).
Gold used in dentistry recorded its eighth successive decline with higher average gold prices again the driving factor. Substitution to base metals (most notably cobalt:chrome) and, to a lesser extent, ceramic led to an 8% decline to 39.9t. On a value basis, demand slipped 2% to US$2.1bn, although nevertheless surpassed the US$1.7bn 5-year average.
Chart 9: Technology demand by category in tonnes
Tonnes
140
120
100
| 80 |
|
| 60 |
|
| 40 |
|
| 20 |
|
0
Q4’09 Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12
Electronics Other industrial Dentistry
• Despite growth in some areas, price-related declines – combined with inventory de-stocking – led to weakness in the technology sector.
Source: Thomson Reuters GFMS, World Gold Council
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Gold Demand Trends | Full year 2012
Central banks
The fourth quarter saw 145.0t of buying by central banks across the globe, the second highest quarterly total since the sector became a source of demand in Q2 2009.
The annual total of 534.6t represented the greatest level of demand since 1964 as the net of central banks adding to their gold reserves was cast wider, reaching Brazil, Paraguay, Iraq and Venezuela.
Russia adhered to its long term buying programme, adding around 75.0t to its reserve holdings throughout the year through the purchase of domestically produced gold. The country’s gold reserves, the seventh largest globally, now approaches 1,000t and slightly less than the 10% of total reserves.
Latin America adopted a higher regional pro?le within the group of central banks adding to gold reserves. During 2012, Brazil and Paraguay made purchases of 34.0t and 7.5t respectively, adding to the net 19.0t bought by Mexico as part of the continued reserve-building witnessed in the region.
Iraq also joined the ranks of net purchasers of gold, adding 24.1t of gold to its reserves between August and November. Gold reserves are just shy of 30t, equal to an allocation of around 2.5%.
South Korea and the Philippines were again the dominant ?gures in the Asian region, adding 30t and 33.6t respectively during the course of the year. The two markets are now in possession of gold reserves totalling 84.4t (South Korea) and 192.7t (Philippines).
Although we have discussed in detail in previous issues of Gold Demand Trends, worthy of note once more is the change to Turkey’s reported reserves, from 195.3t to 359.6t over the year to end-2012. These are not representative of purchases, but instead re?ect the increasing role that gold plays more broadly in the Turkish ?nancial system as these reserves are substantially pledged from commercial banks as part of their required reserves.4
Sales under the Central Bank Gold Agreement (CBGA) throughout 2012 (which saw the beginning of the fourth annual term of the agreement in September) amounted to just 5.5t, which were fully accounted for by Germany for the purposes of minting commemorative gold coins. Other CBGA signatories remain completely inactive with respect to their gold reserves, none of them exercising their right to sell according to the terms of the agreement.
Sales by central banks outside of the CBGA were limited to very small sales by one or two banks, including Russia and Mexico, which were partly related to coin-minting.
Table 1: Top 40 reported of?cial gold holdings (as at December 2012)
Tonnes% of reserves
| 1 |
|
United States 8,133.5 76% |
| 2 |
|
Germany 3,391.3 73% |
| 3 |
|
IMF 2,814.0 - |
| 4 |
|
Italy 2,451.8 72% |
| 5 |
|
France 2,435.4 71% |
| 6 |
|
China 1,054.1 2% |
| 7 |
|
Switzerland 1,040.1 11% |
| 8 |
|
Russia 957.8 9% |
9 Japan 765.2 3%
| 10 |
|
Netherlands 612.5 60% |
| 11 |
|
India 557.7 10% |
| 12 |
|
ECB 502.1 33% |
| 13 |
|
Taiwan 423.6 6% |
| 14 |
|
Portugal 382.5 90% |
| 15 |
|
Venezuela 365.8 75% |
| 16 |
|
Turkey 359.6 16% |
| 17 |
|
Saudi Arabia 322.9 3% |
| 18 |
|
United Kingdom 310.3 16% |
| 19 |
|
Lebanon 286.8 29% |
| 20 |
|
Spain 281.6 30% |
Tonnes% of reserves
| 21 |
|
Austria 280.0 55% |
| 22 |
|
Belgium 227.5 39% |
| 23 |
|
Philippines 192.7 12% |
| 24 |
|
Algeria 173.6 5% |
| 25 |
|
Thailand 152.4 4% |
| 26 |
|
Singapore 127.4 3% |
| 27 |
|
Sweden 125.7 13% |
| 28 |
|
South Africa 125.1 13% |
| 29 |
|
Mexico 124.5 4% |
| 30 |
|
Libya 116.6 5% |
| 31 |
|
BIS 116.0 - |
| 32 |
|
Kazakhstan 115.3 22% |
| 33 |
|
Greece 111.9 82% |
| 34 |
|
Romania 103.7 12% |
| 35 |
|
Poland 102.9 5% |
| 36 |
|
Korea 84.4 1% |
| 37 |
|
Australia 79.9 9% |
| 38 |
|
Kuwait 79.0 13% |
| 39 |
|
Egypt 75.6 25% |
| 40 |
|
Indonesia 73.1 4% |
For information on the methodology behind this data, as well as footnotes for speci?c countries, please see our table of Latest World Of?cial Gold Reserves, at http://www.gold.org/government_affairs/gold_reserves/ Source: IMF, World Gold Council
| 4 |
|
World Gold Council, Gold Demand Trends, First quarter 2012, Turkey: a reawakening, May 2012. |
14_15
Supply
The supply of gold in the fourth quarter was virtually unchanged relative to Q4 2011, just 2.5t lower at 1,133.2t.
A year-on-year decline in recycling activity (notably a contraction in Indian recycling as the price dipped in December) cancelled out a moderate increase in mine supply.
On an annual basis, supply contracted by 1.4% to 4,453.3t. Lower levels of supply from recycling was the main reason for the 2012 decline, although a return to net producer de-hedging (from minor levels of net hedging in 2011) also contributed.
2012 saw a pause in the rising trend in mine production from the 2008 lows as production grew by just 0.4% to 2,847.7t (9% above the 5-year average of 2,614.0t).
Additional production was generated by a number of new projects coming on stream, primarily in Q1, as well as by the ramping of production at a number of relatively new operations. However, the impact of planned production interruptions and unforeseen delays at a number of mines, together with widespread labour unrest in South Africa, was of an equal scale. The net result for annual production was a negligible increase as these opposing in?uences cancelled one another out.
Among the countries to record an increase in annual production were China and Russia, while South Africa and Indonesia saw the largest absolute declines.
De-hedging activity outweighed hedging by a small margin in the fourth quarter, resulting in a full-year ?gure of 20t of net de-hedging. That hedging activity has had a minimal impact on the market for much of the last three years is testament to the relatively trivial size of the outstanding global hedge book (currently in the region of 130t) and to the limited appetite for fresh hedging, which continues to relate to project ?nancing. We expect net hedging activity to remain inconsequential over the coming quarters.
Recycling of gold contributed 1,625.6t to total supply.
This was 2.6% (or 42.9t) less than 2011, despite a 6% increase in the average gold price over the period, which intuitively would seem likely to draw out additional supply from this source. However, as we have discussed in previous editions of Gold Demand Trends, other factors can mitigate the price impact on recycling activity. The degree to which consumers become accustomed to higher prices – and indeed adjust their price expectations higher – has an impact on recycling, as does the size of the stock of old gold (often referred to as near-market supplies) that consumers are willing to sell. This combination of factors dampened down the supply from existing gold holdings, particularly in industrialised countries where available stocks have been considerably depleted.
India was the notable exception to the trend, generating considerably higher levels of supply from recycling in 2012 (see Table 7). This was partly in response to record local prices, particularly in the second quarterly, and partly due to government legislation relating to loans for gold jewellery, which encouraged consumers to sell old jewellery in order to fund a lending shortfall.
Chart 10: Quarterly supply in tonnes
Tonnes
1,400
1,200
1,000
800
600
400
200
0
-200
Q4’09 Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12
Mine production Net producer hedging Recycled gold
• Supply was constrained by disruptions to mine production throughout the year, leading to a pause in the recent uptrend.
• Supply from recycling contracted by 2.6% accounting for just over one third of total supply.
Source: Thomson Reuters GFMS, World Gold Council
Gold Demand Trends | Full year 2012
Gold demand statistics
Table 2: Gold demand (tonnes)
Q4’12
vs
Q4’11 4-quarter Share of
2011 20121 Q1’11 Q2’11 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’121% chg% chg2 total %
Jewellery 1,972.1 1,908.1 551.7 490.0 457.9 472.4 495.7 423.0 464.1 525.3 11 -3 44
Technology 452.9 428.2 115.5 118.7 115.2 103.5 108.8 109.8 108.7 100.9 -3 -5 8
Electronics 319.9 302.7 80.4 84.1 82.7 72.7 76.1 77.1 78.2 71.2 -2 -5 6
Other industrial 89.6 85.7 23.8 23.6 21.9 20.3 22.5 22.5 20.7 19.9 -2 -4 2
Dentistry 43.4 39.9 11.3 10.9 10.7 10.5 10.2 10.1 9.8 9.8 -7 -8 1
Investment 1,700.4 1,534.6 341.8 391.3 504.5 462.9 401.4 288.2 420.3 424.7 -8 -10 36
Total bar and coin demand 1,515.4 1,255.6 402.6 337.1 417.1 358.5 348.2 288.2 282.6 336.6 -6 -17 28
Physical bar demand 1,182.4 941.1 316.0 261.9 322.6 281.8 269.1 213.7 208.7 249.5 -11 -20 21
Of?cial coin 245.2 201.1 61.9 50.2 74.5 58.7 52.6 51.7 44.1 52.7 -10 -18 4
Medals/imitation coin 87.8 113.4 24.7 25.0 20.0 18.1 26.5 22.8 29.7 34.3 90 29 3
ETFs and similar products3 185.1 279.0 -60.8 54.1 87.4 104.4 53.2 0.0 137.8 88.1 -16 51 7
Central bank net purchases 456.8 534.6 136.9 66.2 140.8 112.8 115.2 161.4 113.0 145.0 29 17 12
Gold demand 4,582.3 4,405.5 1,145.9 1,066.2 1,218.5 1,151.7 1,121.1 982.4 1,106.1 1,195.9 4 -4 100
London PM fix (US$/oz) 1,571.5 1,669.0 1,386.3 1,506.1 1,702.1 1,688.0 1,690.6 1,609.5 1,652.0 1,721.8 2 6
| 1 |
|
Provisional. |
| 2 |
|
Percentage change, 12 months ended December 2012 vs 12 months ended December 2011. |
| 3 |
|
For a listing of the Exchange Traded Funds and similar products, please see the Notes and de?nitions. |
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Table 3: Gold demand (US$mn)
Q4’12
vs
Q4’11 4-quarter
2011 20121 Q1’11 Q2’11 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’121% chg% chg2
Jewellery 99,641 102,384 24,589 23,728 25,060 25,639 26,943 21,890 24,647 29,078 13 4
Technology 22,885 22,978 5,149 5,747 6,303 5,620 5,912 5,681 5,775 5,588 -1 1
Electronics 16,164 16,241 3,584 4,075 4,523 3,946 4,136 3,991 4,155 3,941 0 1
Other industrial 4,529 4,597 1,061 1,144 1,196 1,103 1,223 1,165 1,100 1,104 0 2
Dentistry 2,192 2,141 504 527 584 571 554 524 519 543 -5 -2
Investment 85,916 82,346 15,233 18,946 27,607 25,124 21,820 14,912 22,326 23,508 -6 -5
Total bar and coin demand 76,566 67,373 17,944 16,324 22,827 19,458 18,928 14,913 15,009 18,632 -4 -12
Physical bar demand 59,742 50,498 14,085 12,683 17,657 15,294 14,626 11,060 11,087 13,813 -10 -15
Of?cial coin 12,388 10,790 2,757 2,429 4,076 3,184 2,860 2,673 2,343 2,917 -8 -13
Medals/imitation coin 4,436 6,086 1,102 1,212 1,094 980 1,442 1,180 1,579 1,901 94 39
ETFs and similar products3 9,350 14,973 -2,711 2,621 4,780 5,666 2,892 -1 7,317 4,877 -14 46
Central bank net purchases 23,081 28,684 6,103 3,207 7,708 6,121 6,259 8,352 6,003 8,026 31 24
Gold demand 231,522 236,393 51,074 51,628 66,679 62,504 60,934 50,834 58,751 66,199 6 2
| 1 |
|
Provisional. |
| 2 |
|
Percentage change, 12 months ended December 2012 vs 12 months ended December 2011. |
| 3 |
|
For a listing of the Exchange Traded Funds and similar products, please see the Notes and de?nitions. |
Source: LBMA, Thomson Reuters GFMS, World Gold Council
| 16 |
|
_17 |
Table 4: Total investment demand (tonnes except where speci?ed)
Q4’12
vs
Q4’11 4-quarter
2011 2012 Q1’11 Q2’11 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’121% chg% chg2
Investment 1,700.4 1,534.6 341.8 391.3 504.5 462.9 401.4 288.2 420.3 424.7 -8 -10
Total bar and coin demand 1,515.4 1,255.6 402.6 337.1 417.1 358.5 348.2 288.2 282.6 336.6 -6 -17
Physical bar demand 1,182.4 941.1 316.0 261.9 322.6 281.8 269.1 213.7 208.7 249.5 -11 -20
Of?cial coin 245.2 201.1 61.9 50.2 74.5 58.7 52.6 51.7 44.1 52.7 -10 -18
Medals/imitation coin 87.8 113.4 24.7 25.0 20.0 18.1 26.5 22.8 29.7 34.3 90 29
ETFs and similar products3 185.1 279.0 -60.8 54.1 87.4 104.4 53.2 0.0 137.8 88.1 -16 51
OTC investment and stock ?ows4 -66.9 47.8 -135.1 62.3 -19.1 25.1 -86.6 99.3 58.4 -23.3 —
Total investment 1,633.6 1,582.5 206.6 453.5 485.4 488.0 314.8 387.5 478.7 401.4 -18 -3
Total investment US$mn 82,543 84,913 9,210 21,962 26,561 26,486 17,112 20,052 25,427 22,220 -16 1
| 1 |
|
Provisional. |
| 2 |
|
Percentage change, 12 months ended December 2012 vs 12 months ended December 2011. |
| 3 |
|
For a listing of the Exchange Traded Funds and similar products, please see the Notes and de?nitions. |
4 This includes institutional investment (other than ETFs and similar), stock movements and other elements as well as any residual error.
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Table 5: Average gold prices
Q4’12
vs
Q4’11
2011 2012 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12% chg
US$/oz 1,571.5 1,669.0 1,688.0 1,690.6 1,609.5 1,652.0 1,721.8 2
€/oz 1,129.9 1,298.7 1,250.3 1,289.3 1,254.7 1,320.2 1,328.8 6
Ł/oz 980.8 1,053.0 1,073.4 1,075.8 1,016.6 1,045.3 1,072.6 0
CHF/kg 44,649.6 50,323.7 49,439.3 50,061.8 48,464.7 51,088.5 51,603.7 4
Ą/g 4,015.8 4,278.2 4,195.4 4,312.8 4,144.4 4,174.8 4,478.6 7
Rs/10g 23,624.1 28,639.4 27,534.3 27,287.8 28,004.8 29,302.1 29,964.7 9
RMB/g 326.3 338.5 345.2 343.0 327.6 337.3 345.7 0
TL/g 85.4 96.6 99.5 97.6 93.5 95.8 99.3 0
Source: LBMA, Thomson Reuters Datastream, World Gold Council
Gold Demand Trends | Full year 2012
Table 6: Gold supply and demand World Gold Council presentation
Q4’12
vs
Q4’11 4-quarter
2011 2012 Q1’11 Q2’11 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’121% chg% chg2
Supply
Mine production 2,835.6 2,847.7 660.9 711.3 742.1 721.3 662.6 706.2 743.7 735.2 2 0
Net producer hedging 11.3 -20.0 9.7 12.5 2.6 -13.5 -2.0 -8.7 0.6 -9.9 —
Total mine supply 2,846.9 2,827.7 670.6 723.7 744.7 707.8 660.6 697.5 744.3 725.3 2 -1
Recycled gold 1,668.5 1,625.6 358.2 413.9 468.5 427.9 382.5 387.5 447.7 407.9 -5 -3
Total supply 4,515.4 4,453.3 1,028.8 1,137.6 1,213.2 1,135.7 1,043.1 1,085.0 1,192.1 1,133.2 0 -1
Demand
Fabrication
Jewellery3 1,972.1 1,908.1 569.7 499.2 471.8 431.4 504.3 426.3 491.6 485.9 13 -3
Technology 452.9 428.2 115.5 118.7 115.2 103.5 108.8 109.8 108.7 100.9 -3 -5
Sub-total above fabrication 2,425.0 2,336.3 685.3 617.9 587.0 534.9 613.1 536.0 600.3 586.8 10 -4
Total bar and coin demand 1,515.4 1,255.6 402.6 337.1 417.1 358.5 348.2 288.2 282.6 336.6 -6 -17
ETFs and similar 185.1 279.0 -60.8 54.1 87.4 104.4 53.2 0.0 137.8 88.1 -16 51
Central bank net purchases4 456.8 534.6 136.9 66.2 140.8 112.8 115.2 161.4 113.0 145.0 29 17
Gold demand 4,582.3 4,405.5 1,164.0 1,075.3 1,232.3 1,110.6 1,129.7 985.6 1,133.7 1,156.5 4 -4
OTC investment and stock ?ows5 -66.9 47.8 -135.1 62.3 -19.1 25.1 -86.6 99.3 58.4 -23.3 —
Total demand 4,515.4 4,453.3 1,028.8 1,137.6 1,213.2 1,135.7 1,043.1 1,085.0 1,192.1 1,133.2 0 -1
London PM fix (US$/oz) 1,571.6 1,669.0 1,386.3 1,506.1 1,702.1 1,688.0 1,690.6 1,609.5 1,652.0 1,721.8 2 6
| 1 |
|
Provisional. |
| 2 |
|
Percentage change, 12 months ended December 2012 vs 12 months ended December 2011. |
3 Jewellery fabrication. The quarterly data differ from those for jewellery consumption shown in Table 2. Fabrication is the ?rst transformation of gold bullion into a semi-?nished or ?nished product. Jewellery consumption is equal to fabrication plus/minus jewellery imports/exports plus/minus stocking/ de-stocking by distributors and manufacturers. On an annual basis, the consumption and fabrication data series will reconcile.
| 4 |
|
Excluding any delta hedging of central bank options. |
5 This includes institutional investment (other than ETFs and similar), stock movements and other elements as well as any residual error.
Source: LBMA, Thomson Reuters GFMS, World Gold Council. Data in the table are consistent with those published by Thomson Reuters GFMS in their Gold Survey but adapted to the World Gold Council’s presentation.
Table 7: Indian supply estimates
Figures in tonnes 2011 Q1’12 Q2’12 Q3’12 Q4’121 20121
Supply
Net imports, available for domestic consumption 969 228 153 223 255 860
Domestic supply from recycled gold 59 25 30 34 28 117
Domestic supply from other sources2 12 3 2 2 3 10
Equals total supply3 1039 256 185 260 286 987
| 1 |
|
Provisional. |
| 2 |
|
Domestic supply from local mine production, recovery from imported copper concentrates and disinvestment. |
3 This supply can be consumed across the three sectors – jewellery, investment and technology. Consequently, the total supply figure in the table will
not add to jewellery plus investment demand for India.
Source: Thomson Reuters GFMS, World Gold Council
18_19
Table 8: Consumer demand in selected countries: Q4’12 (tonnes)
Q4’11 Q4’12* Q4’12* vs Q4’11, % change
Total bar Total bar Total bar
and coin and coin and coin
Jewellery invest Total Jewellery invest Total Jewellery invest Total
India 113.5 72.0 185.5 153.0 108.9 261.9 35 51 41
Greater China 144.8 65.8 210.6 145.8 68.0 213.8 1 3 2
China 135.6 64.0 199.6 137.0 65.5 202.5 1 2 1
Hong Kong 7.3 0.4 7.7 6.9 0.5 7.4 -5 25 -3
Taiwan 1.9 1.4 3.3 1.9 2.0 3.9 0 43 18
Japan 4.1 -11.9 -7.8 4.2 -3.9 0.3 2 —
Indonesia 6.1 7.4 13.5 6.5 4.3 10.8 6 -42 -20
South Korea 3.1 0.8 3.8 1.4 0.5 1.9 -54 -33 -50
Thailand 0.6 23.2 23.8 0.5 15.1 15.6 -15 -35 -34
Vietnam 2.5 25.8 28.3 2.0 16.5 18.5 -18 -36 -35
Middle East 27.5 9.3 36.8 33.4 8.7 42.1 22 -7 14
Saudi Arabia 7.9 5.0 12.9 8.4 4.7 13.1 6 -6 1
Egypt 8.7 0.7 9.4 13.9 0.5 14.4 60 -23 54
UAE 7.1 2.9 10.0 7.4 2.7 10.1 4 -7 1
Other Gulf 3.8 0.7 4.5 3.8 0.7 4.5 0 6 1
Turkey 6.5 17.3 23.8 7.0 6.8 13.8 8 -61 -42
Russia 22.1—22.1 22.1—22.1 0—0
USA 42.2 20.1 62.4 40.1 16.5 56.5 -5 -18 -9
Europe ex CIS 25.4 96.1 121.5 23.0 65.0 87.9 -9 -32 -28
Italy 14.2—14.2 12.3—12.3 -13 —13
UK 11.2—11.2 10.7—10.7 -5 —5
France—1.6 1.6—0.9 0.9 —44 -44
Germany—39.7 39.7—26.1 26.1 —34 -34
Switzerland—30.7 30.7—19.1 19.1 —38 -38
Other Europe—24.1 24.1—18.9 18.9 —22 -22
Total above 398.3 325.9 724.2 439.0 306.3 745.3 10 -6 3
Other 74.1 32.6 106.8 86.3 30.3 116.6 16 -7 9
World total 472.4 358.5 831.0 525.3 336.6 861.9 11 -6 4
*Provisional.
Source: Thomson Reuters GFMS, World Gold Council
Gold Demand Trends | Full year 2012
Table 9: Consumer demand in selected countries: Q4 2012 (value, US$mn)
Q4’11 Q4’12* Q4’12* vs Q4’11, % change
Total bar Total bar Total bar
and coin and coin and coin
Jewellery invest Total Jewellery invest Total Jewellery invest Total
India 6,160 3,907 10,067 8,470 6,028 14,498 37 54 44
Greater China 7,858 3,569 11,427 8,073 3,764 11,837 3 5 4
China 7,359 3,471 10,830 7,584 3,625 11,209 3 4 3
Hong Kong 396 22 418 384 28 412 -3 28 -1
Taiwan 103 76 179 105 111 216 2 46 21
Japan 223 -646 -423 232 -216 17 4 —
Indonesia 332 402 733 360 238 598 9 -41 -18
South Korea 166 41 207 77 28 105 -53 -32 -49
Thailand 32 1,261 1,293 28 838 866 -14 -34 -33
Vietnam 134 1,400 1,534 111 913 1,025 -17 -35 -33
Middle East 1,492 504 1,997 1,850 480 2,330 24 -5 17
Saudi Arabia 429 271 700 462 260 722 8 -4 3
Egypt 472 38 510 769 30 799 63 -21 57
UAE 385 157 543 408 149 557 6 -5 3
Other Gulf 206 37 244 210 41 251 2 9 3
Turkey 353 941 1,293 387 375 762 10 -60 -41
Russia 1,199—1,199 1,222—1,222 2—2
USA 2,291 1,093 3,384 2,218 913 3,130 -3 -16 -7
Europe ex CIS 1,376 5,216 6,592 1,272 3,596 4,868 -8 -31 -26
Italy 768—768 681—681 -11 —11
UK 608—608 591—591 -3 —3
France—87 87—50 50 —43 -43
Germany—2,155 2,155—1,445 1,445 —33 -33
Switzerland—1,666 1,666—1,057 1,057 —37 -37
Other Europe—1,308 1,308—1,044 1,044 —20 -20
Total above 21,616 17,688 39,303 24,300 16,957 41,257 12 -4 5
Other 4,023 1,771 5,794 4,778 1,675 6,452 19 -5 11
World total 25,639 19,458 45,097 29,078 18,632 47,710 13 -4 6
*Provisional.
Source: LBMA, Thomson Reuters GFMS, World Gold Council
20_21
Table 10: Consumer demand in selected countries: four-quarter totals (tonnes)
| 12 |
|
months ended Q4’11 12 months ended Q4’12* Year on Year % change |
Total bar Total bar Total bar
and coin and coin and coin
Jewellery invest Total Jewellery invest Total Jewellery invest Total
India 618.3 368.0 986.3 552.0 312.2 864.2 -11 -15 -12
Greater China 549.6 271.9 821.5 544.0 273.6 817.5 -1 1 0
China 515.1 264.7 779.8 510.6 265.5 776.1 -1 0 0
Hong Kong 27.8 1.8 29.6 26.5 2.0 28.5 -5 13 -3
Taiwan 6.8 5.4 12.1 6.9 6.0 12.9 1 12 6
Japan 16.6 -46.7 -30.1 17.7 -10.1 7.6 6 —
Indonesia 30.2 24.8 55.0 30.8 21.5 52.3 2 -13 -5
South Korea 12.5 3.0 15.5 9.4 2.7 12.1 -25 -8 -22
Thailand 3.6 103.8 107.4 2.9 78.1 80.9 -21 -25 -25
Vietnam 13.0 87.8 100.8 11.4 65.6 77.0 -12 -25 -24
Middle East 154.6 33.3 188.0 148.3 29.7 177.9 -4 -11 -5
Saudi Arabia 51.7 17.4 69.1 43.3 15.2 58.5 -16 -13 -15
Egypt 33.8 2.2 36.0 45.7 2.1 47.8 35 -5 33
UAE 50.1 10.8 60.9 42.3 9.5 51.8 -16 -12 -15
Other Gulf 19.0 3.0 22.0 17.0 2.9 19.9 -11 -2 -10
Turkey 70.1 72.9 143.0 70.4 48.4 118.8 0 -34 -17
Russia 76.7—76.7 81.9—81.9 7—7
USA 115.5 84.0 199.5 108.4 53.4 161.8 -6 -36 -19
Europe ex CIS 50.2 383.3 433.5 44.6 273.6 318.2 -11 -29 -27
Italy 27.6—27.6 23.5—23.5 -15 —15
UK 22.6—22.6 21.1—21.1 -7 —7
France—6.7 6.7—2.9 2.9 —56 -56
Germany—159.3 159.3—109.7 109.7 —31 -31
Switzerland—116.2 116.2—80.5 80.5 —31 -31
Other Europe—101.0 101.0—80.4 80.4 —20 -20
Total above 1,711.0 1,386.1 3,097.1 1,621.6 1,148.6 2,770.2 -5 -17 -11
Other 261.1 129.3 390.4 286.4 107.0 393.5 10 -17 1
World total 1,972.1 1,515.4 3,487.5 1,908.1 1,255.6 3,163.6 -3 -17 -9
*Provisional.
Source: Thomson Reuters GFMS, World Gold Council
Gold Demand Trends | Full year 2012
Table 11: Consumer demand in selected countries: four-quarter totals (value, US$mn)
| 12 |
|
months ended Q4’11 12 months ended Q4’12* Year on Year % change |
Total bar Total bar Total bar
and coin and coin and coin
Jewellery invest Total Jewellery invest Total Jewellery invest Total
India 30,638 18,335 48,973 29,663 16,828 46,491 -3 -8 -5
Greater China 27,740 13,598 41,339 29,279 14,731 44,010 6 8 6
China 26,002 13,236 39,238 27,490 14,298 41,788 6 8 6
Hong Kong 1,399 91 1,490 1,420 109 1,530 2 20 3
Taiwan 340 272 611 368 323 692 8 19 13
Japan 839 -2,435 -1,596 946 -552 394 13 —
Indonesia 1,514 1,261 2,775 1,657 1,156 2,813 9 -8 1
South Korea 621 145 766 502 145 646 -19 0 -16
Thailand 176 5,258 5,434 155 4,197 4,352 -12 -20 -20
Vietnam 634 4,561 5,195 610 3,521 4,131 -4 -23 -20
Middle East 7,686 1,698 9,385 7,945 1,596 9,541 3 -6 2
Saudi Arabia 2,578 888 3,465 2,314 818 3,132 -10 -8 -10
Egypt 1,711 111 1,822 2,456 111 2,567 44 0 41
UAE 2,443 548 2,991 2,266 511 2,777 -7 -7 -7
Other Gulf 955 152 1,107 909 157 1,065 -5 3 -4
Turkey 3,502 3,712 7,214 3,744 2,580 6,324 7 -31 -12
Russia 3,912—3,912 4,399—4,399 12—12
USA 5,967 4,245 10,212 5,844 2,872 8,716 -2 -32 -15
Europe ex CIS 2,600 19,617 22,217 2,416 14,655 17,071 -7 -25 -23
Italy 1,428—1,428 1,274—1,274 -11 —11
UK 1,172—1,172 1,143—1,143 -2 —2
France—357 357—158 158 —56 -56
Germany—8,176 8,176—5,867 5,867 —28 -28
Switzerland—5,929 5,929—4,328 4,328 —27 -27
Other Europe—5,154 5,154—4,302 4,302 —17 -17
Total above 85,830 69,996 155,826 87,161 61,728 148,888 2 -12 -4
Other 13,187 6,557 19,744 15,397 5,753 21,151 17 -12 7
World total 99,017 76,553 175,570 102,558 67,481 170,039 4 -12 -3
*Provisional.
Source: LBMA, Thomson Reuters GFMS, World Gold Council
| 22 |
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_23 |
Historical data for gold demand
Table 12: Historical data for gold demand1
Tonnes US$bn
Total bar Total bar
and coin ETFs and Tech- Central and coin ETFs and Tech- Central
Jewellery invest similar nology banks Total Jewellery invest similar nology banks Total
2003 2,484 304—386 -620 2,594 29.0 3.6—4.5 -7.2 30.3
2004 2,616 355 133 419 -479 3,044 34.4 4.7 1.7 5.5 -6.3 40.0
2005 2,719 396 208 438 -663 3,098 38.9 5.7 3.0 6.3 -9.5 44.3
2006 2,300 414 260 468 -365 3,077 44.6 8.0 5.1 9.1 -7.1 59.7
2007 2,423 435 253 476 -484 3,104 54.2 9.7 5.7 10.6 -10.8 69.4
2008 2,304 869 321 461 -235 3,720 64.6 24.4 9.0 12.9 -6.6 104.3
2009 1,814 780 623 410 -34 3,593 56.7 24.4 19.5 12.8 -1.0 112.3
2010 2,017 1,205 382 466 77 4,147 79.4 47.5 15.0 18.3 3.0 163.3
2011 1,972 1,515 185 453 457 4,582 99.6 76.6 9.4 22.9 23.1 231.5
2012 1,908 1,256 279 428 535 4,405 102.4 67.4 15.0 23.0 28.7 236.4
Q4’06 708 114 79 116 -57 961 14.0 2.3 1.6 2.3 -1.1 18.9
Q1’07 566 117 36 117 -72 764 11.8 2.4 0.8 2.4 -1.5 16.0
Q2’07 666 135 -3 119 -145 773 14.3 2.9 -0.1 2.6 -3.1 16.6
Q3’07 604 112 139 117 -170 804 13.2 2.5 3.1 2.6 -3.7 17.6
Q4’07 578 65 80 111 -97 737 14.6 1.6 2.0 2.8 -2.4 18.6
Q1’08 484 101 73 122 -76 703 14.4 3.0 2.2 3.6 -2.3 20.9
Q2’08 559 149 4 124 -68 770 16.1 4.3 0.1 3.6 -1.9 22.2
Q3’08 694 283 149 119 -76 1,169 19.4 7.9 4.2 3.3 -2.1 32.7
Q4’08 567 346 95 96 -12 1,092 14.5 8.8 2.4 2.5 -0.3 27.9
Q1’09 356 147 465 88 -62 994 10.4 4.3 13.6 2.6 -1.8 29.0
Q2’09 445 210 68 102 9 834 13.2 6.2 2.0 3.0 0.3 24.7
Q3’09 492 210 42 107 10 861 15.2 6.5 1.3 3.3 0.3 26.6
Q4’09 522 211 42 113 10 897 18.5 7.5 1.5 4.0 0.4 31.7
Q1’10 527 251 6 114 58 956 18.8 8.9 0.2 4.1 2.1 34.1
Q2’10 414 303 296 116 14 1,142 15.9 11.6 11.4 4.5 0.5 43.9
Q3’10 513 311 50 120 23 1,018 20.3 12.3 2.0 4.7 0.9 40.1
Q4’10 563 341 30 116 -17 1,032 24.7 15.0 1.3 5.1 -0.8 45.3
Q1’11 552 403 -61 116 137 1,146 24.6 17.9 -2.7 5.1 6.1 51.1
Q2’11 490 337 54 119 66 1,066 23.7 16.3 2.6 5.7 3.2 51.6
Q3’11 458 417 87 115 141 1,218 25.1 22.8 4.8 6.3 7.7 66.7
Q4’11 472 359 104 104 113 1,152 25.6 19.5 5.7 5.6 6.1 62.5
Q1’12 496 348 53 109 115 1,121 26.9 18.9 2.9 5.9 6.3 60.9
Q2’12 423 288 0 110 161 982 21.9 14.9 0.0 5.7 8.4 50.8
Q3’12 464 283 138 109 113 1,106 24.6 15.0 7.3 5.8 6.0 58.8
Q4’122 525 337 88 101 145 1,196 29.1 18.6 4.9 5.6 8.0 66.2
| 1 |
|
See footnotes to Table 1. |
| 2 |
|
Provisional. |
Source: LBMA, Thomson Reuters GFMS, World Gold Council
Gold Demand Trends | Full year 2012
Appendix
Chart 11: Gold demand in tonnes and the gold price (US$/oz)
Source: Thomson Reuters GFMS, World Gold Council
Tonnes, US$/oz
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Q4’09 Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12
Tonnes (Q4 darker colour) London PM fix (US$/oz)
Chart 12: Gold demand in tonnes and value (US$bn)
Source: Thomson Reuters GFMS, LBMA, World Gold Council
Tonnes US$bn
1,400 80
1,200 70
| 60 |
|
1,000
| 50 |
|
800
| 40 |
|
600
| 30 |
|
400 20
200 10
0 0
Q4’09 Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12
Tonnes (Q4 darker colour) Value (US$bn, rhs)
Chart 13: Gold demand by category in tonnes and the gold price (US$/oz)
Source: Thomson Reuters GFMS, LBMA, World Gold Council
Tonnes, US$/oz
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
-200
Q4’09 Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12
Jewellery Technology Investment
Central bank net purchases London PM fix US$/oz
Chart 14: Jewellery demand in tonnes and value (US$bn)
Source: Thomson Reuters GFMS, LBMA, World Gold Council
Tonnes US$bn
600 35
500 30
| 25 |
|
400
| 20 |
|
300
| 15 |
|
200
| 10 |
|
100 5
0 0
Q4’09 Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12
Tonnes (Q4 darker colour) Value (US$bn, rhs)
24_25
Chart 15: Holdings in Exchange Traded Funds (tonnes) and the gold price (US$/oz)
Source: Thomson Reuters GFMS,
www.exchangetradedgold.com, LBMA, World Gold Council
Tonnes US$/oz
3,000 1,800
2,500 1,600
2,000 1,400
1,500 1,200
1,000 1,000
500 800
0 600
Q4’09 Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12
ETFs (ex GLD) GLD London PM fix (US$/oz, rhs)
Chart 16: Jewellery demand by country in tonnes (Q4’12 vs Q4’11, % change)
Source: Thomson Reuters GFMS, World Gold Council
% change
| 80 |
|
| 60 |
|
| 40 |
|
| 20 |
|
0
-20
-40
-60
a n a a E a A y
IndiChinaKongTaiwaJapanIndonesiKoreaThailandVietnamArabiEgypt Other UA GulfTurkeyRussiUS Ital UK
Hong South Saudi
Chart 17: Jewellery demand in tonnes (Q4’12 vs Q3’12)
Tonnes
180
160
140
120
100
| 80 |
|
| 60 |
|
| 40 |
|
| 20 |
|
0
a n a a E a A y
IndiChinaKongTaiwaJapanIndonesiKoreaThailandVietnamArabiEgypt Other UA GulfTurkeyRussiUS Ital UK
Hong South Saudi
Q3’12 Q4’12
Source: Thomson Reuters GFMS, World Gold Council
Chart 18: Jewellery demand by country in US$ (Q4’12 vs Q4’11, % change)
% change
| 80 |
|
| 60 |
|
| 40 |
|
| 20 |
|
0
-20
-40
-60
a n a a E a A y
IndiChinaKongTaiwaJapanIndonesiKoreaThailandVietnamArabiEgypt Other UA GulfTurkeyRussiUS Ital UK
Hong South Saudi
Source: Thomson Reuters GFMS, World Gold Council
Gold Demand Trends | Full year 2012
Chart 19: Jewellery demand by country in tonnes (4-quarter rolling total, % change)
Source: Thomson Reuters GFMS, World Gold Council
% change
| 40 |
|
| 30 |
|
| 20 |
|
| 10 |
|
0
-10
-20
-30
a n a a E a A y
IndiChinaKongTaiwaJapanIndonesiKoreaThailandVietnamArabiEgypt Other UA GulfTurkeyRussiUS Ital UK
Hong South Saudi
Chart 20: Total investment demand in tonnes
Source: Thomson Reuters GFMS, World Gold Council
Tonnes
700
600
500
400
300
200
100
0
-100
-200
Q4’09 Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12
Investment OTC Investment and stock flows
Chart 21: Total bar and coin demand by category in tonnes
Tonnes
350
300
250
200
150
100
| 50 |
|
0
Q4’09 Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12
Physical bar demand Official coin Medals/imitation coin
Source: Thomson Reuters GFMS, World Gold Council
Chart 22: Total bar and coin demand in tonnes (Q4’12 and Q3’12)
Source: Thomson Reuters GFMS, World Gold Council
Tonnes
120
100
| 80 |
|
| 60 |
|
| 40 |
|
| 20 |
|
0
-20
a n a mEast a UAE Gulf USACISFranc e
Indi Hong ChinaKongTaiwaJapanIndonesi South KoreaThailandVMiddle ietna Saudi ArabiEgyptOther Turkey Europeex GermanySwitzerland
Q3’12 Q4’12
| 26 |
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_27 |
Chart 23: Total bar and coin demand in tonnes (Q4’12 and Q4’11)
Source: Thomson Reuters GFMS, World Gold Council
Tonnes
120
100
| 80 |
|
| 60 |
|
| 40 |
|
| 20 |
|
0
-20
a n a mEast a UAE Gulf USACISFranc e
Indi Hong ChinaKongTaiwaJapanIndonesi South KoreaThailandVMiddle ietna Saudi ArabiEgyptOther Turkey Europeex GermanySwitzerland
Q4’11 Q4’12
Chart 24: European total bar and coin demand in tonnes
Source: Thomson Reuters GFMS, World Gold Council
Tonnes
140
120
100
| 80 |
|
| 60 |
|
| 40 |
|
| 20 |
|
0
-20
Q4’09 Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12
Switzerland Germany
France Other Europe
Chart 25: Q4’12 average gold price (% change)
Source: Thomson Reuters Datastream, World Gold Council
• change
| 10 |
|
9
| 8 |
|
| 7 |
|
| 6 |
|
| 5 |
|
| 4 |
|
| 3 |
|
| 2 |
|
| 1 |
|
0 -1
US$/oz Rs/10g Ą/g TL/g RMB/g €/oz Ł/oz CHF/kg
YoY QoQ
Chart 26: Central bank contributions to demand in tonnes
Source: Thomson Reuters GFMS, World Gold Council
Gold Demand Trends | Full year 2012
Tonnes
180
160
140
120
100
| 80 |
|
| 60 |
|
| 40 |
|
| 20 |
|
0
-20
-40
Q4’09 Q2’10 Q4’10 Q2’11 Q4’11 Q2’12 Q4’12
Net sales Net purchases
Notes and definitions
All statistics (except where speci?ed) are in weights of ?ne gold
“–”
Not applicable or Not available
Consumer demand
The sum of jewellery and total bar and coin purchases for a country i.e. the amount of gold acquired directly by individuals.
Dental
The ?rst transformation of raw gold into intermediate or ?nal products destined for dental applications such as dental alloys.
ETFs and similar products
Exchange Traded Funds and similar products including: Gold Bullion Securities (London), Gold Bullion Securities (Australia), SPDR® Gold Shares (formerly streetTRACKS Gold Shares), NewGold Gold Debentures, iShares Comex Gold Trust, ZKB Gold ETF, GOLDIST, ETF Securities Physical Gold, ETF Securities (Tokyo), ETF Securities (NYSE), XETRA-GOLD, Julius Baer Physical Gold, Central Fund of Canada and Central Gold Trust, Swiss Gold, iShares Gold Bullion Fund (formerly Claymore Gold Bullion ETF), Sprott Physical Gold Trust, ETF Securities Glitter, Mitsubishi Physical Gold ETF, CS ETF II (formerly Credit Suisse Xmtch II) and Dubai Gold Securities.
Fabrication
Fabrication is the ?rst transformation of gold bullion into a semi-?nished or ?nished product.
Jewellery
All newly-made carat jewellery and gold watches, whether plain gold or combined with other materials. It excludes secondhand jewellery, other metals plated with gold, coins and bars used as jewellery and purchases funded by the trading in of existing jewellery.
London PM ?x
Unless described otherwise, gold price values are based on the London PM ?x.
Mine production
Formal and informal output.
Net producer hedging
This measures the impact in the physical market of mining companies’ gold forward sales, loans and options positions. Hedging accelerates the sale of gold, a transaction which releases gold (from existing stocks) to the market. Over time, hedging activity does not generate a net increase in the supply of gold. De-hedging, the process of closing out hedged positions, has the opposite impact and will reduce the amount of gold available to the market in any given quarter.
Central bank net purchases
Gross purchase less gross sales by central banks and other of?cial institutions. Swaps and the effects of delta hedging are excluded.
OTC investment and stock ?ows
Partly a statistical residual, this data is largely re?ective of demand in the opaque over-the-counter (OTC) market, with an additional contribution occasionally from changes to fabrication inventories.
Physical bar demand
Global investment in physical gold in bar form.
Recycled gold (previously gold scrap)
Gold sourced from old fabricated products which has been recovered and re?ned back into bars.
Technology
This captures all gold used in the fabrication of electronics, dental, medical, industrial, decorative and other technological applications, with electronics representing the largest component of this category. This includes gold destined for plating jewellery.
Tonne
1,000 kg or 32,151 troy oz of ?ne gold.
Total bar and coin demand
This comprises individuals’ purchases of coins and bars, de?ned according to the standard adopted by the European Union for investment gold, but includes demand for coins and bars in both the western and non-western markets. Medallions of at least 99% purity, wires and lumps sold in small quantities are also included. In practice this includes the initial sale of many coins destined ultimately to be considered as numismatic rather than bullion. It excludes second-hand coins and is measured as net purchases.
Total investment
Represents the amalgamation of all components of investment demand, including all demand for physical bars and coins, demand for ETFs and similar products, and OTC investment and stock ?ows.
Revisions to data
All data may be subject to revision in the light of new information.
Historical data
Data covering a longer time period will be available on Bloomberg after initial publication of this report; alternatively, contact Thomson Reuters GFMS Ltd (+44 20 7369 7015; jadwiga.zajac@thomsonreuters.com).
| 28 |
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_29 |
Sources, copyright and disclaimers
© 2013 World Gold Council. Where expressly identi?ed as such, the gold supply and demand statistics contained in this report were compiled by Thomson Reuters GFMS. Thomson Reuters GFMS retains all rights in such statistics © 2013.
All rights reserved. Save for the following, no organisation or individual is permitted to reproduce, distribute or otherwise use the statistics relating to gold supply and demand in this report without the written agreement of the copyright owners. The use of the statistics in this report is permitted for the purposes of review and commentary (including media commentary), subject to the two pre-conditions that follow. The ?rst pre-condition is that only limited data extracts be used. The second precondition is that all use of these statistics is accompanied by a clear acknowledgement of the World Gold Council and, where appropriate, of Thomson Reuters GFMS, as their source. Brief extracts from the commentary and other World Gold Council material are permitted provided World Gold Council is cited as the source. It is not permitted to reproduce, distribute or otherwise use the whole or a substantial part of this report or the statistics contained within it.
Whilst every effort has been made to ensure the accuracy of the information in this document, neither World Gold Council nor Thomson Reuters GFMS can guarantee such accuracy. Furthermore, the material contained herewith has no regard to the speci?c investment objectives, ?nancial situation or particular needs of any speci?c recipient or organisation. It is published solely for informational purposes. It does not purport to make any recommendations and is not to be construed as a solicitation or an offer to buy or sell gold, any gold-related products, commodities, securities or related ?nancial instruments.
No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. The World Gold Council and Thomson Reuters GFMS do not accept responsibility for any losses or damages arising directly, or indirectly, from the use of this document.
This report 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 World Gold Council based on statistics compiled by Thomson Reuters GFMS. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions all of which are dif?cult 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 signi?cant 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.
Gold Demand Trends | Full year 2012
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