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WGC: 2013 Global Gold Supply Falls Due To Contraction In Recycling

By Kitco News
Tuesday February 18, 2014 1:00 AM

(Kitco News) - The world’s fresh gold supply fell in 2013 as continued shrinkage in recycling activity modestly outweighed growth in mine production, the World Gold Council reported Tuesday.

The Gold Council report listed total supply last year at 4,339.9 metric tons, down from 4,415.2 tons the year before.

The amount of recycled gold fell to 1,371.4 tons from 1,590.8 in 2012. Mine production climbed to 3,018.6 tons in 2013 from 2,864.10 the year before.

The annual supply of recycled gold declined for the sixth consecutive year to the lowest level since 2008, the WGC said.

“While price is not the only factor that determines the level of recycling, it is a key driver and its influence was clearly on display during 2013,” the WGC said. “The sharp Q2 fall in the price, and subsequent weakness, resulted in a considerable decline in recycling in most of these markets.”

The decline in recycling in India was less pronounced, however, due to a higher rupee price and since there was demand for scrap gold to make up for the lost supply due to import restrictions, the WGC said.

Meanwhile, recycling actually picked up in China, with the WGC chalking this up to consumers taking profits on some of their existing holdings.

Annual gold mine production grew by more than 154 tons, or 5%, in 2013, the WGC said. The bulk of the growth came in the second half of the year.

“Production continued to ramp up at a number of new operations in Canada -- Detour Lake and Canadian Malartic – which accounted for growth of almost 20% in supply from that market,” the WGC said. “In Indonesia, production at Grasberg continues to recover to more normal levels following the disruption of preceding years, resulting in growth in that market. China also made a significant positive contribution, due to an increase in output from the smelting industry. Indonesia, Australia, Russia and Brazil also featured on the list of countries adding to annual supply.”

Output fell in South Africa, the WGC reported.

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Producer de-hedging had a limited impact on the supply, the WGC said. This amounted to just 50.1 tons, with the WGC adding that there is little evidence to suggest producers are embarking upon any notable hedging programs in a lower-price environment.

“The fact that the outstanding global hedge book stands at below 100 (metric tons), the lowest for over a decade, provides a further indication that hedging will contribute little to gold’s supply profile going forward,” the WGC said.

By Allen Sykora of Kitco News; asykora@kitco.com

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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