Commodity Online
TORONTO: The global rush for gold has seen all yellow metal activities picking up momentum across the world. Gold mining companies have increased their production as profits climbed following a rise in prices and a slump in production costs.

Gold exchange traded funds (ETFs) are roaring business because investors are flocking to gold ETFs due to its safe haven value. Gold bars and coins also posted huge leap in business as more and more investors opted for gold as a safe haven buying.

So, goin coin mints all over the world started producing more gold coins as demand soared to new heights. According to mint companies, demand for gold coins climbed sharply during the past few months.

Official goin coin minting hit a two-decade high, climbing by over 40% on the back of stellar demand in North America and Europe. Bar hoarding took off by an impressive 62%, driven mainly by healthy demand in East Asia and to a lesser extent the Middle East. 

As expected gold production was hit badly by several factors in 2008 and the output was down by 3 per cent in a year which saw the yellow metal prices soaring above $1,000 per ounce.

According to a report published by GFMS, global mine production fell by a moderate 3% in 2008 to the lowest level since 1996. The largest drop last year was seen in Indonesia, while much of the remaining losses were concentrated in South Africa and Australia.

But, gold production in the CIS (primarily in Russia) and Latin America (chiefly concentrated in Peru and Mexico) saw gains. As expected, China maintained its position as the leading gold producing country, while the United States moved into second place.

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Annual average global total cash costs in US dollar terms increased sharply by almost 20% year-on-year, as operations worldwide faced surging input costs.

Australian operations posted the sharpest annual total cash cost increases for the second consecutive year.

Net official sector sales plummeted by 49% year-on-year in 2008 to just 246 tonnes. The decline was the result of lower CBGA disposals and modest net purchases outside the group. Driven by low lease rates and, above all, growing concern over counterparty risk, central banks continued to exit from the lending market.

The study said total fabrication fell by 7% to 2,850 tonnes last year, its lowest level since 1988. The bulk of the loss was attributable to the jewellery sector, with its slump in the first half, followed by a slight recovery in the third quarter and near stability in the fourth. In terms excluding scrap, jewellery’s decline in 2008 was yet steeper at almost 20%, with the first half loss ramping up to over a third.

The principal reasons for this were high and volatile gold prices, together with the downturn in the global economy.

The Indian market was the worst affected in terms of volumes while US jewellery consumption fell by nearly one-third last year to its lowest level in GFMS’ 20-year series.

The only bright spot was seen in China where investment-related demand contributed to a notable rise in jewellery offtake. The largest drop for other fabrication occurred in electronics, a result of the economic downturn leading to depressed orders and supply chain de-stocking.

Implied net investment last year soared by nearly 76%, with a significant amount of support arising from record inflows into gold ETFs during the year.

Overall, 2008 as a whole saw wide fluctuations in investment activity accompanied by an eventual divergence between ‘paper’ products and gold’s physical investment markets.

Producer de-hedging remained at an elevated level in 2008, generating almost 360 tonnes of physical demand. This was concentrated in the first half of the year, with producers actively seeking uncapped exposure to the gold price. This left the outstanding global producer hedge book at a year end level of below 500 tonnes in delta-adjusted terms.

According to Royal Canadian Mint, which produces Maple Leaf bullion coins, its production quadrupled last year as demand for gold and silver products went up.

In February this year, gold prices soared above $1000 per ounce and experts predicted in 2009 the prices will cross $1,500 per ounce.

Demand for physical gold products such as coins and bars has been particularly strong in the past few months.

United States Mint said sales of its one-ounce American Eagle gold bullion coins zoomed to 710,000 ounces in 2008, from 140,000 ounces a year before.

French Mint also revealed that sales doubled last year in value terms and are expected to rise by another 50 per cent this year.

The 2009 catalogue the mint had produced was almost entirely pre-sold. The French Mint produces 100 euro gold coins, and plans to mint 10-ounce and 1-kilo coins this year.