Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Despite extending their streak of monthly gold buying, central banks are showing they’re easing back purchases significantly, which the World Gold Council believes could have possibly been influenced by the recent surge in gold prices.
In August, global central banks bought only 8 tonnes, compared to the 12-month average of 33 tonnes (t), according to WGC’s latest report. The August figure also represents the lowest net purchase since March, when banks reported a net sale of 2t.
The WGC notes that only four central banks added gold (of a tonne or more) to their reserves during the month of August. Poland led the way with 6t, continuing its net purchase trajectory over the past five months.
The central banks of Turkey, India and Czech Republic also continued to accumulate gold, each adding 3t, 3t and 2t. On a year-to-date basis, Turkey remains the largest net purchaser at 52t, followed by India in second place at 45t.
Meanwhile, Kazakhstan reduced its gold reserves for a fourth straight months and is now a net seller year-to-date. After shedding 5t in August, its gold holdings now stand at 290t, or about 55% of total reserves.
“While gold’s price performance is not a top strategic driver for central banks purchase, its consistent upward trend could have influenced the deceleration,” WGC’s senior research lead, APAC, Marissa Salim said.
“However, it is worth noting that sales have not increased, which may signal a likely wait and see approach rather than a change in trend. Specially, since all other key drivers of central bank decision making, such as the need for effective diversifiers and gold’s performance in time of risk remain in place.
“In all, our expectation remains positive for the rest of the year but, as we previously discussed, will likely be below last year’s total,” she said.
