This year, the global gold market marks an important anniversary: 50 years ago, in March 1968, the US government passed a bill reducing “gold cover” (reserve backing by gold) for Federal Reserve notes by 25%, thus opening the private gold trade in the free market.
Recently, the CPM Group released the CPM Gold Yearbook 2018, which contains detailed statistics and analysis on the international gold markets in 2017. Here are some of its highlights.
Gold Prices in 2017
Gold prices remained virtually unchanged – good news for the jewelry industry, which makes extensive use of gold. China and India are the main markets for gold in jewelry. In India, about two thirds of gold consumers are jewelry manufacturers. Nevertheless, India passed two bills which impacted jewelry manufacturers in the country in 2017: It increased the GST tax to 3%, and it obligated gold holders to detail their investments in gold.
Investment in Gold
Since gold prices hardly budged, 2017 was a disappointing year for investors. Private investment in gold is made through the purchase of jewelry, gold coins and medals. In China, individual investors are not allowed to invest outside the country, so they invest by purchasing jewelry, gold coins and medals. Due to China’s monetary stability and increased private property rights, the expectation is that private investment in gold will grow.
As for banks, 95% of gold purchase by banks in 2017 was done by banks in Russia, Turkey and Kazakhstan.
Forecast for 2018-2019
The CPM Group expects a moderate growth in gold prices in 2018-2019. On the one hand, this bodes well for jewelry manufacturers. On the other, the CPM Group expects global gold sales to remain unchanged or decrease since there has been no increase in global average wages. Therefore, people have less money to invest in jewelry, and young people prefer fewer pieces as well as “lightweight” jewelry.
CPM Gold Yearbook 2018
The CPM Gold Yearbook 2018, which celebrates its 32nd annual report this year, contains statistics and analysis on the international gold markets including analysis of supply and demand trends, bullion and futures market activity, projections for the current year, detailed information on mine production, secondary recovery, fabrication demand, investment demand, historical price information, and details and analysis on many other aspects of the global gold market.
The CPM Group is a commodities research, consulting, financial advisory, asset management, and commodities management firm providing independent research, analysis, and advisory services related to commodities markets.
Written by Iris Hortman
