Welcome to SurvivalBlog’s Precious Metals Month in Review, where we take a look at “the month that was” in precious metals. Each month, we cover gold’s performance, and the factors that affected gold prices. – Steven Cochran, of Gainesville Coins
Gold In 2019: A Review
Before we get into gold’s wild ride in February, let’s take a look at it’s performance last year. (Data for this review was supplied by the World Gold Council.)
Overall global gold demand was down 1% in 2019, to 4,355.7 metric tonnes (4,801.3 US tons). Higher prices slowed physical gold demand, but this was more than offset by a huge surge in physical gold-backed ETFs. Gold-backed ETFs added 401 tonnes (442 tons) in 2019. This was 426% higher than in 2018.
Central banks bought 650.3 metric tonnes (716.8 tons) of gold in 2019, the second-highest total since 1967. 2018 was the highest, at 656.2 t. Fifteen central banks bought at least 1 tonne of gold last year.
Retail gold demand in 2019 fell 11% due to higher prices. Gold rose in nominal terms against a stronger US dollar. A stronger dollar hurts gold demand in other countries, because it becomes even more expensive in their own currencies. This led to gold prices rising in every nation on Earth. Several countries saw all-time high gold prices in their currency in 2019, due to this currency weakness.
Higher gold prices meant that more old gold was sent to the scrappers last year — a total of 1,304 tonnes. This 11% growth in gold recycling helped the global gold supply rise 2% in 2019, to 4,776.1 tonnes.
This was a good thing, as global gold mining production fell 1% to 3,463.7 tonnes. This is the first annual drop in global gold production since the Financial Crisis in 2008.
China’s domestic gold mining (all of which remains in the country) has now fallen 3 years in a row. It would seem that they are on the downside of “peak gold” in their mining sector. This means that China has to rely more on gold imports to fill demand.
Russia and Australia are still increasing production, but how long they can keep their gold sectors expanding remains to be seen.
Gold So Far in 2020
Spot gold started 2020 at $1,516.80 an ounce. It gained $71.70 in January. As of the close of the spot market on February 27, gold had gained another $56.10.
Gold futures started the year at $1,523.10. It added $64.80 in January, and gained $54.60 by the February 27th close.
What Did Gold Do in February?
Gold started February with a $35.80 loss over the first two days of the month. This crushed prices from $1,588 to a monthly low of $1,552. Prices had worked their way back to $1,583 by Valentine’s Day.
It was when the markets came back from Presidents Day that the afterburners were lit under the gold market. Spot gold gained $20.40 on the 18th, closing at a seven year high of $1,601.20. This was the first time gold had broken the psychologically important $1,600 mark since March 27, 2013Continue reading“February 2020 in Precious Metals, by Steven Cochran”
