The current run of record central bank purchases has helped support the price of the precious metal, but there’s an emerging new case as to why investors should be long gold, according to Chris Watling, Chief Market Strategist at Longview Economics.

“[A]s we outlined in our recent analysis of central bank/official buying of gold, there’s no clear correlation between the level/growth of their purchases and the direction of the gold price,” Watling said in the company’s latest Commodity Fundamentals Report. “Indeed, apart from the past 18 months since the war, the gold price has been highly correlated with our 3 factor macro driven gold model,” which focuses on TIPS, interest rate expectations, and the performance of the U.S. dollar.

Watling said the key question is why this relationship has broken down over the last year and a half.

“Some argue that it reflects significant buying by central banks,” he said. “Others argue that it’s the TIPS yield itself which has been distorted (not the gold price), perhaps because of heavy selling of USTs by the Chinese in order to slow the RMB’s weakness […] Either way, the case is building for gold to resume its rally.”

First, Watling points out that gold is once again oversold and has returned to its 200-day moving average support level of around $1895.

“Given it’s also now oversold (see medium term technical market timing model – fig 4 below), and given our expectations about the shift in rate expectations and TIPS yields […] gold is once again an attractive LONG proposition,” he said.

Watling said that from a fundamentals perspective, gold continues to be driven primarily by rate expectations, real TIPS yields, and the dollar. “Reflecting our view that inflation has primarily been driven by monetary factors,” meaning too much money chasing too few goods, “we continue to expect US inflation to fall rapidly, with deflation a possible and growing risk,” he said. “If correct and if our view on recession is also correct, then US rate expectations (& TIPS yields) should move notably lower.”

On the other hand, Watling points out that the outlook for the dollar is less favorable for gold. “It’s worth bearing in mind, though, that the possibility of interventions in both the RMB & YEN is growing with both currencies at/around levels of prior intervention,” he said. “Added to which, if 2 out of 3 key macro factors are supportive of the gold price, that would be a significant improvement over recent months and likely enough to drive the gold price higher.”

Watling cautioned that there are still risks to his bullish gold scenario, including “a 2008 style credit crunch” driven by the Fed’s dramatic tightening, but pointed to the March banking crisis as proof that the central bank was ready and willing to flood the system with liquidity to prevent this. “Hence it’s a low risk event (for LONG gold positions),” he said. “Other risks include dollar strength – although it’s noteworthy that gold rallied in 2001 (during that recession) despite bouts of dollar strength.”

Spot gold continues to hold its morning gains at the time of writing, last traded at $1915.44, up 0.95% on the session.

Source: Kitco

The BRICS (Brazil, Russia, India, China, South Africa) summit in Johannesburg could have far-reaching ramifications for the world of finance, specifically for precious metals and the US dollar. As the bloc contemplates expansion and expresses discontent over the dominance of the US dollar in global trade, investors worldwide should be attentive to these seismic shifts in economic power dynamics.

Historically, in periods of political and economic instability, gold and silver have been considered safe-haven assets. As BRICS nations push for a greater role in shaping the global financial landscape and challenge Western supremacy, uncertainties could cause a surge in demand for these precious metals. Additionally, the inclusion of Saudi Arabia, the world’s second-largest oil producer, could provide a further boost. If the bloc promotes trading oil in currencies other than the dollar or even in gold, it could drive up the prices of these metals.

The US dollar’s preeminence in global transactions is under scrutiny. As highlighted in the summit, there’s a growing consensus among BRICS nations to conduct trade in local currencies. While the immediate dethroning of the dollar seems unlikely, a gradual move towards a multipolar financial world, where several currencies co-exist in global trade, is plausible.

Cobus van Staden’s, an analyst at the China Global South Project, analogy of “a lot of paper cuts” perfectly encapsulates the situation. BRICS may not deliver a knockout punch to the dollar, but a series of smaller actions could erode its dominance. These “paper cuts” may include bilateral trade agreements in local currencies, establishment of alternative payment systems, or even gold-backed financial instruments.

An erosion of confidence in the US dollar could trigger a bull market for precious metals. As nations seek to diversify away from dollar-centric systems, they might increase their gold and silver reserves. A multipolar currency world, where local currencies gain prominence, would likely have fluctuating exchange rates. This volatility could further push central banks and investors towards the stability offered by gold.

The US and its allies are closely watching the geopolitical aspirations of BRICS, especially the inclusion of nations like Saudi Arabia. As the bloc grows and its influence expands, it might create a counterweight to Western financial institutions. While the geopolitical repercussions are vast, from a financial perspective, it introduces a new set of players determining global precious metal demand and currency flows.

In conclusion, while the BRICS bloc grapples with internal differences, their united front against the dollar’s dominance signals a transformative phase in global finance. Precious metal investors and dollar watchers alike should keep a keen eye on the bloc’s decisions, as they have the potential to reshape the world’s economic landscape.

Source: FX Empire

Gold isn’t losing its allure, according to a dozen money managers who all told Bloomberg News they expect to maintain or raise their exposure to the precious metal in the coming 12 months.

Bullion has stumbled in recent weeks in the face of multiple headwinds from surging real yields to a stronger U.S. dollar and the prospect of U.S. rates staying higher for longer. The survey of investors – from sovereign wealth managers to hedge funds – offered some modest optimism for price prospects into 2024.

None of the respondents said they would cut their exposure to gold in the immediate 12 months, and five of them said they expected to boost their allocations. More than two-thirds of them see prices rising, and five expect a clear all-time high. The poll was conducted between Aug. 10 and Aug. 22.

There’s still obvious uncertainty around when the Federal Reserve will end the bank’s tightening cycle, which would be an important positive for noninterest-bearing gold. Global central banks continue to grapple with stubborn inflation, and the U.S. labor market has remained surprisingly resilient in the face of aggressive monetary tightening.

While there are some signs that investors are bracing for rates to stay higher for longer, the swaps market is still pricing in no more rate hikes, and a shift to policy easing next year.

“We do anticipate there’s pent-up gold demand from investors waiting for the Fed to finish,” said Darwei Kung, head of commodities and portfolio manager at DWS Group. “That’s a positive setup from our perspective.” He sees gold reaching a record $2,250 an ounce in the period.

Bullion is currently trading near $1,900 an ounce, down about 8% from this year’s peak. It reached a record in August 2020 at about $2,075, amid global economic turmoil triggered by the Covid-19 pandemic.

To be sure, economists are getting more confident that the U.S. economy can glide to a soft landing, in a marked shift from widely-held views earlier this year that the economy would experience a sharp downturn.

A separate survey also showed expectations for higher gold prices. Gold will trade at $2,021 per ounce 12 months from now, according to the median of 602 responses to Bloomberg’s Markets Live Pulse online survey of global readers conducted from Aug. 14 to 18.

The continued appetite for gold points to lingering worries about geopolitical tensions and macroeconomic uncertainties – for example, simmering tensions between the U.S. and China, war in Ukraine, or what’s next for China’s property crisis. Other positive factors for gold include continued purchases by global central banks and relatively strong retail demand in emerging markets.

Meanwhile, a breakdown in the correlation between equities and bonds – a cornerstone of the popular 60/40 investment strategy – is also helping to make the case for the metal due to its ability to diversify portfolios, according to the World Gold Council.

“People are looking for things that do move differently and gold does that,” the council’s head of institutional investor relationships for APAC ex-China, Jaspar Crawley, said at a panel in Sydney on Tuesday. “Diversification has now become a real thing.”

Still, in the near term, gold-watchers have plenty of reasons to be gloomy about the metal’s prospects. For the next clues on interest rates, investors will be paying attention to commentary from this week’s Jackson Hole gathering of central bankers. Fed Chair Jerome Powell is due to speak on Friday.

Spot gold gained 0.3% to $1,902.52 an ounce as of 11:15 a.m. in London.

Source: Bloomberg

In a recent in-depth interview, Canadian business magnate Frank Giustra offered critical insights into the future of gold, investment strategies, and the economic landscape. As the founder of Eris Gold, Giustra is well-positioned to speak on these matters, sharing both his professional experience and personal life lessons to provide a comprehensive perspective on financial planning and wealth preservation.

Giustra emphasized the enduring importance of gold, particularly as a hedge against economic downturns and inflation. “To preserve your wealth, own physical gold… and own it and don’t sell it,” he said. This classic financial advice continues to resonate, especially in an era of economic uncertainty.

However, Giustra also distinguished between the role of established, large mining companies and smaller, more aggressive outfits like his own Eris Gold. While larger companies have been conservative, especially post-2011, smaller entities offer an aggressive growth plan for significant value appreciation. Speaking on his vision for Eris Gold, Giustra stated that the company starts with about 10 million ounces of “really good grade gold” and aims to build it into a million-ounce per year producer, thus achieving the status of a senior mining company.

The interview also touched on the topic of risk in investments. Giustra pointed out that while every portfolio should include some element of risk for growth potential, it’s crucial to avoid putting all your eggs in one basket. “I wouldn’t be like the Bitcoiners say you have to put it all into this, and you’re going to be fabulously wealthy. That’s pretty dumb investment advice,” he cautioned.

One of the most compelling aspects of the conversation was when Giustra recounted his family’s experience with hyperinflation in Argentina, where his father lost his wealth. “By the time [my father] got his money sometime in the late 70s, it was worthless,” he revealed. This personal anecdote served as a powerful reminder of the importance of diversifying assets and focusing on wealth preservation, particularly in gold.

Toward the end of the discussion, Giustra showcased a more balanced life philosophy. He spoke of his love for the Mediterranean diet, suggesting that a holistic approach to investment isn’t just about financial returns but also about improving one’s quality of life.

In conclusion, Frank Giustra’s multi-faceted insights into gold, the mining industry, and investment strategies offer a valuable roadmap for anyone seeking to navigate the complex world of financial planning. From his professional experience to the life lessons learned from personal hardships, Giustra’s advice serves as both a guide and a warning, making it clear that in a world filled with uncertainties, the timeless value of gold continues to offer avenues for both wealth preservation and growth.

Watch the interview on YouTube.

Even though the timing of the new BRICS (Brazil, Russia, India, China, and South Africa) currency is still a big unknown, it is an inevitable outcome, according to Andy Schectman, President and Owner of Miles Franklin.

“I do believe that the BRICS will issue a common settlement currency, and it will be backed by something,” Schectman told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. “It’s coming. Whether or not it is a gold-back currency that is introduced in a few weeks or in a few months, or next year, to me, the alliance that is being built represents the majority of the human population.”

In the lead-up to the BRICS summit taking place in Johannesburg on August 22-24, there have been conflicting reports about whether a gold-backed currency was going to be discussed.

According to Anil Sooklal, South Africa’s Ambassador at Large to Asia and BRICS, told reporters last month that a BRICS currency was not on the agenda for the upcoming summit.

“There’s never been talk of a BRICS currency, it’s not on the agenda,” Sooklal said. “What we have said and we continue to deepen is trading in local currencies and settlement in local currencies.”

The more immediate goals for the BRICS bloc are to sidestep the SWIFT system and have the ability to avoid Western sanctions. And there is one event that investors need to closely monitor concerning this – Saudi Arabia’s participation at the upcoming BRICS summit.

The BRICS alliance is expected to expand its membership soon, with over 20 countries formally asking to join the BRICS, including Saudi Arabia, Argentina, Iran, the United Arab Emirates, and more.

But how the BRICS bloc expands will play a vital role in the global de-dollarization move as member countries continue to push to ditch the greenback and trade using their own currencies.

Schectman sees Saudi Arabia as an essential player in this transition, with eventually 85% of the global population dumping the U.S. dollar.

“There is this cohesion of countries that have joined together to break free from the Western hegemony,” Schectman said. “And I look to Saudi Arabia as the linchpin of all of the issues surrounding the de-dollarization and the dollar hegemony.”

This all hinges on the petrodollar and how other countries need to hold the greenback to buy oil from Saudi Arabia.

Schectman referred to the deal struck between the Nixon administration and Saudi Arabia in the 1970s, which saw Saudis trade oil exclusively in dollars in exchange for security guarantees from the U.S. Following this deal, there was also a shift within the OPEC itself to keep oil in dollars.

“That was the deal we struck with Saudi Arabia and, by extension, OPEC, who has for almost 50 years [conducted] about 90% of all the oil sales across the globe in dollars,” Schectman said. “And this has created a synthetic demand for the dollar.”

This has given the greenback its petrodollar status. But the recent moves from Saudi Arabia should be alarming to the world’s reserve currency, Schectman pointed out.

“I see Saudi Arabia as a very important cog in that [de-dollarization] movement because when Saudi Arabia accepts other currencies for oil, the lack of settlement in the dollar will have substantial effects,” he said. “The glue that will make all of this work is indeed having a currency backed by commodities, presumably gold, using distributed ledger technology or blockchain.”

This whole move against the dollar also goes far being the BRICS bloc, Schectman added. If all the new alliances come together, it would represent 85% of the human population. “If you put together the Belt Road Initiative, the BRICS, the Shanghai Cooperation Organization, and the Eurasian Economic Union … it is a very big deal,” he noted.

Another recent development was Saudi Arabia approving the decision to join the China-led Shanghai Cooperation Organization (SCO) as a dialogue partner. The SCO is a political, security and trade alliance created in 2001 to counter Western influence. Its members include China, Russia, India, Pakistan, and four central Asian countries.

“This is a very big deal. The Shanghai cooperation organization is the largest regional military and financial organization in the world. It represents about 60% of the Eurasian landmass and 40% of the global GDP,” Schectman said. “We can see how they are pushing away from the Western influence and getting very close with some powerful entities.”

The de-dollarization trend has not only been accelerating, but it is also irreversible at this stage, we are at a point of no return – “past the Rubicon”, according to President and Owner of Miles Franklin. “When you see all of this settlement outside the dollar, that’s significant. It creates less demand for the dollar and an environment where the dollar has to fall, and interest rates have to rise to compensate.”

Schectman sees 85% of the global population dumping the greenback in due time. “It’s like a game of Jenga. You keep pulling out these pieces of the dollar hegemony one by one. At what point does it tumble? It’s not going to happen overnight, but you can see the acceleration. So little by little, and then all at once.”

Source: Kitco

Gold buying by central banks reached its highest level in 55 years this February 2023, according to the World Gold Council. The uptick in gold buying is part of a decades-long shift away from the U.S. dollar as the world’s primary reserve currency, and has coincided with the strengthening of emerging economies like Brazil, Russia, India, China, and South Africa. In recent weeks, members of the BRICS economic coalition have announced plans to introduce a new, alternative currency to further challenge the U.S. dollar’s role as primary world currency.

Since the U.S. dollar was officially decoupled from gold in 1971 and the gold standard was fully abandoned in 1973, central banks have bought gold in times of market volatility and uncertainty. Gold can act as a hedge against the U.S. dollar, and may be in higher demand in times of high inflation and political tension with the United States. In recent years, central banks in emerging markets have led the gold buying spree, signaling uncertainty in international relations and a shift towards independence from the U.S. monetary system. (Yet the U.S. is by far the largest holder of gold – here are the countries with the most gold.)

To determine which countries are buying up the world’s gold, 24/7 Wall St. reviewed data on gold reserves by country from the World Gold Council. Countries were ranked based on the net change in gold reserves held by their central bank from 2017 to 2022. Data on the value of gold reserves and gold reserves as percentage of all foreign reserves also came from the WGC and was calculated using the LBMA (London Bullion Market Association) Gold Price for the fourth quarter of each year. Population figures are from the World Bank and are for 2021.

The largest buyer of gold from 2017 to 2022 is, by far, the central bank of Russia (though data for Russia is actually only until the end of 2021. The U.S.-imposed sanctions on Russia in response to its invasion of Ukraine effectively made the hundreds of billions of U.S. dollars the Russian central bank holds worthless. Russia recently said it further increased its bullion holdings in 2022. (Here are the most sanctioned countries of all time.)

Other countries whose relations with the U.S. may be worsening have also purchased gold. From 2017 to 2022, the central banks of Russia, Turkey, India, and China were the largest buyers of gold. 

And while Russia, Turkey, India, and China account for nearly 60% of the net change in gold reserves globally from 2017 to 2022, it is small countries in the Middle East and North Africa that are buying gold at the fastest rates. Mauritania, Qatar, and the United Arab Emirates all more than tripled their gold reserves from 2017 to 2022, while Oman increased its once meager gold supply by more than one hundredfold. 

Countries have also made significant changes to the composition of their central bank holdings, with upper- and middle-income countries in Central Asia and Latin America doubling down on their gold positions the most. In Pakistan, Kazakhstan, Turkey, Lebanon, and Venezuela, gold as a share of central bank holdings increased by more than 15 percentage points from 2017 to 2022, while in Bolivia gold as a percentage of central bank holdings increased by a world-leading 49 percentage points. Globally, gold as a share of total central reserve holdings rose from 9.7% to 12.9%.

25. Czech Republic
> Chg. in gold reserves since 2017: +2.5 metric tons, reaching 12.0 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$305.6 million, reaching $697.4 million in 2022
> Chg. in share of total reserves since 2017: +0.2 ppts, reaching .5% in 2022
> Population, 2021: 10.5 million

24. Kyrgyzstan
> Chg. in gold reserves since 2017: +3.2 metric tons, reaching 10.2 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$306.0 million, reaching $594.4 million in 2022
> Chg. in share of total reserves since 2017: +11.0 ppts, reaching 24.2% in 2022
> Population, 2021: 6.7 million

23. Mongolia
> Chg. in gold reserves since 2017: +3.7 metric tons, reaching 7.9 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$285.3 million, reaching $462.0 million in 2022
> Chg. in share of total reserves since 2017: +10.5 ppts, reaching 16.4% in 2022
> Population, 2021: 3.3 million

22. Ireland
> Chg. in gold reserves since 2017: +6.0 metric tons, reaching 12.0 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$452.8 million, reaching $701.9 million in 2022
> Chg. in share of total reserves since 2017: -0.3 ppts, reaching 5.4% in 2022
> Population, 2021: 5.0 million

21. Argentina
> Chg. in gold reserves since 2017: +7.0 metric tons, reaching 61.7 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$1.3 billion, reaching $3.6 billion in 2022
> Chg. in share of total reserves since 2017: +3.9 ppts, reaching 8.0% in 2022
> Population, 2021: 45.8 million

20. Belarus
> Chg. in gold reserves since 2017: +7.1 metric tons, reaching 53.6 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$1.2 billion, reaching $3.1 billion in 2022
> Chg. in share of total reserves since 2017: +15.3 ppts, reaching 41.8% in 2022
> Population, 2021: 9.3 million

19. Serbia
> Chg. in gold reserves since 2017: +19.1 metric tons, reaching 38.5 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$1.4 billion, reaching $2.2 billion in 2022
> Chg. in share of total reserves since 2017: +5.8 ppts, reaching 12.5% in 2022
> Population, 2021: 6.8 million

18. Ecuador
> Chg. in gold reserves since 2017: +22.0 metric tons, reaching 33.8 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$1.5 billion, reaching $2.0 billion in 2022
> Chg. in share of total reserves since 2017: +3.3 ppts, reaching 25.9% in 2022
> Population, 2021: 17.8 million

17. Singapore
> Chg. in gold reserves since 2017: +26.3 metric tons, reaching 153.7 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$3.7 billion, reaching $9.0 billion in 2022
> Chg. in share of total reserves since 2017: +1.1 ppts, reaching 3.0% in 2022
> Population, 2021: 5.5 million

16. Cambodia
> Chg. in gold reserves since 2017: +29.9 metric tons, reaching 52.4 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$2.1 billion, reaching $3.1 billion in 2022
> Chg. in share of total reserves since 2017: +9.4 ppts, reaching 17.1% in 2022
> Population, 2021: 16.6 million

15. Iraq
> Chg. in gold reserves since 2017: +40.5 metric tons, reaching 130.3 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$3.9 billion, reaching $7.6 billion in 2022
> Chg. in share of total reserves since 2017: +1.4 ppts, reaching 9.0% in 2022
> Population, 2021: 43.5 million

14. Egypt
> Chg. in gold reserves since 2017: +48.9 metric tons, reaching 125.3 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$4.1 billion, reaching $7.3 billion in 2022
> Chg. in share of total reserves since 2017: +14.2 ppts, reaching 22.9% in 2022
> Population, 2021: 109.3 million

13. Kazakhstan
> Chg. in gold reserves since 2017: +51.8 metric tons, reaching 351.7 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$8.1 billion, reaching $20.5 billion in 2022
> Chg. in share of total reserves since 2017: +17.9 ppts, reaching 58.4% in 2022
> Population, 2021: 19.0 million

12. Uzbekistan
> Chg. in gold reserves since 2017: +59.4 metric tons, reaching 395.9 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$9.1 billion, reaching $23.1 billion in 2022
> Chg. in share of total reserves since 2017: -4.4 ppts, reaching 64.5% in 2022
> Population, 2021: 34.9 million

11. Qatar
> Chg. in gold reserves since 2017: +62.0 metric tons, reaching 91.8 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$4.1 billion, reaching $5.4 billion in 2022
> Chg. in share of total reserves since 2017: +3.4 ppts, reaching 11.6% in 2022
> Population, 2021: 2.7 million

10. Brazil
> Chg. in gold reserves since 2017: +62.4 metric tons, reaching 129.7 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$4.8 billion, reaching $7.6 billion in 2022
> Chg. in share of total reserves since 2017: +1.6 ppts, reaching 2.3% in 2022
> Population, 2021: 214.3 million

9. United Arab Emirates
> Chg. in gold reserves since 2017: +72.3 metric tons, reaching 80.0 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$4.3 billion, reaching $4.7 billion in 2022
> Chg. in share of total reserves since 2017: +3.3 ppts, reaching 3.6% in 2022
> Population, 2021: 9.4 million

8. Japan
> Chg. in gold reserves since 2017: +80.8 metric tons, reaching 846.0 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$17.6 billion, reaching $49.3 billion in 2022
> Chg. in share of total reserves since 2017: +1.5 ppts, reaching 4.0% in 2022
> Population, 2021: 125.7 million

7. Thailand
> Chg. in gold reserves since 2017: +90.2 metric tons, reaching 244.2 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$7.8 billion, reaching $14.2 billion in 2022
> Chg. in share of total reserves since 2017: +3.4 ppts, reaching 6.6% in 2022
> Population, 2021: 71.6 million

6. Hungary
> Chg. in gold reserves since 2017: +91.4 metric tons, reaching 94.5 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$5.4 billion, reaching $5.5 billion in 2022
> Chg. in share of total reserves since 2017: +12.9 ppts, reaching 13.4% in 2022
> Population, 2021: 9.7 million

5. Poland
> Chg. in gold reserves since 2017: +125.7 metric tons, reaching 228.7 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$9.1 billion, reaching $13.3 billion in 2022
> Chg. in share of total reserves since 2017: +4.2 ppts, reaching 8.0% in 2022
> Population, 2021: 37.7 million

4. China
> Chg. in gold reserves since 2017: +168.0 metric tons, reaching 2,010.5 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$40.8 billion, reaching $117.2 billion in 2022
> Chg. in share of total reserves since 2017: +1.2 ppts, reaching 3.6% in 2022
> Population, 2021: 1.4 billion

3. India
> Chg. in gold reserves since 2017: +229.3 metric tons, reaching 787.4 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$22.8 billion, reaching $45.9 billion in 2022
> Chg. in share of total reserves since 2017: +2.5 ppts, reaching 8.1% in 2022
> Population, 2021: 1.4 billion

2. Turkey
> Chg. in gold reserves since 2017: +339.8 metric tons, reaching 541.8 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$23.2 billion, reaching $31.6 billion in 2022
> Chg. in share of total reserves since 2017: +18.5 ppts, reaching 27.6% in 2022
> Population, 2021: 84.8 million

1. Russia
> Chg. in gold reserves since 2017: +462.9 metric tons, reaching 2,301.6 metric tons in 2021
> Chg. in value of gold reserves since 2017: +$57.9 billion, reaching $134.2 billion in 2021
> Chg. in share of total reserves since 2017: +3.6 ppts, reaching 21.2% in 2021
> Population, 2021: 143.4 million

Source: 24/7 Wall St

When Guy Robert Lukama looked out at thousands of illegal gold diggers hacking away at the verdant hills in remote northeastern Congo, he glimpsed opportunity where previous owners saw only an intractable problem.

Lukama’s former employer, South Africa’s AngloGold Ashanti, had for years sought to develop the 3,260 square kilometre Mongbwalu concession but pulled out partly due to concern over the sprawling blue-tented camps full of miners.

When he led a buyout of AngloGold’s 86 percent stake in the Mongbwalu Gold Mine (MGM) last year, Lukama knew he couldn’t chase them away if he was to succeed in mining any of the 2.5 million ounces of gold estimated to lie trapped in the earth. Instead, he decided to put them on the payroll.

“We cannot avoid the fact that … we [have] to manage the presence of [the diggers],” Lukama told Reuters.

It is an innovative attempt to address one of the knottiest problems facing industrial miners around the world and the first initiative of its kind in Congo, where up to 2 million people mine with rudimentary tools, most illegally and in dangerous conditions.

While some mines in South America and elsewhere in Africa have experimented with similar concepts, MGM’s could be the most ambitious, particularly in light of concerns over so-called Congolese “conflict minerals.”

Armed groups have long dominated small mines in eastern Congo, a legacy of nearly two decades of war and unrest.

A study by the Antwerp-based International Peace Information Service found that 64 percent of gold miners in Congo work under the influence of armed actors, most commonly government soldiers.

Once the scene of militia violence, Mongbwalu is peaceful these days but the police and army continue to levy illegal taxes on artisanal miners.

“It’s a very fundamental problem,” said Valery Mukasa, chief of staff to Congo’s mines minister. “We don’t need armed men where there is mining.”

Conflict minerals

The 2010 U.S. Dodd-Frank financial reform law requires firms sourcing gold and the “3Ts” — tin, tungsten and tantalum — from Congo or neighboring countries to conduct supply chain due diligence.

Traceability schemes, such as “bag and tag,” which labels minerals by point of origin, have helped reduce armed influence over 3T extraction but have proved unworkable for gold, which is much more lucrative.

In his shop in downtown Mongbwalu, one middleman boasted that he once smuggled abroad 850 kg of gold — worth almost $34 million at current prices – bought from local diggers.

“You put the gold in the suitcase and you drive into Uganda,” he laughed, brandishing a 500 gram brick of solid gold in one hand, a Ugandan driver’s license in the other.

A panel of U.N. experts estimated in 2013 that 98 percent of Congo’s artisanal gold production was illegally smuggled out of the country.

Lukama’s solution depends on establishing partnerships with cooperatives of about 100 diggers each who will work limited plots that can be monitored for evidence of armed influence.

They will be given better equipment and access to areas with high ore grades but which are not suitable for industrial mining. Most importantly their ore will be processed more efficiently at MGM’s industrial plant, allowing the company to
pay them better than the smugglers.

MGM plans to start buying from local miners next month and pour its first gold in the first quarter of next year.

“If MGM helps us with small things … people are going to accept it because they are looking for a livelihood and nothing else,” said digger Freddy Ngoy, 44, over the churning of pumps draining flood water from the recent rains.

“Outside the box”

Not everyone is happy with MGM’s plan. Since March, as the company has laid the groundwork for its scheme, tens of thousands of new illegal diggers have flocked to its concession. Lukama and local activists say they are backed
by local military and political officials.

Congo’s army spokesman did not respond to requests for comment. The director of the provincial division of mines referred questions to the governor of Ituri province, who did not respond to requests for comment.

Even if the initiative succeeds in Mongbwalu, there’s no guarantee other companies will be willing to replicate it, said Gregory Mthembu-Salter, a former member of the U.N. panel of experts specializing in mining supply chains.

“The precedent is a difficult one for industrial miners to swallow because they like to deny the presence of artisanal miners on their concessions,” he said.

MGM estimates around 25,000 diggers mine its concession illegally. Others put the figure as high as 100,000. At most the new scheme will employ around 1,500 informal miners.

Though MGM’s initiative also aims to promote agricultural jobs and develop infrastructure that should boost the local economy, Lukama fully recognizes its limitations.

But with up to 10 million people, or around one in seven Congolese, economically dependent upon the informal mining sector, Lukama said it’s imperative that companies play a role in improving those livelihoods.

“We are not there to fix all the problems. … In a post-conflict area, you should from day one keep in mind how to make it beneficial for most of the stakeholders,” he said. “We have decided to think outside the box.”

Source: VOA News

Global nations are accelerating their efforts to acquire the rich resource base of the African continent, which is expected to become one of the world’s main sources of raw materials in the future.

Perhaps one of the most important of such states is the Democratic Republic of the Congo (DRC). Once a Belgian colony, according to analysts, the country has an economic potential comparable to the strongest regional powers, although currently remains one of the world’s poorest countries.

Being the second largest African country, the DRC is incredibly rich in natural resources. Oil, coal, diamonds, cobalt, zinc, silver, tungsten and other rare metals have been found and mined here. Moreover, the share of the republic in the global production of cobalt reaches 70%. The situation is almost the same with tantalum and coltan (a mixture of columbite and tantalite), which are necessary in the production of electronic equipment, in particular, for military purposes. In addition, the country ranks fourth in the world in terms of diamond production.

Still, political instability and the resulting decentralization of power have resulted in almost 30% of all mining activities in the country being carried out artisanally in hand-dug mines, where safety standards are absent and child labor is actively used. Only in the last two years the government of Kinshasa (the capital of the Congo) has been taking efforts to bring this situation under state control.

According to experts of the Russian Izvestia business paper, until the early 2000s, the DRC, like its neighbours in Central Africa, regularly served as a resource base for Europe (mainly France) and the United States, despite its formally independent status received in 1960. The main assets were controlled by North American (First Quantum Minerals, Barrick Gold, Chevron Texaco and others) and European (Glencore, Areva) companies. For Washington, this source is still of strategic importance. According to some reports, 75% of the cobalt and 50% of tantalum used in the US military-industrial complex is mined in the DRC.

In recent years, the DRC, along with other African states, which are characterized by rich raw material resources, have faced an active expansion of Chinese investors. Over the last decade, overall capital investments of Chinese business in the African mining sector have grown by 22 times, to US$220 billion, and the volume of issued loans increased 74 times (US$100 billion). A significant part of these investments was accounted for in the DRC.

In recent years, imports of some critical minerals, which are produced in the African continent for China, has also increased. For example, since 2015 imports of cobalt to China have grown by 3,000% and copper ore by 1,700%. In the case of the DRC, for 20 years Beijing has effectively withdrawn the US from the mining sector of the country. The latest major US asset in the country’s mining industry was Tenke Fungurume Mining, which was sold to China Molybdenum in 2020.

In the meantime, the mining sector of Congo, along with the country’s hydrocarbons resource base, is also within the sphere of interests of Russia for which the expansion in the African continent, after the exodus from the majority of Western markets, is considered as one of its priorities. As part of these plans, Russia plans to transfer some of its technologies in oil and gas production to the DRC, that will allow to significantly increase their production already in the short-term.

At the moment, the country produces only 22,000 of oil barrels per day, although the DRC hopes to increase these figures by more than 10 times.

Still, the traditional political and economic instability and the simmering military conflict with neighboring Rwanda, which led to the Second Congo War (the origins of which, go back to the bloody war between the Hutus and Tutsis in Rwanda) poses a threat for the active development of the DRC’s rich raw materials base.

The biggest instability is currently observed in the eastern part of the DRC. The situation is complicated by the fact that the republic’s central government does not fully control individual regions of the country. Chinese and Western companies have learned to work in this environment. They seek to form an autonomous environment which includes tools to ensure the security of mines under their control, create logistics corridors, conduct a dialogue with local communities.

According to analysts, the future situation in the region will be determined by the ability of the central government of the Democratic Republic of the Congo to establish control over the activities of foreign business and limit the influence of other regional players, including Rwanda and Tanzania, as well as to send an income from the export of raw materials to the development of the eastern provinces of the country.

Source: Resource World

Despite recent volatility, the gold market continues to hold firm support at around $1,950 an ounce. However, despite the precious metal’s resilient strength, one analyst says something more is needed to drive the precious metal to record high.

In an interview with Kitco News, John LaForge, head of real asset strategy for Wells Fargo Investment Institute, said that gold and silver have been underperforming general commodities in a broad neutral trading range for the last three years. He added that the precious metal market is stuck as investors continue to focus on tightening U.S. monetary policies and the sharp drop in U.S. money supply.

However, LaForge added that with the Federal Reserve nearing the end of its tightening cycle, both gold and silver could be on the cusp of a long-term bull market as part of the larger commodity super-cycle. He said that it’s only a matter of time before the U.S. central bank starts pumping money back into financial markets to keep the economy from slipping into a recession.

“If we do get this jump back up in Money supply and again and investors start to worry that we are printing too many of these little pieces of paper, we will finally see that long-term run in gold and silver. I would expect that rally to last for three years,” he said.

LaForge added that it wouldn’t take a significant rise in the money supply nor a major shift in U.S. monetary policy to support gold prices at record highs. He added that the market is already sensitive to the government’s massive deficit spending.

The comments come as the U.S. deficit has surged by more than $1 trillion in the last two months since the U.S. government resolved its debt ceiling crisis in early June. LaForge said he expects the deficit to be a significant talking point ahead of the November 2024 elections.

“The more politicians talk about deficit spending, the more people will realize just how unstainable this environment is,” he said. “Where do you go when people start losing confidence in their currency and want to preserve their wealth and purchasing power?”

LaForge said that as the November election approaches, the U.S. could face a similar situation that sparked a crisis of faith in the U.K. bond market last year. The British bond market saw a significant meltdown in October after the then-newly-minted Prime Minister Liz Truss released a mini-budget that proposed the nation’s biggest tax cuts in 50 years.

Truss lasted six weeks as the Prime Minister and the Bank of England had to support the bond market.

Another potential piece to the gold rally is a further deterioration in the U.S. economy. He added that the Federal Reserve could be forced to expand its balance sheet as smaller regional banks continue to feel the pressure of a weakening economy, rising corporate bankruptcies and tighter financial market conditions due to rising interest rates.

“I don’t think it will take much to wake people up to how fragile the economy actually is. There are a lot of potential little triggers that could create a big move in the market,” he said.

Looking at gold and silver‘s technical outlook, LaForge said that despite the long-term consolidation, the precious metal is in a good place to capitalize on any market uncertainty.

“The only thing that’s really disappointing with gold and silver now, frankly, is that they’re not breaking out to the upside,” he said. “They don’t look bad. They’re just going sideways, waiting for a trigger.”

While LaForge is bullish on gold and silver as investment demand is expected to pick up, he explained that the fundamental supply and demand picture will keep prices elevated long-term.

He noted that even if the U.S. slips into a recession, impacting demand for gold, particularly silver, dwindling supply will keep prices well supported.

“Ten years ago, broader commodities saw significantly higher prices, and everyone was out looking for deposits and finding them. The market became oversupplied, and prices have suffered. Fast forward ten years later, after years of weak prices, there is no supply left,” he said. “Gold and silver have two of the best-looking supply growth charts of any commodity, meaning there’s no growth there. So should not take much in demand to support prices at elevated levels.”

Source: Kitco

A $2.6 billion deal announced last week has set the stage for a potentially landmark shift in the metal and mining investment landscape: the arrival of Saudi Arabia as a pivotal player.

The agreement with Vale SA gives the kingdom a 10% slice in one of the world’s crucial suppliers of nickel and copper — essential metals needed to decarbonize. It’s also held other talks, including with Barrick Gold Corp. about investing in a big Pakistan copper mine, according to people familiar with the matter. Speaking privately, executives at top miners said the value of Thursday’s deal made clear that the Saudis are ready to splash cash around.

The move comes as the question of who controls the commodities needed to both sustain and decarbonize the world’s economies has turned into a global flashpoint, jumping to the top of agendas in the US and Europe.

China has for years been the dominant buyer and a key source of funding, as it sought to secure supply for its rapid industrialization. But as tensions with the West have mounted, the mining industry is now facing increased pressure to look elsewhere.

Saudi Arabia is seeking to take minority stakes in global mining assets that will over time help provide access to supplies of strategic minerals. The country also is looking to build a metals-processing industry that could in turn make it more attractive for international miners to exploit its mineral deposits — a central pillar of Saudi efforts to diversify the economy away from oil.

The kingdom has invested heavily into industrial and financial assets and even turned the world of sport upside down by essentially buying the game of professional golf and piling into soccer. However, the Vale deal announced last week is its first major foray into mining. Manara Minerals, a new venture between the kingdom’s sovereign wealth fund and state mining company, will get a stake in Vale’s base metals business, giving Saudi Arabia an interest in mines from Indonesia to Canada producing copper, nickel and other industrial metals.

For western producers, the kingdom offers access to deep pools of capital, which are appealing as Chinese funds become less politically palatable, but also as some institutional investors have turned less comfortable with mining over environmental concerns.

Investors from the region — Qatar is already a major backer of Glencore Plc — are now likely to become one of the most important financiers for the capital hungry sector, according to serial mine builder Robert Friedland, who spent the last few years developing one of the world’s biggest copper operations, in the Democratic Republic of Congo, with the help of Chinese funds.

“Now, probably, the largest supply of capital to the mining industry will come from the Middle East,” he said in an interview last month.

But Saudi Arabia offers something else beyond cold cash: political backing for companies looking to expand into the Muslim world as deposits in more traditional jurisdictions are depleted.

Canada’s Barrick has been in talks with the Public Investment Fund about a potential stake in its Reko Diq copper project in Pakistan, which is a relatively untouched frontier for the international mining industry, according to people familiar with the matter. Bringing the Saudis on board would not only ease Barrick’s funding burden, but also introduce a partner that has significant political influence in Pakistan, the people said.

Spokespeople for the PIF and Barrick did not comment.

Saudi Arabia’s deep pockets may also present some challenges for the biggest producers who are looking for deals of their own. Keen to get more exposure to copper and nickel, miners have started writing the biggest checks in more than a decade. BHP Group and Rio Tinto Group — the two largest — have just completed multi-billion dollar deals to grow in copper, while Glencore Plc tried to buy Teck Resources Ltd.

For years, the big producers have found themselves repeatedly outbid by Chinese companies when it comes to buying mines. China’s state-owned metal and mining companies have been willing to pay valuations that western firms simply couldn’t match. Saudi Arabia now seems willing to do the same, potentially putting some deals beyond the reach of the industry’s traditional buyers.

Executives at two of the biggest mining companies, which have spent years assessing base metal assets such as those owned by Vale, said privately that they were surprised by the price tag in last week’s deal, which valued the unit at $26 billion (RBC Capital Markets said it was worth about $21 billion.)

Still, unlike Chinese companies, Saudi Arabia is currently more interested in securing stakes — guaranteeing future supply of critical minerals — rather than buying outright and then operating the assets.

Saudi Arabia set down a marker earlier this year when it announced the new firm to invest in mining assets globally, with $3.2 billion for initial investments. The country holds an annual mining conference, which this year featured the CEO of the world’s biggest mining company, BHP’s Mike Henry, as well as the chairman of no. 2 producer Rio Tinto — a major step up from past speakers. CEOs from other top miners are expected to attend next year.

For mining companies looking for funds, the US and Canadian governments’ recent crackdown on Chinese investment in key metals companies has changed the investment landscape. That’s given an opening to Middle Eastern countries like Saudi Arabia to fill the gap.

“Everything’s changed,” said Friedland.

“The American government has an ‘ABC’ policy: Anything But China. So the American government instead goes to rulers in the Middle East and says, “You should be giving the African people an alternative for financing mines in Africa. Recycle some of those petro-dollars.”

Source: Mining.com