Gold consumption over the last decade has definitely moved East. With respect to consumption, gold purchases have quadrupled each year since the 1970’s while production has trebled. Today, gold is more than just a store of value. More than any other time in history gold is being used in a variety of ways and has diversified its end-uses and market drivers. One can assess gold consumption by looking at four main uses, namely; jewellery, as a central bank tool, for investment, and in technologies.
Jewellery
Asia, China, followed by India, dominate with respect to consumption of gold for jewellery. While this sector has declined in recent decades, jewellery still makes up around 50% of total gold demand with China and India accounting for 50% of this.
Central Banks
With respect to demand by central banks, the 2008 financial crisis prompted a reappraisal of the role of the yellow metal and its relevance. Overall, emerging market central banks have increased their official gold purchasing to try stabilise their currencies, while developed economies have stopped selling, particularly in Europe. This phenomenon has helped bolster gold demand and create a sense of urgency in gold purchases.
Investment
In terms of investment demand, we have seen this play out over the last few months and has become even more pronounced since the COVID19 outbreak. Investment demand has helped gold break through the $2,000 barrier on the 18th of August 2020. Modest allocations of gold in a diversified portfolio has proven to protect and enhance the performance of investments. However, according to the World Gold Council, the annual volume of gold bought by investors has increased by 235% in the last three decades.
Technology
In terms of technology, gold has for a long time been a central commodity for electronics. Today, with nanotechnology, there have been a plethora of new uses for gold in medicine, engineering and environmental management. One study, appearing in Medical News Today Journal, showed that gold slowed the growth of certain cancer cells by as much as 46.9% compared to platinum-based therapies. In 2019, using a gold nanoparticle instead of an inactivated virus, scientists at the Fred Hutchinson Cancer Research Centre safely delivered gene-editing tools in lab models of HIV and inherited blood disorders.
