This morning The Real Asset Company was invited by the World Gold Council to go through their latest report: The Direct Economic Impact of Gold.
The report is designed to set the baseline in future discussion around the value the gold industry brings to both the national and international economic scene.
- In total, the WGC report states that in 2012 the gold industry generated over $210 billion in to the world’s economy in 2012. This is the equivalent GDP to the city of Beijing or the Republic of Ireland.
- Of this $210 billion, $78.4 billion is contributed to the top 15 mining economies in large scale mining activities. Whilst the largest mining economies are China and Russia, gold mining accounts contributes very little to their GDP. For instance China is estimated to derive the small proportion of GVA from its gold mining sector, at 0.2%. Instead, smaller mining nations such as Papua New Guinea where gold mining was valued at $2 billion in 2012, saw a much greater contribution of 15% to the country’s GDP.
- In terms of gold exports from mining countries, Tanzania’s account for 36.3% of their national merchandise exports.
- The average amount of economic value that can be derived per ounce of mined gold is $1,139. It ranges from $946 in China to $1,352 in Peru.
- Of course mines contribute a significant amount to the economy in terms of employment and tax. The WGC estimate 527,900 individuals are employed in the gold mining industry, of which South Africa employs 145,600. The average GVA per worker across the industry accounts is estimated to be $295,000. However, this figure varies widely from $841,800 in the US to US$39,600 in South Africa.
- Recycled gold accounts for a significant proportion of gold supply, although in 2013 this has fallen significantly thanks to the fall in the gold price making it less attractive for individuals to sell their gold. In 2012, recycled gold made up 36% of global supply. GVA from this was $25 billion, the third largest contributor to gold’s economic impact in the global economy.
- Interestingly, the GVA per tonne of recycled gold is less than half of that of gold produced from mines, $16 billion to $36 billion.
- Of course, we must not forget the other side to this equation – demand. The report states that in 2012, the 13 largest gold consuming countries accounted for 75% of gold used for fabrication and 81% of gold used for final consumption (i.e. jewellery or small bars and coins).
- Jewellery is where gold really proves its worth in terms of GVA, in 2012 it contributed $70 billion to global GDP. In 2012, jewellery demand accounted for 43% of total gold demand, compared to 35% investment demand.
- A lesser contributor but one which is likely to keep on growing is the direct GVA attributable to gold’s use in technology. In 2012 this was just $4 billion, the US accounted for 56% of third GVA.
- The report focussed heavily on the gold mining industry, but only 75% of the world’s mining suppliers were considered. As the WGC notes, ‘the total economic contribution of gold is likely to be greatly considerably greater than this study of large scale gold mining indicates, if all global gold mining activity were able to be included.’
