GFMS GOLD SURVEY 2015

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GFMS GOLD SURVEY 2015
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GFMS GOLD SURVEY 2015

BY:

Rhona O’Connell, Head of Metals Research & Forecasts

William Tankard, Manager, Mining
Cameron Alexander, Manager, Regional Demand
Andrew Leyland, Manager, Regional Demand
Ross Strachan, Manager, Regional Demand
Matthew Piggott, Lead Analyst
Saida Litosh, Senior Analyst
Sudheesh Nambiath, Senior Analyst
Janette Tourney, Senior Analyst
Johann Wiebe, Senior Analyst
Ling Wong, Senior Analyst
Erica Rannestad, Senior Analyst
Samson Li, Senior Analyst
Sara Zhao, Analyst
Natalie Scott-Gray, Analyst
Dante Aranda, Analyst
Gregory Rodwell, Analyst
John Bedi, Analyst
Beverley Salmon, Customer Relationship Manager
Milo Troman-Taylor, Design and Layout

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TABLE OF CONTENTS
1. Summary and Price Outlook 8
• Supply 10 • Demand 11 • Price and Market Outlook 14

2. Investment 15
• Overview 15 • Exchange Traded Funds 20 • Activity on Commodity Exchanges 22
• Over the Counter Market 26 • Physical Bar Investment 26 • Official Coins 29
• Medals and Imitation Coins 31

3. Mine Supply 32
• Mine Production 32 • Production Costs 45 • Producer Hedging 50

4. Supply from Above-Ground Stocks 52

• Overview 52 • Scrap Supply 54

5. Official Sector 60
• Overview 60 • Sales 61 • Purchases 62

6. Gold Bullion Trade 64

• Indian Sub-Continent 64 • East Asia & Oceania 65 • Middle East 67
• Europe 68 • North America 70

7. Fabrication Demand 71
• Carat Jewellery 71 • Electronics 93 • Dentistry 95
• Other Industrial and Decorative Uses 96

8. Appendices 98

FOCUS BOXES

• Gold Survey 2015: Supply-Demand Methodology 9

• Investment in Commodities 18
• Gold Price Correlations 19
• Production and Consumption-Weighted Gold Prices 24
• Corporate Activity in 2014 44
• E-Scrap Supply 59
• Russia vs Ukraine 63
• Swiss Gold Bullion Trade 69
• Gold Leasing in China Inflates Imports and SGE Turnover 78
• Consumption and per Capita Demand (Excluding Bank Activity) 82
© THOMSON REUTERS 2015.

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ISSN: 2055-1797 (Print)

ISSN: 2055-1800 (Online)

FORTHCOMING RELEASES

• GFMS COPPER SURVEY 2015 14th April 2015

• GFMS GOLD SURVEY 2015: Q1 UPDATE AND OUTLOOK 28th April 2015
• WORLD SILVER SURVEY 2015 6th May 2015
• GFMS PLATINUM & PALLADIUM SURVEY 2015 14th May 2015
• GFMS GOLD SURVEY 2015: Q2 UPDATE AND OUTLOOK July 2015
• GFMS COPPER SURVEY 2015 - UPDATE October 2015
• GFMS GOLD SURVEY 2015: Q3 UPDATE AND OUTLOOK October 2015
• GFMS GOLD SURVEY 2015: Q4 UPDATE AND OUTLOOK January 2016

ACKNOWLEDGEMENTS

The estimates shown in the GFMS Gold Survey for the main components of mine production, scrap, fabrication and
investment demand are calculated on the basis of a detailed supply/demand analysis for each of the markets listed
in the main tables. In the vast majority of cases, the information used in these analyses has been derived from visits
to the countries concerned and discussions with local traders, producers, refiners, fabricators and central bankers.
Although we also make use of public domain data where this is relevant, it is the information provided by our contacts
which ultimately makes this GFMS Gold Survey unique. We are grateful to all of them.
NOTES
UNITS USED

troy ounce (oz) = 31.1035 grammes

tonne = 1 metric tonne, 32,151 troy ounces
carat = gold purity in parts per 24

• Unless otherwise stated, US dollar prices and their equivalents are for the PM fix of the London Bullion Market.
• Unless otherwise stated, all statistics on gold supply and demand are expressed in terms of fine gold content.
• Throughout the tables, totals may not add due to independent rounding.

TERMINOLOGY

“-” Not available or not applicable.

“0.0” Zero or less than 0.05.
“dollar”, “$” US dollar unless otherwise stated.
“Identifiable Investment” The sum of physical bar investment and all coin fabrication, plus the net change
in Exchange Traded Fund (ETF) holdings.
“Jewellery Consumption” Fine gold content of all new jewellery (i.e. does not include exchanged or second-
hand pieces) sold at the retail level. It is calculated as being equal to jewellery
fabrication, plus imports less exports (i.e. the net inflow of jewellery). An
adjustment is also made for retail stock movements.
“Physical Surplus/ Deficit” The difference between the supply of new and secondary gold to the market in
a calendar year and measurable demand for physical gold. This excludes opaque
Over the Counter (OTC) investment in gold and commercial bank transactions.
“Net Balance” The physical surplus or deficit of gold with the addition of highly visible ETF and
exchange stock inventory changes.
“Retail Investment” Identifiable net investment in physical gold in bar and coin form. The bars may
or may not conform to ‘London Good Delivery’ status but will be in a form that is
commonly traded in the country of origin. Coins include all official and unofficial
coins and medallions, with and without a face value.
 GFMS GOLD SURVEY 2015

1. SUMMARY AND PRICE OUTLOOK

After a turbulent 2013, last year saw the gold market Excluding impairment charges costs fell 2.3% to
stabilise with most aspects of supply and demand $1,208/oz due to favourable exchange rate movements
SUMMARY AND PRICE OUTLOOK

adjusting to lower prices. The end of the US Federal and the ramping up of new lower cost mines. The
Reserve’s quantitative easing programme and a change industry also saw the average head grade of processed
in market focus to potential rate hikes and a stronger US ore increase for the first time since our records began in
dollar remained the driving force behind gold prices. 2000, and likely the first time since the 1970s.

In dollar terms gold has traded lower on the back of its
lessening appeal as an asset class, with lower perceived
risk from systemic financial instability and continued
low inflationary pressures. Outside the United States it
has been a different story, however, with Europe finally
embarking on its own quantitative easing programme
in 2015 and a slowdown in emerging markets and
resource‑based economies undermining many currencies
against the dollar.
Lower prices over the past 24 months have also had an
impact on the supply side of the market with scrap supply
down from a peak of 1,728 tonnes in 2009 to 1,125 tonnes
in 2014, while output from the mining industry increased
2.3% in 2014 to 3,133 tonnes, as All‑in‑Costs fell 25% to
$1,314/oz, owing primarily to lower impairment charges.
Meanwhile physical demand consolidated after the
excesses of 2013. Importantly some themes remain in
place, notably increased 18-carat jewellery purchases at
the expense of higher carat material. The more volatile
bar market (which is measured on a net consumption
basis) saw an expected decline in demand as the
investment case for gold weakened, but remained at
much higher levels than pre-financial crisis with an
estimated $34bn spent against $5.3bn in 2007. Likewise
the coin market witnessed its lowest level of production
since 2007 with 251 tonnes of gold consumed in coins,
down from a record 380 tonnes in 2013. Looking at the
supply-demand balance as a whole the reduction in
purchases in bars, coins and investment-grade jewellery
helped to push the market into a 204 tonne physical
surplus for the year.

WORLD GOLD SUPPLY AND DEMAND

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Supply
Mine production 2,561 2,496 2,499 2,429 2,612 2,742 2,846 2,875 3,061 3,133
Scrap 903 1,133 1,006 1,352 1,728 1,713 1,675 1,677 1,287 1,125
Net Hedging Supply -92 -434 -432 -357 -234 -106 18 -40 -39 103
Total Supply 3,372 3,195 3,072 3,424 4,106 4,349 4,539 4,513 4,310 4,362

Demand
Jewellery 2,722 2,302 2,426 2,308 1,819 2,033 2,034 2,008 2,439 2,213
Industrial Fabrication 449 480 487 471 422 476 468 426 419 400
...of which Electronics 294 325 331 318 283 333 330 295 289 279
...of which Dental & Medical 62 61 58 56 53 48 43 39 36 34
...of which Other Industrial 92 94 98 97 86 95 95 92 93 87
Net Official Sector -663 -365 -484 -235 -34 77 457 544 409 466
Retail Investment 416 428 436 916 830 1,221 1,556 1,343 1,775 1,079
...of which Bars 261 236 236 659 548 934 1,230 1,039 1,394 829
...of which Coins 155 192 200 257 283 287 326 304 380 251
Physical Demand 2,923 2,845 2,864 3,460 3,038 3,807 4,515 4,321 5,041 4,158
Physical Surplus/Deficit 448 350 208 -36 1,068 542 25 192 -732 204
ETF Inventory Build 208 260 253 321 623 382 185 279 -880 -160
Exchange Inventory Build 29 32 -10 34 39 54 -6 -10 -98 1
Net Balance 212 58 -35 -391 406 106 -154 -78 246 363
Gold Price (London PM, US$/oz) 444.45 603.77 695.39 871.96 972.35 1,224.52 1,571.52 1,668.98 1,411.23 1,266.40
Source: GFMS, Thomson Reuters
Totals may not add due to independent rounding. Net producer hedging is the change in the physical market impact of mining companies’
gold loans, forwards and options positions.

8

GOLD SURVEY 2015: SUPPLY-DEMAND
METHODOLOGY
Physical surpluses and deficits in the gold market are less
relevant than those in the industrial metals, owing to the
available level of above ground gold stocks. We calculate
that some 183,600 tonnes of gold have been produced in
human history and much of this is still in circulation. For
analysts of the gold market this generally leads to the
assumption that rather than annual supply and demand
determining the price, it is the price that determines how
much new physical supply and demand are attracted to
the market each year. The price itself is determined by a
number of changing factors, the most important relates
to demand for gold as an asset class and the Over-the-
Counter (OTC) market.
Not all of the 183,600 tonnes of gold is near-to-market,
however. The majority of gold used in electronics before
the 21st century would not have been recycled and
ended up in landfill. Likewise much of the above ground
stockpile of jewellery, bars and coins will have been lost
over time or taken to the grave. Importantly, however,
there remains a liquid stock of near-to-market material
used as a store of value that is many times annual
physical demand.
This includes not just bars and coins held by individuals
and commercial banks but also large tonnages of
jewellery primarily bought for investment purposes.
Inventories held by commercial banks have also been
supplemented in the past by leasing of central bank
stockpiles, themselves estimated at 30,900 tonnes,
although a re-assessment of counterparty risk has seen
this lessen in recent years. When assessing the size of
new demand on an annual basis it is important not to
confuse the volume of shipments of these above ground
stocks with new physical demand.
The existence of large volumes of OTC trade and
near‑to‑market inventory means that the annual physical
surplus or deficit in the market may not directly impact
the price. It will, however, impact upon lead times,
premia and margins across the value chain. The addition
of a physical surplus / deficit in the GFMS Gold Survey
allows us to remove the pre-2014 residual balancing
line item of net-implied investment / net-implied
disinvestment.
Changes in known stock levels are also included in the
supply-demand balance in order to account for the
highly visible moves in Exchange Traded Fund (ETF)
holdings and published inventory changes at gold futures
exchanges. It is important to note that the resulting Net
GFMS GOLD SURVEY 2015
Balance does not include changes in OTC investment or
disinvestment. Changes in ETF holdings are a helpful
guide to investment trends in gold, but ultimately only
make up a small part of the market.
SUMMARY AND PRICE OUTLOOK
The volumes of gold transferred in 2014, as reported by
London Bullion Market Association clearing members,
totalled approximately 157,000 tonnes, with a value of
$5.9 trillion. This trade, often between commercial banks
themselves, may result in the physical shipment of gold,
or merely a paper reallocation of bars within a vault.
Even the above figure does not represent the total value
of gold transactions globally. As a rule of thumb, the net
transfers are roughly one-third of the total loco London
market volume. The changing dynamics of the market
and the proliferation of trading centres in the Far East
in particular mean that loco London trade is now closer
to 70% of the world total as against its historical share
of 90%. This share changed during 2014 in particular
and we can therefore assume an average market share
of perhaps 80% for the year as a whole. This leads to
turnover of roughly 589,000 tonnes for the year overall,
with a value of approximately $22 trillion, or roughly
188 times mine production. This ample liquidity (most of
the time) is why, like most currencies, gold usually trades
at full carry.
Thomson Reuters’ supply and demand data are collected
and collated by our team of research analysts based
in Australia, China, Europe, India and the USA within
an extensive field research programme which involves
interviewing stakeholders across the supply chain in
every market and utilising the unique data sets available
to us after researching the market continuously since
1967. The full datasets and mine cost profiles are
available exclusively on Thomson Reuters Eikon.
ABOVE GROUND STOCKS (END 2014)
100000
90000
80000
70000
60000
Tonnes
50000
40000
30000
20000
10000
0
Jewellery Central Bank Bars and Coins Other Fabrication
Holdings and Unaccounted
Source: GFMS, Thomson Reuters
9
 GFMS GOLD SURVEY 2015

SUPPLY IN 2014 to greenfield exploration expenditure. Furthermore,

producers are focused on optimising portfolios and
——Mine production increased for a sixth successive implementing operational improvements at existing
year in 2014, rising by 2% to a record volume of mines in order to better cope with a gold price that lies
3,133 tonnes. beneath the average All-in Cost of production, and far
SUMMARY AND PRICE OUTLOOK

——All-in Costs fell by 25% to $1,314/oz last year, as below estimates of an incentive price required for the
impairment charges fell back from heightened exploration and development engine to restart in earnest.
levels in 2013. All-in Costs, excluding writedowns, As such, in terms of both volumes and profitability, the
averaged $1,208/oz. mining industry remains in a precarious position.
——Producer hedging generated 103 tonnes of
accelerated supply in 2014, only the second year of Producer hedging activity switched to the supply side
net producer hedging since 1999. of the market last year, with net hedging of 103 tonnes.
——Global scrap supply retreated 13% in 2014 to a This was only the second such outcome since the 1990s.
seven-year low of 1,125 tonnes, chiefly as a result of a The impetus behind this development was a move by two
weaker dollar gold price and an improved economic producers, Polyus Gold International and Fresnillo plc,
environment. both of which entered into new hedge positions to more
proactively manage cash flows associated with planned
Global mine production increased by 2% last year to investments. In addition to these two companies,
reach an all-time high of 3,133 tonnes. This marked the several producers responded to the US dollar rally by
sixth consecutive year of production growth, prolonged opportunistically entering into modest domestic currency
by the legacy of investments made during years of denominated gold hedges (most notably A$ based). One
higher prices. Aside from China, where strong output of the factors that has helped magnify the impact of this
growth was broad-based, many of the headline increases moderate swing to net hedging has been the fact that the
in many of the world’s largest producing countries producer hedge book has in recent years been run down
came from large projects that had either been recently to exceptionally low levels. In the event that the hedge
commissioned properties ramping up production, such as book is expanded further in future years, an enlarged
at Detour Lake, Kibali, Oyu Tolgoi and Tropicana, or due delivery profile would necessitate progressively higher
to significant expansions, such as at Kupol. In contrast, volumes of gross hedging to bring about, for example,
some of the largest mine site losses came at more mature 100 additional tonnes of net hedging.
operations, such as Barrick’s Cortez and Newmont’s
Nevada Complex, both in the United States. Global scrap supply declined by almost 13% last year to
an estimated 1,125 tonnes, broadly in line with the 10.3%
Despite these additions, global production growth drop in the dollar gold price. The fall sent scrap supply
slowed in 2014 and we expect that 2015 will see to a seven-year low; contributing just 26% of world
production growth halt. Behind this expectation, capital supply, compared to 42% during the peak in 2009. The
investment in new project development remained industrialised world recorded some of the greatest falls,
constrained during 2014, while there were also cuts as lower gold prices and improved economic outlook

WORLD GOLD SUPPLY SUPPLY FROM ABOVE-GROUND STOCKS

6000 Net Producer Hedging Real Gold Price 2000 2000 Net Official Sector Sales Real Gold Price 2000
Net Official Sector Sales Net Producer Hedging
5000 Scrap Mine Production Scrap
1500 1500 1500
Constant 2014 US$/oz

Constant 2014 US$/oz

4000
Tonnes

Tonnes

3000 1000 1000 1000

2000
500 500 500
1000

0 0 0 0
2005 2007 2009 2011 2013 2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters Source: GFMS, Thomson Reuters

10

constrained liquidations. North America and European
flows declined 22% and 17% respectively, with the former
recording a notable slow down in e-waste recycling.
Jewellery scrap from India is estimated to have declined
26% to a three-year low, while recycling in the Middle
East retreated by 15% in 2014, largely as a result of the
weaker price profile and further erosion of near-to-market
stockpiles. The major outlier last year was East Asia
where scrap volumes from the region were estimated
to have registered a 1% rise. The annual increase, while
modest, was entirely due to a 12% jump in Chinese
scrap volumes, where weak consumer demand and an
oversupply of inventory led to a sharp rise in supply chain
liquidations.
DEMAND IN 2014
——Total physical demand fell by 18% last year, to a
four-year low of 4,158 tonnes, as all areas, with
the exception of official sector purchases, recorded
year‑on-year declines.
——Despite lower gold prices in US dollar terms, jewellery
demand dropped by 9% in 2014, largely on the back
of a sharp decline in Chinese offtake.
——Industrial fabrication continued to slide last year,
falling by 4% to 400 tonnes, the lowest level since
2003, due to weakness in all major sectors.
——Total Identifiable Investment, which includes physical
bar investment, all coins and ETF inventory build,
increased by 3%, primarily due to a slower pace of
ETF selling last year. Meanwhile, retail purchases of
gold bars and coins slumped by nearly 40%, largely
due to a lack of interest from key Asian markets.
——Net official sector buying rose by 14% to 466 tonnes,
which was the second highest annual total since
1964.
WORLD GOLD DEMAND
Net Official Sector Purchases Real Gold Price
6000
New Producer De-Hedging
Retail Investment*
5000
Industrial Fabrication
Jewellery
4000
Tonnes
3000
2000
1000
0 400
2005 2007 2009 2011 2013
* Retail Investment refers to physical bar and coin investment.
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
Total physical demand slumped by 18% last year, to
the lowest level since 2010. The chief driver of last
year’s fall was the 9% decline in jewellery fabrication to
2,213 tonnes. This was largely down to a hefty decline in
jewellery fabrication demand in China, which suffered a
SUMMARY AND PRICE OUTLOOK
33% year-on-year drop, as a softer economy and a drop
in sentiment reduced investment-related purchases.
Moreover, the market needed some more time to digest
the extra gold consumed during the buying frenzy
witnessed in 2013. It should be emphasised, though,
that demand was exceptionally high in 2013 and despite
a marked contraction last year’s figure represented the
second highest level ever recorded in China.
Moreover, the comparative analysis between 2014 and
2012, which is deemed to be a more ‘normal’ year for
Chinese gold demand, reveals that jewellery fabrication
in 2014 was still up 7% on the 2012 level. It is interesting
to observe that excluding China from the global offtake
data reveals that jewellery fabrication demand in the
rest of the world jumped by 6%, predominantly driven
by a rebound in demand in India and a modest recovery
in some parts of the developed world, particularly the
United States and some European countries.
After three consecutive years of decline, jewellery
fabrication in India returned to growth last year, rising
by 14% year-on-year to a record high of 690 tonnes, and
hence restoring its status as the world’s largest jewellery
manufacturer. Last year’s result was primarily down to
a strong rebound in the second half of the year, thanks
to restocking on the back of lower gold prices and falling
local premia. In addition, the relaxation of the regulation
that allowed Premier and Star trading houses to import
gold under the 80:20 scheme resulted in a higher
availability of the metal, thus putting downward pressure
on local premia. Meanwhile, gold jewellery fabrication
JEWELLERY FABRICATION AND IDENTIFIABLE INVESTMENT
2000 3000 2000
Jewellery Fabrication Real Gold Price
Identifiable Investment*
2500
1600 1600
Constant 2014 US$/oz
Constant 2014 US$/oz
2000
Tonnes
1200 1500 1200
1000
800 800
500
0 400
2005 2007 2009 2011 2013
*Identifiable Investment is the sum of physical bar investment, official coins,
medals & imitation coins and net ETF inventory build.
Source: GFMS, Thomson Reuters
11
 GFMS GOLD SURVEY 2015
in the United States posted a modest recovery, on the
back of improving economic sentiment and lower gold
prices. European jewellery demand jumped by 10% to
the highest level since 2008, largely driven by higher
manufacturing in Turkey and a return to growth in Italy.
SUMMARY AND PRICE OUTLOOK
That said, the above gains were somewhat alleviated by
losses in some other key markets across East Asia and
the Middle East.
Industrial fabrication saw a 4% reduction last year,
mainly on the back of the continued decline in global
electronics demand, which was dragged down by weaker
economic conditions in some parts of the world and
ongoing substitution. Demand for gold used in dental
and other industrial & decorative applications continued
to suffer from substitution and thrifting despite the lower
gold price environment.
Total identifiable investment, which includes physical
bar investment, all coins and ETF inventory build, rose
by 3% in 2014, to 919 tonnes. While this is considerably
lower than the record high of 1,741 tonnes of 2011, last
year’s result was still elevated by historical standards.
A close analysis of individual components of our
identifiable investment figure reveals that the 3% rise in
tonnage terms was primarily down to the smaller scale of
ETF selling registered last year. Net outflows from gold
ETFs totalled 160 tonnes in 2014, against 880 tonnes a
year earlier.
This was thanks to a broad stabilisation in the first
quarter of the year, on the back of renewed concerns over
global economic recovery and increased geopolitical
tensions, and less aggressive liquidation in the following
quarters. Demand for gold bars and coins registered
a nearly 40% slump last year, falling to an estimated
1,079 tonnes. This was largely attributable to waning
investor appetite from key Asian markets, particularly
PHYSICAL SURPLUS / DEFICIT OF GOLD
1200
Real Gold Price
1000
800
600
400
Tonnes
200
0
-200
-400
-600
-800
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
12
from China and India, which together accounted for more
than half of the 2014 drop.
Physical bar demand in China dropped 53%, to the
lowest level since 2010, as a result of anti-corruption
policy measures introduced by the government, slowing
economic activity and lower price expectations. In
addition, exceptionally high demand in 2013 after
the sudden price crash also contributed to weaker
investment demand last year. Purchases of gold bars in
India plunged by an even more remarkable 59% in 2014,
to hit the lowest level since 2005. High and volatile local
premia, lower price expectations and the shortage of
metal on the back of gold import restrictions introduced
by the government in 2013 were among the key factors
that contributed to last year’s decline in activity. It should
be noted, though, that despite a marked drop in our
global retail investment figure last year, it was still the
fifth highest on record.
For the first time since the 1960s, official sector activity
recorded a fifth successive year of net purchases in 2014.
Indeed, net buying rose by 13% to 466 tonnes, which
was the second highest annual total since 1964. Critical
to the upturn in purchases were acquisitions by Russia,
and to a lesser extent Kazakhstan. Russia was already
the biggest reported purchaser in 2013 but it more than
doubled its pace, acquiring 173 tonnes in 2014. This was
fuelled by geopolitical tensions that stemmed from the
Ukraine crisis and which saw strong buying from Russia
in the last nine months of 2014. Underpinning this, as
well as substantial purchases from Iraq, was an effort to
support the domestic the currency, and in Russia’s case
a desire to diversify reserves away from the dollar. The
high net purchase figure was supported by no major sales
from signatories to the Central Bank Gold Agreement
which saw the fourth round begin in September.
CHINA REMAINS WORLD’S LARGEST GOLD CONSUMER
2000 1500
China
India
1250
1600
Constant 2014 US$/oz
1000
Tonnes
1200 750
500
800
250
400 0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
*Demand consists of jewellery fabrication, industrial fabrication
and retail investment
 GOLD PRICE & TRADE-WEIGHTED DOLLAR (INVERTED) - DAILY

75
1400
DXY
Gold
80
16 1350
15
17
85
12 1300
20
22
14 21

11
90 2 18 19
13
4 10 26 1250
5
25
6

3 23
8
95 27
24 1200

(Inverted, 1 January 2014 =100)

Trade Weighted Dollar
9
Gold London p.m. Fix, US$/oz

7
100
1150
1

105
1100
Jan 14 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 15 Feb Mar 15

1 (03/01/14): ISIS occupies
Fallujah, city near Baghdad.
Tension escalates in the region.
Ukraine crisis adds to geopoliti-
cal risk premium
2 (29/01/14): A further $10bn
taper is announced
3 (11/02/14): US debt ceiling
raised through to March 2015,
technical default averted
4 (22/02/14): President
Yanukovych leaves Ukraine
5 (19/03/14): Additional taper
takes stimulus down to $55bn
per month
6 (15/04/14): Gold short-covering 10 (18/06/14): Fed reduces further
rally meets profit taking
followed by heavy technical
sales amid improving US
economic sentiment
7 (25/04/14): Russia threatens
military exercise along Ukraine
border
8 (01/05/14): U.S April NFP rose
304,000
9 (21/05/14): India eases gold
import rules
bond purchases to $15bn of
MBS and $20bn per month of
long dated Treasuries
11 (02/07/14): British MPs urge
watchdog to probe allega-
tions of price-rigging in gold
12 (11/07/14): CME cuts gold
futures margins by 10%
13 (17/07/14): Malaysian commer-
cial airliner crashes in Ukraine.
Geopolitical tensions increase
14 (01/08/14): Argentina defaults
on its debt
15 (14/08/14): Russian President
Putin plays low on crisis
in Ukraine at a speech in Crimea
16 (04/09/14): ECB cuts refinanc-
ing rates to 0.05% and
overnight deposit to -0.20%
17 3rd and 4th week October:
Indian festival demand reaches
peak for the year
18 (07/11/14): Russian rouble
weakens 13% in a week to
lowest on record
19 (28/11/14): India’s gold import
rule 80:20 scheme abolished
20 (30/11/14): Swiss referendum
gets negative vote
21
(05/12/14): November US NFP
registered at 321,000
22 (23/12/14): US Q3 GDP
grows at 5%
23 (02/01/2015): Weaker-than-
expected US manufacturing
data. Speculation on a delay of
a rate hike begins to build
24 (15/01/2015): SNB abandons
cap on the franc
25 (26/01/2015): Leftist leader
Alexis Tsipras wins Greek
parliamentary election
26 (06/02/2015): Stronger-than-
expected U.S. jobs data.
US Dollar rises
27 (06/03/2015): Upbeat US
non-farm payroll data fuels
speculation of an earlier rate
hike than previously anticipated
GFMS GOLD SURVEY 2015

Source: GFMS, Thomson Reuters

13
SUMMARY AND PRICE OUTLOOK
 GFMS GOLD SURVEY 2015
PRICE AND MARKET OUTLOOK
Until the beginning of April 2015 the gold price, as with
almost all asset classes, has been second-guessing when
the Federal Reserve will increase rates and reacting to
SUMMARY AND PRICE OUTLOOK
movements in the dollar. Gold as an asset class is to the
fore and this has seen the price suffer as higher rates and
a healthy US economy imply better returns from fixed
income and equity markets.
There has been much debate as to how low gold could
go in a rising interest rate environment and whether we
will see a return to pre-crash price levels in the region of
$600‑700/oz. Those on the mining side of the market
will point out that margins are unsustainably thin for
the current industry at $1,200/oz and investment in new
capacity has already been heavily curtailed. In gold’s
unique position, with huge above ground stockpiles,
this becomes less of a support than it would be in
industrial metals markets. Instead we view price support
as coming from a structural change in demand that
developed since 2008; not in Western financial markets,
but in physical demand from price sensitive markets
across Asia. Moreover, the response of these markets
has already been tested in Q2 2013 when, with prices
averaging $1,400/oz, there was almost an additional
400 tonnes of demand from China and India alone.
Leading to shortages of physical supply and spikes in
premia. At $1,000/oz the purchasing power of physical
demand becomes even more pronounced, and below
this level there is a danger that a sustained disconnect
would develop between prices and premia, in our view. In
short, we see enough physical demand at $1,000/oz to
see unsustainable drawdowns in near-to-market above
ground stockpiles.
Sustained falls below $1,000/oz are not our base
case scenario, however. The continued prevalence
REAL AND NOMINAL GOLD PRICES
2000 Real Price (Constant 2014)
Nominal Price
1500
US$/oz
1000
500
0 50
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Source: GFMS, Thomson Reuters
14
of quantitative easing programmes outside the US,
underlying geopolitical risk in Eastern Europe, the Middle
East and the South China Sea, coupled with the desire for
physical assets in times of not just country level crises,
but also for family level savings, rainy day planning and
tax avoidance should all support purchases.
There appears to be less upside risk in the market at the
moment given the relative health of the US economy
versus Europe and Emerging Markets. It will take a
shock to the market to push prices north of $1,500/oz in
our view, with the most likely candidates being a major
regional conflict, reaction to monetary policies targeting
ingrained deflation, or, conversely, a return to inflationary
pressure.
In our base case forecast gold is set to average 
$1,170/oz in 2015. For 2016 we expect modest strength,
with a base case of $1,250/oz as buying in Asian markets
picks up and institutional investment demand in these
markets also serves to offset the recent decline in OTC
gold demand from the West. For the supply side of the
market this scenario is likely to see the continuation of
a constrained investment environment and lower mine
output by 2016. Scrap supply should also be close to
levelling off and hedging is likely to remain a feature,
albeit not a defining one, of the market.
Turning to demand we expect jewellery consumption
to continue to grow at a modest pace while retail
investment in bars and coins is unlikely to return to
the peaks we saw in 2013. It is not going to disappear,
however, and we expect that over 1,000 tonnes of gold
a year will continue to be stockpiled by bar and coin
investors in the yellow metal. Finally we continue to
forecast purchases from the official sector, although
these will be lower given declines in energy prices since
late 2014.
INDEX OF GOLD PRICE IN MAJOR CURRENCIES
400
Rupee
350 Euro
Dollar
Index, 2nd January 2007= 100
300 Yen
250
200
150
100
Jan-07 Jan-09 Jan-11 Jan-13 Jan-15
Source: GFMS, Thomson Reuters
 GFMS GOLD SURVEY 2015

2. INVESTMENT
• Total Identifiable Investment, which includes physical bar
investment, all coins and ETF inventory build, posted a
modest 3% increase in 2014, to reach 919 tonnes.
• If measured in value terms, however, total identifiable
investment dropped by 8% to approximately $37 billion.
in the June-July period. Investor interest was fuelled by
gold’s appeal as a safe haven, in the wake of renewed
concerns about slowing global economic recovery and the
escalation of geopolitical tensions.
OVERVIEW

• The muted year-on-year increase in the tonnage figure
was entirely down to the smaller scale of ETF selling in
2014 in comparison to the previous year. Net outflows
from gold ETFs slowed considerably to 160 tonnes last
year. This was due to a broad stabilisation in the first
quarter and less marked liquidation in the following
quarters.
• Retail purchases of bars and coins posted a major slump
The key theme driving investor sentiment in the gold
market during 2014 revolved around global monetary
policy, particularly in light of policy tightening in the
United States, along with additional stimulus measures
from the world’s other major central banks. On the
one hand, improving economic sentiment in the United
States and the shift in US monetary policy, following the
announcement by the Federal Reserve of the first round
of tapering in December 2013, put significant pressure

last year, dropping by nearly 700 tonnes from the all-time
high registered a year earlier. This was due to a waning
investor appetite from key Asian markets, which was, in
turn, attributable to various government policies aimed
at reducing gold demand, and lower price expectations,
which saw many investors waiting on the sidelines.
Despite the sharp drop, the absolute level remained
elevated by historical standards and was still the fifth
highest on record.
INVESTMENT
on gold, restraining investment demand. However, at
the same time, intensifying concerns over the global
economic recovery, loosening of monetary policy in other
major advanced and some emerging countries, and
geopolitical risk factors helped to underpin investment
demand for gold, particularly in the first quarter of the
year. These factors also helped to explain, to some
extent, a modest increase in our total identifiable
investment figure for 2014 as a whole.

• The OTC market on balance saw modest net buying in
2014, helped by opportunistic buying in Asia, although
the overall level of activity was notably lower than in
2013.
• While investor activity in the futures markets fluctuated
considerably over the course of the year, managed money
net long positions on COMEX registered a robust increase
of some 200 tonnes for the year as a whole. This was
driven by short-covering, as well as some fresh investor
interest, particularly in the first quarter of the year and
Total identifiable investment demand for gold rose
by just 3% to 919 tonnes last year. While this pales
by comparison with the record high of 1,741 tonnes of
2011, it should be emphasised that last year’s result still
remained elevated by historical standards. To put this
into perspective, for the period between 2000 and 2007
investment demand averaged 477 tonnes, before the
financial crisis changed investors’ attitude towards risk to
the extent that average investment demand from 2008
to 2013 jumped to 1,425 tonnes. It is also interesting to
observe that last year’s result was achieved in spite of

IDENTIFIABLE INVESTMENT*

(tonnes) 2010 2011 2012 2013 2014

Retail Investment 1,221 1,556 1,343 1,775 1,079
of which bars 934 1,230 1,039 1,394 829
of which coins** 287 326 304 380 251
ETF Inventory Build 382 185 279 -880 -160
Total Identifiable Investment 1,603 1,741 1,622 895 919
Indicative Value*** 63 88 87 41 37
* Excludes investment activity in the futures and OTC markets.
**Official Coins and Medals & Imitation Coins.
***Indicative value calculated on an annual basis using annual average gold prices.
Source: GFMS, Thomson Reuters

15
 GFMS GOLD SURVEY 2015
the 40% drop in bar and coin demand, which accounts
for the larger portion of our identifiable investment
figure. This was entirely thanks to a marked slowdown in
selling from gold ETFs recorded last year. Combined ETF
holdings declined by 160 tonnes in 2014, in comparison
to 880 tonnes a year earlier, representing an 82% year-
on-year drop. Nonetheless it was the second year of ETF
redemptions, after ten years of increases.
The first half of the year saw a broad stabilisation in
demand for gold ETFs, particularly in the first three
months, when total holdings fell by fewer than three
tonnes and February recorded a month-on-month
increase for the first time in more than a year. This was
driven by fresh concerns about slowing global economic
recovery, following the release of weaker-than-expected
economic data in the United States, and softer economic
activity in some key emerging countries. This, along with
rising geopolitical tensions between Russia and Ukraine,
INVESTMENT
sparked some safe-haven interest in gold.
Once again, ETF buyers were moving in tandem with
investors on COMEX, who had raised their net long
positions by 341 tonnes or 382% by the third week of
March, before profit taking set in. The move was driven
by short-covering, as investors were closing out their
positions, or in some cases switching to the long side
amid reduced risk appetite and in search for a shelter.
Short positions plunged by 195 tonnes or 82% during
this period to the level last visited in December 2012.
This was accompanied by the notable build-up in long
speculative positions, which rose by 147 tonnes or 45%
from the beginning of the year to the highest for more
than a year.
The speculative safe-haven interest in gold receded in the
next couple of months, as geopolitical risks diminished
and more robust economic data began to roll out from
IDENTIFIABLE INVESTMENT
Coins* Real Gold Price
2000
Bars
ETF Inventory Build
1500
1000
Tonnes
500
0 1000
-500
-1000
2005 2007 2009 2011
*Official coins and medals & imitation coins.
Source: GFMS, Thomson Reuters
16
the United States. This was evidenced by a sizeable
reduction in investors’ net long positions on COMEX,
largely on the back of a sharp increase in short positions.
Similarly, gold ETFs suffered attrition as some investors
locked in gold-related profits and switched to the US
dollar. While the tonnage decline was comparably
small, the selling lasted for the period between April to
mid-June, before the broad stabilisation and some fresh
interest in July, although this proved to be short-lived.
The resurgence in interest followed the more dovish
tone of the FOMC June meeting, where the Committee
expressed concerns about US economic recovery and cut
its 2014 growth forecast. This put downward pressure
on the US dollar, while gold benefited from increased
investor risk aversion, which sent the price to a near
four-month high of $1,340/oz on 10th July. The
escalation of military tensions in Iraq and renewed fears
about slowing global growth, after the OECD and the
World Bank slashed their 2014 growth forecasts, also
provided some support.
In the meantime, a series of weak economic data in
the Eurozone and the persistence of dangerously low
levels of inflation prompted the ECB to introduce a
raft of measures aimed at stimulating the economy.
The central bank cut its benchmark interest rate to
0.15% from 0.25% at its June meeting and introduced
negative interest rates to encourage more lending. This
undoubtedly provided a temporary support to the gold
price and triggered the next bout of investment activity
on COMEX. The net investor long almost tripled in the
period between early June to mid-July, to hit 449 tonnes
by the second week of July, the highest since December
2012 and the highest point for the year. This was largely
driven by a sharp decline in short speculative positions,
which plunged by 158 tonnes or 70% during that period,
coupled with a 132-tonne or 35% increase in the long-
US DOLLAR INDEX
2000 130
120
110
Constant 2014 US$/oz
1500
100
Index
90
80
70
500 60
2013 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14
Source: Thomson Reuters

S&P 500: GOLD RATIO
6 1.0
5
4 0.4
Ratio
3
2 -0.2
1
0 -0.8
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14
Source: Thomson Reuters
side component. Turning to the second half of the year,
as the US economy had taken a turn for the better and
continued to gain momentum, with strong job gains,
falling unemployment rate and a return in risk appetite,
investors’ attention switched from safe-haven gold to
equity products and the US dollar, which had become the
major beneficiary of any risk-related investment activity
during that period. In addition to the growing optimism
towards the US economy, a big shift in the Fed’s policy
and its commitment to tapering drove the greenback
higher for the remainder of the year. In the period
between July and December, the US dollar index jumped
by 13% to hit a new eight-year high of 90.27 at year-end.
Meanwhile, ETF selling resumed in August and lasted
through the end of the year, although the scale of
outflows was considerably lower compared to 2013.
Investors liquidated approximately 136 tonnes of their
gold ETF holdings during the period between end-July
and year-end, as opposed to over 230 tonnes over the
same period a year before. ETF and COMEX investors
again ran in tandem as net sellers of gold through August
and September, before net positions picked up in mid-
October, largely on the back of fresh speculative interest,
which saw long positions jump by 73 tonnes or 20%
within just two weeks. Renewed interest was sparked
by a series of disappointing US economic data, which
sent worrisome signals on the health of the economy.
In addition, weak economic data in the Eurozone and a
worse-than-expected inflation reading from China added
to global growth concerns, triggering investment activity
and driving the gold price towards a one-month high of
$1,250/oz on 21st October.
Moreover, the yellow metal gained some support after
the ECB unveiled another round of stimulus measures
at the September meeting, including interest-rate cuts
to a record low for the second time in four months and
GFMS GOLD SURVEY 2015
GOLD & US NONFARM PAYROLLS CORRELATION
0.8
24-Month Rolling Correlation
0.6
0.2
0.0
-0.4
-0.6
Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15
Source: Thomson Reuters
the asset-purchase plan, before the markets’ attention
switched back to Fed’s policy. Gold came under renewed
pressure in the last week of the month ahead of the
FOMC meeting, as investors were waiting on the sidelines
INVESTMENT
for further hints on the US interest rate outlook. The net
long continued to contract over the next couple of weeks
after the Fed announced the ending of the asset purchase
programme. However, persistent concerns over global
economic recovery fuelled some safe-haven interest
towards the year-end, further aided by monetary policy
loosening by other major central banks.
The chart above provides an interesting analysis on how
the S&P 500:gold ratio evolved over time. This ratio is a
good indicator of investor sentiment, and sends signals
of investors’ confidence about the US economy and the
equity markets. Despite the wide fluctuations, it is clear
from the graph that the ratio had been steadily rising over
the past couple of years. This is broadly a reflection of
the improving economic climate in the United States and
a return of risk appetite, which had seen investors flee
from safe-haven gold towards riskier and high-yielding
asset classes such as equities.
The chart on the right demonstrates the correlation
between US nonfarm payrolls data and the gold price. It
is interesting to observe that the relationship between
the two variables returned to negative territory in 2014,
as the pace of jobs growth accelerated, particularly from
the second quarter, sending a strong signal on the health
of the economy. To put this in perspective, an average
of 260,000 jobs per month had been created in 2014,
compared to an average of 199,000 jobs per month a
year earlier. The rate of growth picked up sharply in the
past few months, with an average of 330,000 jobs per
month in the period between November and January,
recording the best three-month average in 17 years and
underpinning the strength of the economic recovery. The
17
 GFMS GOLD SURVEY 2015
INVESTMENT IN COMMODITIES
Last year was generally a dismal year where commodities price
performance was concerned. With the exception of rhodium
and palladium, many commodities, whether from the precious
metals complex, base metals complex, energy or agriculture
ended the year with lower price levels. Of particular significance
were the double digit percentage declines in iron ore and crude
oil, both of which saw their asset prices halved over the course
of the year.
The key drivers that shaped the commodities markets in
2014 can be largely summarised into three factors (1) U.S.
dollar strength (2) market surpluses and (3) geopolitical
risk. The dollar index gained 12% over 2014 on the back of
a strengthening U.S. economy and the end of the tapering
programme by the Fed. This shifted the markets’ attention
towards an expected interest rate hike in 2015. The dollar
strength was made even more pronounced by weaker economies
INVESTMENT
elsewhere, notably the Eurozone, Japan and emerging markets,
resulting in further appreciation of the dollar against these
currencies.
Meanwhile, the market also saw further expansion of supply
in some commodities, notably in iron ore output and increased
oil and gas production in North America. Without concomitant
growth in demand, this contributed to a supply glut in these
markets and subsequent price declines. The impact of the rise
in the dollar, however, was mitigated somewhat in precious
metals markets by a series of events last year that led to
heightened geopolitical risks, namely the Ukrainian crisis and
the Northern Iraq offensive, which helped catalyse demand for
safe haven assets.
In terms of price performance, the precious metals complex was
right in the middle of the pack relative to other commodities
and asset classes, registering a gain of 3% in 2014. The dollar
index was the best performing asset (12%), followed by equities
CFTC INDEX INVESTMENT DATA (US$BN)
CFTC Index Investment Data (US$bn)
300
3-month moving average
200
US$ bn
100
0 -20
2011 2012 2013 2014 2015
Source: CTFC
18
(8%). Energy was the worst performing subsector, registering
a loss of 45% over the year. Within the precious metals
complex, rhodium and palladium were the only commodities
that registered gains in 2014, at 37% and 12% respectively. The
remaining precious metals all posted losses, with silver posting
the biggest loss at 21%. The gains in rhodium and palladium
were largely down to recovery in the global automobile sector,
with the former gaining extra momentum from labour strikes
in South Africa, further broadening the deficit in the rhodium
market balance. Conversely, the losses in gold and silver
prices were primarily driven by expectations of monetary policy
normalisation in the U.S., which resulted in the strengthening of
US dollar and decreased demand for safe haven assets.
Using CFTC monthly Index Investment Data as a gauge of
investment activity in the commodities sector, notional values
in the U.S. commodities futures market have been trending
downwards since 2012, with the decline gathering pace in 2014.
From a record high of $242.6 bn in 2011, the notional value in
commodities futures had declined by 41% to $143.2 bn by the
end of January 2015, the lowest level since 2009. This decline,
however, is mainly explained by falling commodity prices as
open interest has largely held up against that in 2011.
That said, many hedge funds that were set up to ride the
commodities super-cycle have also closed their doors as supply
has caught up with the China-led demand shock that had
characterised many markets since the mid-2000s. A closer
look at CFTC Managed Money positions for each sector within
commodities showed that the decline in net positions in energy
and the agriculture sector were the main drivers behind the
overall reduction in net positions last year. The positioning of
energy futures, which saw a sharp decline in the net position
much earlier than the oil price descent later in the year suggests
that the oil price decline may have been partially driven by
speculative shorting of the market in addition to its already
unfavourable fundamentals.
NET POSITIONS IN KEY COMMODITY FUTURES
120
Livestock
100 Agriculture
Energy
80 Copper
Precious Metals
60
S bn
US$
40
20
Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15
Source: CTFC
 GFMS GOLD SURVEY 2015

INDEXED PERFORMANCE ACROSS ASSETS IN 2014

Looking ahead, our macroeconomic view
50 60 70 80 90 100 110 120 130 140 150
supports a stronger dollar on the back of Note: 2nd January 2014 = 100

the strengthening U.S. economy. This may Rhodium

be detrimental to the price performance of S&P 500

Palladium
commodities as an asset class, especially
Dollar Index
precious metals which are typically
Dow Jones Industrial Average
sought as a safe haven during times of
Nickel
crisis. A weaker oil price may provide
MSCI International World Price Index (USD)
some support to producers’ margins by Zinc
reducing production costs but demand Aluminium
– the other side of the equation – plays Wheat
an equally important role in shaping the Gold
fundamentals. Corn
Euro

With China’s proclaimed ‘new normal’ Platinum

Tin
of slower economic growth, demand for
Copper
commodities may wane, albeit a sharp
Thomson Reuters/Core Commodity CRB Index
correction in precious metals prices may
Lead

INVESTMENT
spur some physical demand uptake. With
Soybean
the exception of India, other emerging
Silver
markets are mired in recession or slow US 10 Year Benchmark
growth, as evident in Russia and Brazil. S&P Goldman Sachs Commodity Index
Henceforth, it remains to be seen whether WTI
the U.S. can continue to build on the Brent

economic recovery to offset slowing Iron Ore

growth elsewhere. 50 60 70 80 90 100 110 120 130 140 150

Source: GFMS, Thomson Reuters

GOLD PRICE CORRELATIONS
The table illustrates daily-log return correlations between gold
and a number of asset classes. The correlation between gold
and silver during 2014 remained the strongest among other
assets under scrutiny, which should not be too surprising, given
the historical link between the two metals. The gold:silver
relationship was particularly strong throughout the year.
However, this relationship weakened somewhat in the third
quarter, as concerns that China’s slowing GDP growth could
hamper demand for industrial metals triggered massive selling
first half, the correlation was low when high oil prices were a
proxy for the US’s economy strength due to its shale industry,
but the relationship increased when both fell in the second half.
The correlation between gold and the S&P 500 went into the
negative territory in 2014. The improving economic outlook for
the US economy prompted investors to flee from safe-haven
assets towards more conventional, higher-yielding assets like
equities, sending the S&P 500 to record high levels at year-end.
GOLD PRICE CORRELATIONS

from funds. Silver lost over 25% in the second half, being
dragged down along with other base metals, while gold lost
over 10% in the same period.
The dollar index rose over 12% in 2014, but gold only lost 1.8%,
suggesting that dollar strength was far from fully reflected in
lower dollar gold prices. That said, the dollar:euro correlation
rose notably in the fourth quarter. At that time, dollar strength
was clearly a contributory factor in dragging the dollar
denominated gold price sharply lower.
2013 2013 2014 2014 2014 2014
Quarterly Q3 Q4 Q1 Q2 Q3 Q4
Euro/US$ Rate 0.50 0.45 0.28 0.14 0.17 0.38
Silver 0.88 0.85 0.79 0.82 0.67 0.80
Oil (WTI) 0.23 0.07 -0.17 0.20 0.31 0.34
S&P 500 0.10 0.03 -0.25 -0.17 -0.18 -0.11
Annual 2009 2010 2011 2012 2013 2014
Euro/US$ Rate 0.32 0.16 0.10 0.50 0.34 0.33
Silver 0.82 0.81 0.74 0.84 0.90 0.80
Oil (WTI) 0.17 0.34 0.27 0.36 0.28 0.24

The correlation between gold and oil prices continued to be S&P 500 0.03 0.21 -0.03 0.26 0.17 -0.16
Source: GFMS, Thomson Reuters
loose in 2014, and has reached the lowest since 2010. In the

19
 GFMS GOLD SURVEY 2015

economy added 295,000 jobs in February, representing
the twelfth consecutive month in which more than
200,000 jobs were created, sending the gold price to a
three-month low of $1,167/oz.
Turning to other components of our total identifiable
investment figure, demand for physical bars and
coins fell by a sharp 39% last year, to an estimated
1,079 tonnes, although the 2014 figure was still the fifth
highest on record. This was largely attributable to a lack
of interest from the key physical markets such as China
and India, which together accounted for more than a half
of last year’s drop in our global retail investment figure.
Physical bar demand in China plunged by a marked 53%
in 2014, to the lowest level since 2010. The introduction
of government measures aimed at supressing corruption
and bribery in the country, slowing economic activity
and a lack of clear price direction were among the major
factors contributing to weak gold investment activity.
INVESTMENT
Looking at 2015, after a fairly strong start to the year,
gold entered a downtrend in the second half of January,
plunging below the key $1,200/oz level in mid-February,
on the lack of physical support and generally weak
sentiment, as the market was waiting for clarity on US
interest rate policy. After a brief recovery at end-February
on the dovish tone of the FOMC minutes, gold continued
to slide in the following weeks on positive US jobs data,
stronger dollar and ahead of the FOMC March meeting.
However, gold prices rallied on the dollar’s retreat after
the Fed signalled that the first interest rate hike might
not come as soon as initially thought.
EXCHANGE TRADED FUNDS
— ETF holdings fell by 9% in 2014, with the second half
of the year accounting for over 70% of total outflows.
Combined holdings of ETFs declined by 160 tonnes,

It is worth emphasising, though, that last year’s result
should be viewed in the context of the exceptionally high
demand in 2013, when the sudden crash in the gold price
triggered a rush of bargain hunting, driving investment
demand to record levels.
Investment demand in India fell by an even more
pronounced 59% last year, to hit the lowest since 2005.
This was due to a supply shortage of metal through
official channels in light of gold import restrictions
introduced by the Indian government in 2013, high and
volatile premia, and lower price expectations, which saw
professional investors deferring purchases of gold bars
and coins in an anticipation of further price declines.
or 9% over the year, from 1,811 tonnes to 1,652 tonnes.
Total ETF holdings in value terms at the end of the
year, at $64 bn, were $6 bn or 9% lower year-on-
year, a stark difference to 2013 in which ETF outflows
posted a $73 bn or 51% decline. Despite outflows in
each quarter, redemptions in the second half of 2014
made up over 70% of the total, with the heaviest
outflows concentrated in the fourth quarter. The
easing in ETF liquidation over the first quarter of 2014,
which resulted in February recording the first monthly
inflow since December 2012, was driven by rising
geopolitical tension in Crimea, weaker than expected
US economic data due to poor weather and financial
turmoil in emerging markets. However, by late

GOLD ETFS & OTHER SIMILAR PRODUCTS

% share
(tonnes) end-2013 end-2014 change of total change
SPDR Gold Shares 798.2 709.0 -89.2 56%
iShares COMEX Gold Trust 162.4 161.2 -1.2 1%
ZKB Gold ETF 176.1 137.6 -38.6 24%
ETF Securities 108.3 124.1 15.8 -10%
GBS LSE 97.3 84.3 -13.0 8%
Central Fund of Canada 52.7 52.7 0.0 0%
Julius Baer 66.0 51.0 -14.9 9%
Xetra Gold 44.5 48.5 4.0 -3%
Source Physical Gold ETC 38.5 44.1 5.6 -3%
Sprott Physical Gold 48.5 39.5 -9.0 6%
NewGold Gold Debentures 41.3 34.5 -6.7 4%
Others 177.4 165.1 -12.3 8%
Total 1,811.2 1,651.6 -159.6 100%
*Other includes DB Euro Hedged, GBS ASX, Royal Canadian Mint, DB Physical Gold ETC (EUR), ETFS - Swiss Gold, iShares ETC, Mitsubishi Tokyo, DB Physical Gold ETC, ETFS Precious
Metals Basket Trust, Goldist, ETFS Asian Gold Trust, ETFS NYSE, DB Physical Gold CHF Hedged, Claymore Gold Bullion ETF, Dubai DGX, DB Physical Gold GBP Hedged ETC, DB Physical
Gold SGD Hedged ETC, Central Gold Trust, HuaAn Gold ETF, Guotai Gold ETF, FinEx Physically Held Gold ETF, ETFS Hong Kong, E Fund Gold ETF, Bo Gold ETF, Credit Suisse Xmtch, Indian
ETFs; Source: Respective issuers

20

GLOBAL ETF HOLDINGS
(end-period) Tonnes US$bn Tonnes US$bn Tonnes US$bn Tonnes US$bn
12.Q1 2,465 131.77 12.Q2 2,465 126.70 12.Q3 2,603 148.63 12.Q4 2,691 143.41
13.Q1 2,515 129.21 13.Q2 2,112 80.95 13.Q3 1,992 84.96 13.Q4 1,811 70.14
14.Q1 1,809 75.11 14.Q2 1,770 74.83 14.Q3 1,737 67.94 14.Q4 1,652 64.04
Source: Respective issuers
April with equity markets at all time highs, weaker-
than-expected physical demand from Asia and the
US Fed announcing a 2014 year-end to its stimulus
programme, ETF outflows gained momentum. In
the second half of the year, liquidation continued
to pick up pace as the gold price declined by $109
from the end of June to December. This was driven
by a variety of factors, including a surging US dollar
and a plummeting oil price, while the weakening yen
following the announcement from the Bank of Japan
on further easing of monetary policy was another
drag. Expectations that the US would actually start to
tighten monetary policy following the end of the Fed
QE programme in October, encouraged redemptions
in the final quarter of 2014 of 85 tonnes, to end the
year at 1,652 tonnes.
Among the individual funds, the largest redemptions
were in the established entities, with SPDR Gold
Shares, the largest gold ETF, posting an outflow of
89 tonnes or 11% over the year, more than half of the
total outflows recorded for the period. Meanwhile,
other noteworthy decreases were registered by ZKB
Gold, Julius Baer and GBS LSE which saw losses of
39, 15, and 13 tonnes respectively. In stark contrast,
London based ETF Securities was the only ETF to
record a significant inflow in 2014, of 16 tonnes.
It is also worth noting that 2014 saw the introduction
of two new gold-backed exchange traded funds.
California-based Merk Funds launched The Merk
GOLD ETFS AND OTHER SIMILAR PRODUCTS
3000 ETF Securities Other
iShares Gold
2500 SPDR Gold Shares
ZKB
2000
GBS (LSE listed)
Tonnes
1500
1000
500
0 0
Jan-07 Jan-09 Jan-11 Jan-13
Source: GFMS, Thomson Reuters, collated from respective ETF issuers’ data
GFMS GOLD SURVEY 2015
Gold Trust in May on the New York Stock Exchange,
while China’s Bosera Asset Management Co. Limited
introduced China’s fourth gold-backed exchange
traded fund in August, Bo Gold ETF, registered to the
Shenzhen Stock Exchange. Since the opening of The
Merk Gold Trust, ETF inflows have increased by
48% or 1.5 tonnes, while Bo Gold ETF has posted
outflows of 98% or one tonne.
After five consecutive months of redemptions, gold
ETFs recorded their first monthly inflow in January
2015, of 65 tonnes, a level that was last achieved in
INVESTMENT
September 2012. In value terms, total ETF holdings
rose to $70 bn, a $6 bn increase. SPDR Gold Shares
was responsible for three quarters of the purchases,
while other established entities such as ETF Securities
and GBS LSE posted inflows of six tonnes. The driving
force behind the reversal from outflows to inflows was
mainly due to gold regaining its safe haven appeal,
as fears grew over the health of the global economy,
while expectations heightened over the upcoming
Greek elections and potential for European stimulus
measures from the ECB.
On 15th January, a shock move from the Swiss
National Bank to remove the euro cap on the Swiss
franc, prior to markets opening, may have been a
contributor to the increase in inflows, of 27 tonnes,
that were recorded over the next 48 hours, with SPDR
Gold Shares responsible for 80% of the transactions.
On 22nd January, gold recorded its highest level in
over four months, breaking over the psychological
$1,300/oz barrier (on an intra-day basis), following
2000 the announcement by the ECB to initiate a $60 bn
QE program, to curb deflation and increasing market
1600 volatility, bringing total ETF holdings to 1,717 tonnes
Gold Price
by month end. Over February, ETF inflows continued,
1200 albeit at a reduced level increasing by 22 tonnes, to
US$/oz
reach an end-month total of 1,739 tonnes. Firm global
800 equity markets and an ever increasing US dollar were
the core factors behind the reduction, where gold
400 consequently slid by $70. Turning to the beginning
of March and ETF once again returned to outflows,
posting daily redemptions totalling 31 tonnes by 13th
Jan-15
March, to reach 1,708 tonnes, representing a 3% rise in
combined gold ETF levels since the end of 2014.
21
 GFMS GOLD SURVEY 2015

NET INVESTOR LONG POSITIONS ON COMEX

(end-period) 2009 2010 2011 2012 2013 2014

Futures contracts 208,088 167,914 106,043 98,894 17,725 87,050
equivalent in tonnes 647 522 330 308 55 271
value US$ (bn) 22.6 23.6 17.0 16.4 2.1 10.5
Options contracts -10,528 2,073 5,876 6,867 16,379 11,341
equivalent in tonnes -33 6 18 21 51 35
value US$ (bn) -1.1 0.3 0.9 1.1 2.0 1.4
Source: CFTC (Managed Money Net Positions)

ACTIVITY ON COMMODITY EXCHANGES rise, to 1.5 million contracts. The year-end open position
at 1,401,393 contracts or 4,359 tonnes was up by 3% from
— Trading volumes on major commodity exchanges, the end-2013 level.
with the exception of Chinese markets, posted
sizeable declines last year. CFTC reports on managed money can be used as a proxy
for investor activity on the exchange. The first half of
COMEX 2014 was characterised by a significant contraction in
short positions of 139 tonnes, with the first quarter of the
INVESTMENT

Following a rise in 2013, total volumes of gold futures year responsible for over two-thirds of the drop. Investors
traded on COMEX decreased by 14% last year, to instead were seen to favour long positions; by late June
41 million contracts. This is equivalent to a nominal an increase of 128 tonnes had been recorded, resulting
126,024 tonnes and to an average daily turnover of in a near 300% rise in net investor positions to reach
502 tonnes. Open interest, at 371,646 contracts by 356 tonnes. The renewed investor interest in the first half
end-December, was down by a modest 2%. The fall of the year was triggered by fresh concerns over global
in turnover in 2014 can, in part, be attributed to a economic recovery, amid a series of disappointing US
continuation of the weak investor interest that began economic data, financial turmoil in emerging markets
in the second half of 2013. Indeed the total volume fell and an escalation of geopolitical tensions in Ukraine,
by 26% year on year to 19.4 million contracts or just which saw gold prices rise to multi-month highs by
over 60,321 tonnes. The first ten months were relatively March. However, with more upbeat economic data in
stable, with daily trading volume averaging 154,187 the following months, together with growing speculation
contracts. The signalling by the Fed of the closure of that the ECB would announce policy easing at the June
stimulus led to a stronger dollar and a corresponding meeting, safe haven assets were put under pressure.
fall in the gold price led interest to grow substantially
in November and December, with daily trade volumes By early October, a surge in the US dollar saw investors
averaging 197,702 contracts and a total of 8.0 million rapidly liquidate long positions, by 74 tonnes, in turn
contracts, up 24% year on year. Investor activity in restoring their short positions to a level last seen in
COMEX options followed suit, with an 8% year-on-year December 2013. However, this did not last long, as

COMEX VOLUME & OPEN INTEREST MANAGED MONEY NET POSITIONS IN COMEX FUTURES

800 475 200 1400

open Interest
Daily Open Interest (contracts, thousands)

Net Positions (contracts, thousands)

Daily Volume (contracts, thousands)

Comex Settlement Price (US$/oz)

450
600 150 1300

425

400 100 1200

400

200 50 1100
375

0 350 0 1000
Jan-14 Mar May Jul Sept Nov Jan-15 Mar Jan-14 Mar May Jul Sept Nov Jan-15 Mar
Source: Thomson Reuters Source: CFTC

22
 GFMS GOLD SURVEY 2015

GOLD TRADED ON COMMODITY EXCHANGES

rallying prices fuelled short covering. Indeed, by the
time gold had risen above $1,200 in December, shorts (total volume in nominal tonne equivalents) Change
had liquidated to such an extent that the net long had 2012 2013 2014 y-o-y
risen to its highest level since August. The first quarter COMEX 136,522 147,093 126,024 -14%
of 2015 saw an advance on the managed money net long SHFE 5,917 20,088 23,858 19%
position, up to 522 tonnes in the last week of January, TOCOM 11,895 12,225 8,745 -28%
back to levels last seen at the all time when gold was SGE Au(T+D) 2,113 3,347 4,724 41%
over $1,750 oz in October 2012. Since then longs fell MCX 10,324 8,945 3,972 -56%
back heavily, while shorts almost tripled from the end of SGE Spot 950 2,003 2,560 28%

January to the middle of March. At end-January 2015 the ICE Futures US 1,177 1,116 508 -54%
DGCX 497 426 426 -0.1%
CME launched a new gold contract on COMEX, a Gold
Borsa Istanbul 312 438 239 -45%
Kilo futures, which is physically delivered in Hong Kong.
SGE International Board* na na 78 na
It is linked to the 9999 gold price in Hong Kong and
*Trading commenced in mid-September 2014.
trades around the clock.
Source: Thomson Reuters, relevant exchanges

CHINESE EXCHANGES
emerging markets currencies. This encouraged investors
In recent years there has been greater investor in those countries to invest in gold as a hedge against
participation in gold futures trading outside the falling currencies.

INVESTMENT
traditional commodity exchanges, none more so than in
China. As illustrated in the earlier table, the Shanghai China’s only legal source of VAT free gold and platinum,
Futures Exchange saw a significant 19% year-on-year the Shanghai Gold Exchange (SGE), saw trading
rise in trading volumes in 2014, to a nominal equivalent volumes of Au(T+D) futures post a 41% gain year-on-year
of 23,858 tonnes. This, however, is largely a function of to 4,724 tonnes in yet another year of significant growth
the extended trading hours, rather than an indication for the exchange first founded in 2005. Turning to the
of strong investment activity. The introduction of the physical spot contracts (AU9999 and Au9995); total
after-hours trading session in July 2013 saw a dramatic volume for the year recorded 2,560 tonnes, up by 28%
increase in trading volumes on the exchange. However, year on year or 10.5 tonnes per day. In terms of the total
a comparative analysis between the second half of 2014 volume traded on the exchange, the first nine months
and the second half of 2013 reveals that those volumes of 2014 saw fairly stable volumes with a daily average of
have contracted by more than 20%. As can be seen in 9.3 tonnes. Activity gradually picked up in the rest of the
the SHFE chart, activity surged at the very end of October, year, with a daily average of 13.8 tonnes as a strong dollar
much like the COMEX. Average daily trading volumes attracted investment demand in emerging markets.
were the equivalent of 149 tonnes in November and
December compared to 86 tonnes for the rest of the year The premium/discount of the SGE price against the
and up 53% year on year. This was the result of an FOMC London am fix, which can be seen as a proxy for supply
meeting that signalled the closure of quantitative easing, tightness in the Chinese market, fell sharply, starting
causing the dollar index to spike and putting pressure on the year at $25/oz and dropping to a first quarter low of

SGE GOLD SPOT VOLUME & PRICE PREMIA SHFE VOLUME & OPEN INTEREST

30 5 800 300
Price Premia Open Interest
Daily Trading Volume (contracts, 000s)

Daily Trading Volume (contracts, 000s)

4 700
250
Open interest (contracts, 000s)

600
3
Daily Price Premia (%)

20
500
200
2
400
1
150
300
10
0
200
100
-1 100

0 -2 0 50
Jan-12 Jul Jan-13 Jul Jan-14 Jul Jan-15 Jan-12 Jul Jan-13 Jul Jan-14 Jul Jan-15
Note: Reported trading volume is bilateral. Data above is divided by two.
Source: SGE Source: SHFE

23
 GFMS GOLD SURVEY 2015
a $13/oz discount in mid March. This coincided with a
curtailment of bullion exports to China from Switzerland,
indicating that the Chinese market was flush with metal
and that fabricators had overstocked. The premium
was stable at a daily average of $0.9/oz over the second
quarter; this was largely due to weak jewellery demand
and lack of investor interest. From mid July until the end
of October the premium crept up with a daily average of
$3/oz, but nowhere near what was seen at the beginning
of the year. The last two months of the year was a highly
volatile period of the premium, but down to a daily
average of $2/oz.
September saw the launch of a new foreign exchange
board based in the Shanghai Free Trade zone, the SGE
International board with its own yuan denominated
contracts. Although they are managed by the same
people the operations are independent of each other with
the international board conceivably aimed at attracting
INVESTMENT
offshore RMB to flow back to China. For the first time,
foreigners gained access to the strictly regulated Chinese
gold market. From the beginning of the contracts to the
end of the year there was a nominal 78 tonnes of activity.
The start of 2015 has seen increased investor interest,
with trading volumes reaching a nominal 50 tonnes in
the first two months.
TOCOM
The Tokyo based exchange offers one kilogramme and
one hundred gramme gold futures and options contracts,
for which the price is quoted in yen. Following a relatively
flat performance in 2013, trading volumes resumed their
long term decline, to the lowest level since 2000, at
just over 8.7 million contracts (equivalent to a nominal
8,745 tonnes) down 28% year-on-year. In part, this was
due to a continuation of the low investment activity that
started in the second half of 2013 as gold prices declined
PRODUCTION AND CONSUMPTION-WEIGHTED GOLD PRICES
200
Index, 2nd January 2009 = 100
150
100
50
Jan-09 Jan-10 Jan-11
Source: GFMS, Thomson Reuters
24
dramatically. There was a nominal 3,632 tonnes traded
in the first half of 2014, down 52% year on year, but only
down 22% on the second half of 2013. Activity did start
to pick-up at the start of September with the average
daily turnover over September and October standing at
42,679 contracts. Like other exchanges, turnover surged
at the start of November with the strengthening dollar,
with the daily average turnover reaching 67,789 contracts
in that month. However by mid December, interest
had again dropped off to levels seen in the traditional
summer lull period. Trading volumes on the TOCOM
ended the year at 35,881, up 38% on the end-2013 figure.
Open interest in gold futures ended the year at 73,137
contracts, down by 19% on the end-2013 figure.
Net investor positions on TOCOM futures can be used as
a proxy for speculative activity on the exchange. After
starting the year at 32,182 contracts, net long positions
remained flat until mid February. Driven by the release
of poor Q4 2013 GDP numbers and a rising gold price,
the net position fell strongly, becoming a net short of
10,885 contracts on 16th March. The speculative short
then evaporated as longs increased, albeit at a slower
rate than the decline. The net long position hit a year
high net long of 44,662 contracts in mid June as gold
prices dropped. The net position then fell back to a
stable daily net position of around 20,000 contracts from
mid June to mid October.
However this masks a steady growth in both the short
and long position. The comments by officials at the Bank
of Japan that inflation may fall below 1% caused a rout
in the net long, from 36,753 contracts on 7th November
2014 to a net short of 10,177 contracts in 28th November
2014. Shorts tailed off towards the end of the year
leading to an end 2014 net long of 2,575 contracts. The
start of 2015 saw a surge in the yen gold price, which led
to a continued fall in the net position. An equally steep
The production and consumption-weighted gold price indices
show gold prices adjusted by weighted price inflation indices.
The weights are dictated by gold supply and demand from key
countries. The real gold price is the nominal price adjusted for
US CPI, the generally accepted convention; however, it ignores
inflation and currency fluctuations in countries where local
gold prices may be telling a drastically different story. Real
gold prices declined 0.6% in 2014. Consumption-weighted
Real Gold Price
prices fell 2.4% and production-weighted prices increased by
Consumption Price
Production Price
12%. Production-intensive countries like Russia and China saw
higher local gold prices (adjusted for inflation) last year, mainly
Jan-12 Jan-13 Jan-14
due to currency depreciation against the US dollar.

decline in the gold price led positions to return to a net
long by mid February 2015.
OTHER EXCHANGES
A number of relatively new commodity exchanges around
the world, launched in previous years in response to
market liberalisation and growing investor interest in
commodities, have expanded their activity, overtaking
some traditional exchanges.
There are currently a number of commodity exchanges
in India that offer gold futures contracts, of which the
leader is the Multi Commodity Exchange. Turnover
on the exchange witnessed a near 60% decline over
2014, with trading volumes falling to their lowest levels
since 2005, posting 302 tonnes in April. A series of
regulations and gold import restrictions introduced by
the Indian authorities, in addition to the implementation
of the Commodity Transaction Tax of 0.01%, saw traders
shift to alternative exchanges such as COMEX, the
Dubai Gold and Commodity Exchange, and alternative
unregulated markets in India. However, the easing of
import regulations as of 21st May has seen volumes
improve, reaching 385 tonnes in November. So far in
2015 volumes have remained flat with an average daily
trading volume of 16 tonnes up to 20th March compared
with the same figure for the last three months of 2014.
In September 2014 NYSE Liffe contracts were migrated
to ICE Futures US. These contracts continued the long
decline of their predecessor, at a nominal 508 tonnes,
down 56% year on year. Meanwhile, end year open
interest, at a nominal one tonne, was down 72% on
the 2013 level. Volume traded on the 100 oz contract
trickled to almost negligible amounts, with open interest
following suit. The total volume of the 33.2 ounce “mini-
gold” fell by a slightly lower rate, i.e. 54% year-on-year,
to 0.5 million contracts or a nominal 507 tonnes. End-
year open interest stood at 1,800 contracts, down sharply
by 57% on the end-year figure of 2012.
Since the launch of the exchange in November 2005,
gold futures have also been available on the Dubai Gold
and Commodity Exchange (DGCX). After a moderate
fall in 2013, the total volume in gold futures listed on
the DGCX was essentially flat at 426 tonnes year on
year. In spite of the strategic location and organisation
of the exchange (its backers include the Dubai Multi
Commodities Centre and the MCX, and offers contracts
priced in US dollars), investment activity on the exchange
has remained constrained over the past few years. The
DGCX had been set to launch a spot gold contract in June
GFMS GOLD SURVEY 2015
LONDON BULLION MARKET (LBM) AND COMEX TURNOVER*
LBM LBM Comex LBM/
Number of Transfers** Turnover Comex
Transfers Tonnes Tonnes Ratio
2010 1,737 571 553 1.0:1
2011 2,296 644 607 1.1:1
2012 2,678 616 542 1.1:1
2013 4,464 683 584 1.2:1
2014 4,207 569 500 1.1:1
*daily averages, **represent the net volume of loco London gold
transfers settled between clearing members of the LBMA
Source: LBMA; Thomson Reuters
2014, but delays have meant, that as of early 2015, this
has not been launched. It is expected that this will be a
one-kilogramme 995 Au contract.
The Istanbul Gold Exchange, opened in 1995, merged
with the Istanbul Stock Exchange in 2013, creating the
INVESTMENT
Borsa Istanbul. The 92 members of the exchange are
the only companies allowed to trade gold through Turkey
and this must come via the exchange with at least one
trade. In addition, all domestic production must also
come through the exchange. Total volumes on the
Borsa Istanbul dropped heavily last year, to a nominal
239 tonnes, down 45% of the 2013 figure. This was
driven by lower investment demand for bars and coins,
thus less material needed to go through the exchange.
Unique to the Borsa Istanbul is the T+0 (same day) spot
delivery. It is also of note that there is continuous trading
every day, including weekends and holidays, in the
precious metals markets.
In October 2014 the Singapore Exchange launched a
25 kilobar 9999 gold contract for the wholesale market,
with the contracts being settled by physical delivery. It
will be made up of a series of six daily contracts.
TURNOVER ON THE LONDON BULLION MARKET
800 400
Daily Average Value of Transfers
Daily Average Turnover (Tonnes)
Daily Average Value (Bln USD)
600 300
400 200
200 100
0 0
2000 2002 2004 2006 2008 2010 2012 2014
Source: LBMA
25
 GFMS GOLD SURVEY 2015
OTC MARKET
— Following the frenzy of 2013, overall activity in the
OTC market was appreciably lower last year. Overall,
this arena saw net activity, mainly achieved by
opportunistic buying in Asia.
The Over-the-Counter (OTC) market trades a variety of
products linked to the gold price, including spot and
forward products, metal accounts, as well as vanilla
options and other derivatives, which can be tailor-made
to suit particular investment purposes. The OTC market
tends to be populated largely by institutional investors,
who are attracted to the flexibility inherent in products
traded therein, the relatively low transaction costs and
discrete nature of operations. The high entry level costs
inherent in the market tend to make it inaccessible
to retail players (with the exception of high net worth
individuals).
INVESTMENT
There was net investment in the OTC market in 2014 and
this helped to provide some support to gold prices at
times, not least in the first quarter, fuelled by geopolitical
turmoil and bargain hunting. Indeed, the same could
be said for the action at the tail end of last year when
bargain hunting for investors in dollar terms meant that
gold prices in many other currencies rallied robustly.
However, it is worth noting that the overall level of
activity in this arena was noticeably softer than in 2013.
Supporting this view is data from the LBMA, showing
that the net volume of gold transferred in 2014 was down
17% compared to the same period a year earlier. It is not
surprising that the value of these transactions for the
same time period fell by an even more severe 25%. The
spectacular activity in 2013 arguably skews the year-on-
year comparisons but even sidestepping that year overall
turnover on the LBMA was the lowest annual turnover
since 2005.
Interestingly, the number of transfers only edged lower
by 6%, as the decline derived from the size of the average
transfer, which continues to slide lower. This is chiefly
indicative of heavy investor selling in 2013, especially by
institutional investors (and buying by different investors)
not being replicated en masse in 2014. This was both a
symptom and a cause of the low volatility in the market,
and in this vein it was only in November that activity was
up for the first time year-on-year on the back of increased
volatility. It is also arguably the case that a trend across
the wider markets to move more activity into the futures
markets may also have been a drag on volumes. Part of
this reduction reflects the growing importance of regional
markets and loco London transactions are losing market
26
share. Thus a key factor underpinning shifts in the OTC
market is the continued shift from west to east. There
are many examples of this, but most recently it is worth
noting the stellar growth in activity in Shanghai. Another
important development in this mould is the launch of
gold contracts on three Asian exchanges, which are
likely to cause a further shift away from western markets
in the coming months and years. At the beginning of
2015 there was a pickup in activity. In January this was
undoubtedly encouraged by rising gold prices as there
was strong investor buying, especially in Europe sparked
by increasing signs (and realisation) of quantitative
easing by the ECB, as well as the uncertainty caused
by the unpegging of the Swiss franc. Indeed LBMA
transfer numbers were up by a fifth year-on-year in
January. Subsequently, field research indicates activity
has dropped back, and also involved more selling, not
helped by the continued strength of the US dollar and
the consequences for dollar-denominated gold prices.
PHYSICAL BAR INVESTMENT
— Demand for bullion bars dropped by over 40% year-
on-year in 2014, to an estimated 829 tonnes, the
lowest since 2009.
— The lower figure was primarily on the back of a sharp
decline in investment demand in Asian markets, led
by China and India.
— Elsewhere, demand for bars in Europe and North
America posted double-digit losses.
World demand for physical bars saw a sharp decline
last year, dropping by 566 tonnes or 41% to a five-year
low of 829 tonnes. This was largely driven by a sizeable
contraction in demand from Asia, as a lack of gold price
volatility and lower price expectations, plus advance
buying in 2013, prompted investors to defer purchases
of physical bullion. Various government policies aimed
at reducing local demand for gold also helped to explain
last year’s marked drop. In other parts of the world, bar
purchases in Europe saw a notable decline last year, on
the back of a lack of clear price direction and a gradually
improving economic sentiment, while stronger economic
recovery in the United States saw investors switch from
safe-haven gold to high-yielding assets, resulting in a
double-digit percentage decline in bar purchases.
EUROPE
After reaching a peak of 337 tonnes in 2011, European
demand for gold bars declined, to hit 210 tonnes in 2014.
It is worth stressing that, despite the 15% drop, last year’s
figure was nevertheless high by historical standards.

This was largely a result of continued investor interest
in physical bullion, largely on the back of persistent
economic and financial uncertainties in the region. The
bulk of the selling last year was concentrated in the
first half, when demand fell by an estimated 27% when
compared to the corresponding period in 2013. It should
be noted, though, that the first half of 2013 witnessed
an extraordinary buying spree, particularly in the second
quarter, following the sharp correction in the gold price.
Among other factors contributing to the last year’s
decline were gold’s disappointing price performance,
along with improving investor confidence and booming
equity markets, which were the key determinants of
investor behaviour in markets like Germany and France.
Meanwhile, declines in some other, structurally weaker
economies such as Italy, were less pronounced as
protracted economic headwinds continued to encourage
portfolio diversification into safe-haven gold. In stark
contrast to the first six months of the year, investment
demand in the latter half was down by ‘just’ 3% year-
on-year, as the anticipation (and realisation later on) of
quantitative easing by the ECB encouraged some interest
at the end of 2014 and helped to underpin a strong start
to 2015 by retail investors.
NORTH AMERICA
Physical bar demand in North America fell to 28 tonnes
in 2014, down 27% from the previous year. In 2013, bar
demand rose by 23% on the back of lower prices, which
garnered interest among small retail-level investors.
These investors seem to have purchased the bulk of their
targets in 2013, as it likely brought forward demand
that might have occurred in 2014. As the US economy
gathered momentum, investor interest in non-yielding
assets was reduced. The S&P 500, a proxy for the US
equity markets, reached fresh record highs throughout
the year, diverting investment dollars away from safe
RETAIL INVESTMENT
600 Other
North America
500 Europe
China
400 India
Tonnes
300
200
100
0
Q1-10 Q1-11 Q1-12 Q1-13 Q1-14
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
haven gold. There was increased liquidation of investor
gold holdings in the third and fourth quarters of the year
in the US as well, which weighed on net bar demand.
INDIAN SUB-CONTINENT
Indian investment demand fell by 59% to 110 tonnes last
year, the lowest since 2005. India’s share of the global
total fell to 13%, a level not observed in the last decade.
This is sharply lower than the annual average of 35% of
the global market share calculated for the period 2004
to 2012. A drop of this magnitude was due to a supply
shortfall of metal through official channels, lower price
expectations from professional investors, a crackdown on
corruption, and a liquidity crunch during first half of 2014
due to the general election.
Gold available through official channels has been a key
source of income for a large part of the trade to maintain
INVESTMENT
regular cash flow and show higher turnover on the books
of most of the jewellery retailers and bullion traders.
This can be inferred by extensive physical trading activity
noted in silver, which saw imports rise to a new record
for the second consecutive year. As a result, the tactical
investment part was missing by and large, with gold
coming in through unofficial channels and going into
jewellery. High and volatile premia were yet another
factor keeping away short term physical trading activity.
With metal availability restricted to a few hands the
change in premia over a week could occasionally exceed
the London spot price. Also in the physical market, the
customs duty is basis the fortnightly tariff rates set by
customs and thus will differ from the ad valorem rates,
another risk that the trade was not willing to take.
Professional investors were sellers in the market leading
to a high level of dishoarding; however this was quickly
absorbed by jewellery market to partly make up for the
supply shortfall. Selling was also high from political
circles ahead of the general election in the first half.
Wealth managers were focussed on enticing investors to
equity markets over gold, and the appetite for portfolio
diversification into gold was generally down. Event
based buying was the only source which helped drive
demand. For instance both during Akshaya Tritya in April
and Dhanteras in October generated strong purchases,
although in smaller sized bars. One-hundred gramme
investment bars were of less interest to the public as
people bought 10 and 20 grammes, largely to keep
up with tradition. That said, lower prices in November
saw the return of investment flows, but it still was not a
convincing price point for investors at large and second-
half investment was down by 36% from the first half.
27
 GFMS GOLD SURVEY 2015

PHYSICAL BAR INVESTMENT

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Europe
Germany 9.3 22.3 30.3 109.1 128.7 121.7 154.5 104.1 112.5 97.0
Switzerland 9.2 10.5 12.5 88.9 97.1 92.4 115.9 80.4 65.1 44.6
Belgium -1.2 -4.3 -2.0 -0.1 12.2 18.7 23.8 19.2 21.0 21.8
Turkey 1.5 3.2 4.4 4.0 0.9 4.9 14.0 8.5 11.6 10.0
Other Countries -30.6 -32.9 -40.3 5.6 -7.3 -10.2 28.4 35.3 37.5 36.5
Total Europe -11.9 -1.2 4.8 207.4 231.5 227.5 336.5 247.4 247.6 209.8
North America
United States 12.4 4.9 -2.5 51.4 63.5 62.0 47.5 25.9 33.4 24.8

Canada 1.4 4.0 1.4 5.2 7.4 3.4 5.1 2.6 5.0 3.0

Mexico 0.7 0.8 1.8 5.3 3.3 2.8 2.9 2.8 0.1 0.1
Total North America 14.5 9.7 0.8 61.9 74.3 68.3 55.5 31.3 38.4 27.9
South America

Venezuela 0.0 0.0 0.0 0.0 2.0 2.0 2.0 2.0 2.6 2.0
Other Countries -4.3 -3.6 -2.0 -0.6 0.6 0.3 0.5 0.5 1.2 0.3
Total South America -4.3 -3.6 -2.0 -0.6 2.6 2.3 2.5 2.5 3.8 2.3
Asia
China 9.0 10.1 21.0 60.8 102.3 178.6 237.8 249.3 362.1 171.1
INVESTMENT

India 102.8 139.8 148.6 159.9 117.5 266.3 288.0 205.9 265.8 109.8
Thailand 28.0 15.9 4.6 42.6 -10.1 63.0 103.6 101.9 157.9 84.4
Vietnam 34.0 69.5 56.1 96.2 58.2 67.0 87.8 67.4 84.8 56.4
Iran 11.9 12.0 20.2 30.6 15.8 33.8 40.4 44.2 50.4 43.4
Indonesia 3.0 -1.0 0.3 2.9 -6.0 15.3 24.8 22.1 43.1 18.1
Saudi Arabia 7.3 8.0 9.0 13.5 10.9 14.5 17.4 16.3 17.8 14.6
Pakistan 3.4 2.1 2.6 -4.4 -19.4 7.0 14.6 12.3 23.9 13.4
UAE 8.3 6.6 5.9 8.0 4.4 6.1 9.1 7.9 9.5 8.5
South Korea 1.6 1.3 1.4 -0.3 -8.0 0.6 3.0 2.7 7.0 7.9
Other Countries 52.2 -34.4 -39.2 -23.1 -31.4 -27.3 -7.5 12.1 49.2 34.8
Total Asia 261.5 229.8 230.5 386.8 234.2 625.0 818.9 742.0 1,071.5 562.4
Oceania & Other
Australia 0.7 0.8 1.0 2.9 4.4 10.2 15.5 14.8 17.6 16.2

Egypt 0.9 0.6 0.7 0.4 0.7 1.2 0.7 0.8 15.2 9.9
Total Oceania & Other 1.6 1.4 1.7 3.3 5.1 11.3 16.2 15.6 32.8 26.1
World Total 261.4 236.1 235.8 658.8 547.7 934.4 1,229.5 1,038.9 1,394.1 828.5
…of which:-
Middle East* 36.0 34.8 45.0 61.4 34.9 65.8 93.1 73.3 115.9 97.9
East Asia* 119.1 54.7 37.1 171.7 100.9 290.5 435.3 456.7 688.7 357.8
CIS* 3.3 3.6 4.2 4.4 4.9 3.1 2.8 2.7 2.7 2.8
Indian Sub-Continent* 108.1 143.0 152.3 156.6 98.5 273.6 304.4 220.8 293.0 126.0
Source: GFMS, Thomson Reuters; *The key regional bullion markets

EAST ASIA significantly weakened, since those found guilty of

Bar investment in China dropped to 171 tonnes in 2014,
decreasing by a whopping 53% year-on-year to the
lowest level since 2010. The significant retreat was
heavily impacted by the anti-corruption activities in
Chinese government introduced since April 2013. Indeed,
gifting had been a substantial part of physical bar
demand and had been part of the fabric of corruption
in Chinese history as gold bars have high value, high
liquidity, and gold is deeply rooted in Chinese culture.
Yet as the policy rolled out, the gifting sector was
corruption have faced anything form a lengthy jail
sentence to capital punishment. Another key reason for
the drop is the lack of confidence among investors, with
the price of gold under pressure, and this kept would-be
investors on the sidelines. Also, the strong performance
of the domestic stock market attracted investment away
from gold.
In an effort to reign in a spiralling trade deficit in 2013
the State Bank of Vietnam made significant changes to
how the gold market operated in the country. In what is a

28

remarkable arrangement, the government has effectively
moved to control all imports of bullion. In addition, it has
banned the production of minted bars aside from that
sanctioned and controlled by government authorities.
This in turn has limited the volume of gold bars that can
be released into the domestic market at any one point
in time. The GFMS team at Thomson Reuters estimates
that investment demand in Vietnam retreated by a third
last year to an estimated 56.4 tonnes. Given the lack of
available supply, and the high premium these products
attract, consumers are increasingly purchasing 24-carat
encapsulated rings when looking to invest in the gold
market, especially in rural areas where access to official
minted bars is limited.
Following the record levels in 2013, bar hoarding in
Thailand slumped by 47% last year, declining 74 tonnes
to an estimated 84.4 tonnes. A lack of volatility, which
restricted regular trades, a drop in price expectation
among investors with media reports suggesting that
gold would fall further, and with many speculators still
under water from their purchases in 2013, saw physical
investment in the first half crash by 57% year-on-year. In
addition, a surging equities market in Thailand (the SETI
rose by over a tenth last year) also saw funds diverting
to this higher yielding asset class. The second half
delivered a year-on-year decline of 30%, punctuated
by brief periods of buy side activity during the fourth
quarter when gold in baht terms dipped briefly below
19,000 baht per baht bar. This price level fuelled
renewed demand for the yellow metal, although offtake
during this period paled in comparison to the level of
demand in the first half of 2013.
Following the return to net investment in 2013 (the first in
seven years) Japanese bar investment returned to trend
last year, with net disinvestment reaching an estimated
1.9 tonnes. The year started well for the physical
WORLD PHYSICAL BAR INVESTMENT
1500
Value of Bar Investment
1000
Tonnes
500
0 0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
investment market, buoyed by investors front loading
purchases ahead of the 3% rise in the consumption
tax rate in April. This lifted net investment in excess
of five tonnes, a level not seen in the Japanese market
since 2008. The investment market swung back to net
disinvestment in the third quarter with volumes surging
in the final period of 2014 as a weaker yen drove gold in
domestic terms to over 4,700 yen per gramme, a level not
since May 2013. The higher price provided a profit taking
opportunity for investors, with many taking the chance to
liquidate their gold holdings.
MIDDLE EAST
After surging by over 38% in 2013 to a record high, bar
hoarding in the Middle East declined 15% last year to
an estimated 98 tonnes. Following a strong start to
the year, when a rising gold price encouraged some
speculative activity, the lack of volatility and a general
INVESTMENT
lowering of price expectations saw investment demand
falter thereafter. Consumers, it would appear, have, in
many cases, lost faith that gold can deliver the yields that
other asset classes (chiefly the equities markets) have
done in the last twelve months. Sizeable declines were
registered across almost the entire region, led by Iran
and Saudi Arabia (as the largest investment markets in
this Bloc) which retreated by 14% and 18% respectively.
It was a similar pattern across the region, with double
digit falls seen in the UAE and most of the GCC. The only
exception in 2014 was Kuwait, where demand increased
28% year-on-year, from a low base, as high wealth
investors took advantage of any dips in the price to build
gold assets.
OFFICIAL COINS
— Global official coin minting declined by 37% year-on-
year in 2014, as the market recovers from frenzied
physical buying that had largely characterised
demand in the previous year.
70 Total coin fabrication was visibly lower in 2014 compared
to 2013, totalling 173 tonnes – a 37% year-on-year
60
decline. The decline in official coin fabrication was
50
especially pronounced in North America (-36%) and
Value (US$, bn)
40 Europe (-44%), two of the largest bullion coin fabricating
regions globally. While the steep decline in 2014 could
30
be partly explained by an anomalous year in 2013,
20 which was characterised by fervent bargain hunting on
10
the back of severe price declines, the fall in official coin
fabrication in 2014 also indicated waning enthusiasm
for gold as a safe haven asset. Coin demand in 2014
was 17% down against 2012. The drop in enthusiasm
29
 GFMS GOLD SURVEY 2015

OFFICIAL COINS (INCLUDING THE USE OF SCRAP)

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Turkey 52.0 56.7 56.7 53.1 30.9 35.6 58.9 39.9 90.6 40.5
Canada 10.2 8.3 9.0 27.6 38.2 34.1 35.8 23.9 35.5 22.1
United States 14.0 27.5 19.0 31.8 50.9 44.5 36.5 27.5 34.1 21.8
South Africa 1.5 2.4 6.8 8.7 23.2 20.0 23.8 23.7 27.5 21.5
China 9.4 9.4 7.2 5.5 6.7 8.5 23.9 21.4 21.8 15.4
Austria 7.2 4.4 5.3 24.9 33.4 17.9 21.1 12.4 20.3 13.6
Australia 4.4 5.3 5.6 9.6 11.0 8.4 10.6 10.0 16.2 11.6
Iran 4.2 4.0 4.5 5.3 7.6 9.4 9.6 9.2 10.3 7.5
United Kingdom 3.3 3.5 3.4 4.3 4.7 4.4 5.8 6.8 4.9 4.7
Russian Federation 0.9 1.6 4.3 5.7 6.5 5.4 4.6 6.4 5.7 4.5
Germany 5.5 5.5 5.5 5.5 5.0 5.0 4.7 5.0 4.2 4.2
Switzerland 0.1 0.1 0.1 0.2 0.2 0.3 0.3 0.1 1.9 1.9
Other Countries 5.0 3.6 3.8 5.4 5.5 5.1 3.0 4.1 3.7 3.9
World Total 117.7 132.3 131.3 187.4 223.8 198.5 238.7 190.4 276.6 173.2
Source: GFMS, Thomson Reuters

reflected the general recovery from the global financial hedge for investors in these countries who experienced
INVESTMENT

crisis prompting investors to search for higher returns
from other investment avenues. This is evident in the
volume of coin fabrication, which has returned to levels
last seen before 2008. While volumes had declined by
37% on a year-on-year basis, total value posted an even
sharper decline of 44%, following on from declining
investor interest and a lower average gold price. The
average gold price in 2014 declined by 10% on a year-on-
year basis, bringing the total value invested in the coin
market to $7 billion, the lowest level since 2009. Using
our proprietary gold bullion coin survey as a gauge of
regional bullion coin sales, we observed the biggest year-
on-year decline was in Asia (excluding Japan), where
the largest buyer of bullion coins is China. Coin sales to
this region declined by 50%, another sign that the gold
buying frenzy that characterised much of the physical
shift from west to east in 2013 has retreated considerably,
as investors have adopted a more cautious stance after
a bout of irrational buying. Meanwhile, sales to North
America, traditionally the world’s largest market for
bullion coins, declined by 36%, symptomatic of waning
interest for gold in light of higher yielding investment
alternatives elsewhere.
Interestingly, bullion coin sales in Japan and Europe
held up better. We estimate that coin sales to Europe
declined by 25% (against the global average of -30%)
a depreciating currency towards the end of the year.
Furthermore, both the Japanese and EU economies
appeared to have lost considerable momentum towards
the end of the year as central banks in both regions
sought to introduce QE to boost liquidity. This dissuaded
local investors from liquidating their investments, and
in some cases encouraged further investments in gold
to hedge against currency movements and economic
slowdown. Looking at coin fabrication on a quarter-by-
quarter basis, the large declines mainly took place in
the first and third quarter. In the absence of strategic
investment in physical gold, investment demand for coins
largely relied on speculators and bargain hunters over
the year. After falling to an average of $1,276/oz in the
last quarter of 2013, the gold price held firm over the first
three quarters of the year, averaging at $1,287/oz and
trading in a range of $1,214/oz to $1,385/oz. Comparing
this to the sharp price correction and wide trading range
of $1,192/oz to $1,694/oz in the previous year, there was
OFFICIAL BULLION COIN SALES
120 2000
Gold Price
100
80 1500
US$/oz
Tonnes

and decline by a mere 3% in Japan. While Europe saw 60

declines in demand in the same order of magnitude

40 1000
in the first three quarters, demand surged towards
the final quarter. This is largely explained by foreign 20
exchange movements. While the dollar denominated
0 500
gold price had been trending downwards throughout the Q1-09 Q1-10 Q1-11 Q1-12 Q1-13 Q1-14
year, euro and yen denominated gold prices held firm Source: GFMS Quarterly Bullion Coin Survey, Thomson Reuters
over the same period. Gold served as a good inflation

30

MEDALS AND IMITATION COINS (INCLUDING THE USE OF SCRAP)
(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
India 32.8 55.8 64.7 63.5 53.5 82.6 80.0 106.3 96.3 70.8
Other Countries 4.2 3.6 3.7 6.2 5.4 5.7 7.8 7.1 7.5 6.6
World Total 37.0 59.4 68.4 69.7 58.9 88.3 87.8 113.4 103.8 77.4
Source: GFMS, Thomson Reuters
no sufficient downward move to draw in fresh buying
from bargain hunters, nor was there sufficient upside
to lure in speculators. It was only in the final quarter
where a relatively large price correction saw some buying
activity return to the market.
Ranking of coin producers, both bullion and numismatic,
showed that Turkey continues to occupy the top of the
list, producing a total of 40.5 tonnes, despite a 55%
year-on-year decline in production. It should be noted
that coin fabrication in Turkey rose by an eye-popping
127% in 2013 to achieve total production of 91 tonnes, a
record-high and more than twice its production in 2012.
This is followed by Canada (22 tonnes), the United
States (21.8 tonnes) and South Africa (21.5 tonnes).
China, which we estimate to be the fourth largest coin
producer in 2013, lost its position to South Africa last
year, with a total production of 15.4 tonnes, largely on
the back of declining bullion sales, reflecting satiation
amongst existing investors from the buying frenzy of
2013 and a limited inclination to expand their holdings.
This is followed by Austria and Australia, producing 14
and 12 tonnes respectively. Rankings for the remainder
of the list are largely unchanged. With the exception of
the U.K. which saw production decline 3%, most major
coin fabricating countries saw coin production decline by
double digit percentages.
Entering 2015, we have seen relatively lacklustre sales
in the first two months and expect coin sales to trend
lower than 2014, albeit at a slower rate of decline.
Physical investment demand for gold in the near term
will continue to be driven by price expectations and
the relative attractiveness of alternative investment
opportunities. As the US rate hikes become imminent,
this will provide a challenging backdrop for continued
investment in physical gold.
MEDALS AND IMITATION COINS
— Indian demand for coins fell to 71 tonnes, the lowest
in five years as lower price expectations discourage
investment activity.
Demand for medallions and imitation coins in India last
year declined 26% compared to 2013. This also marks
GFMS GOLD SURVEY 2015
the second consecutive year of decline and the steepest
drop since the decade long bull market in gold. Lower
price expectations and higher premia discouraged
purchases, though seasonal factors and attractive price
points during last year helped lift volumes. Having said
that, tight regulations implemented by the government
and the Reserve Bank of India that discouraged demand
for coins from the second half of 2013. Also many
jewellery retailers showed a lack of interest in selling
coins due to low margins from coin when compared to
plain jewellery, apart from the weeks leading to Akshaya
INVESTMENT
Tritya and Dhanteras.
The ban on bank and post offices from retailing coins
was a big blow to the minted coin industry and equally
important was curbing advances on gold coins weighing
more than 50 grammes. Thus the collateral market
accepted only jewellery and some even branched out to
sell standard jewellery, which would return to them as
collateral at some point in time. Low making charges
were the key that made coins a point of attraction
compared to jewellery.
That said, with more standardised hallmark jewellery
being sold, future volumes will be limited for the coin
market and may not return to levels seen before. While
the ban on coin imports was lifted in the 28th November
circular, banks are still not allowed to sell coins. Part of
the current volumes also includes medallions imported
unofficially by Indians working in GCC or East Asian
countries during their visit to India. The ease of hooking
the medallion to chain was an easy way to pass the green
channel at airports. Also important to note was the
increase in sale of coins that fake the stamp and design
of some Swiss coins, primarily due to the restriction that
existed on coin imports.
Looking ahead we are not very bullish about demand
for the rest of 2015 despite possible price declines. On
the other hand we note a strong growth in the locally
minted 995 coin market and should see a greater shift
from 916 coin. The government’s proposal to launch
India’s first official coin, ‘Ashoka Chakra’, should elicit a
consumer response; though it largely depends on the
denomination and the distribution network employed.
31
 GFMS GOLD SURVEY 2015

TOP 20 GOLD MINING COUNTRIES

3. MINE SUPPLY
• Global mine production expanded by 2% last year to
reach a record level of 3,133 tonnes.
• The dominant influence behind this lift was the ramp up
of projects that had been commissioned in previous years.
• Canada, the DRC and Mongolia saw the greatest
production increases courtesy of project growth, while
expansions were behind firm gains in Russia and China.
• Notable production losses were seen in the United States,
Rank Production (t)
2014 2013 2013 2014
1 1 China 438.2 461.8
2 2 Australia 268.1 272.9
3 3 Russia 248.8 262.2
4 4 United States 229.5 205.0
5 5 Peru 187.7 172.6
6 6 South Africa 177.0 163.8
7 7 Canada 133.3 153.8
8 8 Mexico 119.8 118.2
9 9 Indonesia 109.6 116.4
10 10 Ghana 107.4 108.2
11 11 Brazil 80.1 80.7

Peru and South Africa. 12 12 Uzbekistan 77.4 80.4

13 14 Argentina 50.1 59.8
14 13 PNG 60.5 58.2
• Average Total Cash Costs fell by 3% in 2014 to $749/oz.
15 18 Kazakhstan 42.6 49.2
16 16 Mali 48.2 47.4
• The main factor behind the drop in costs was favourable
17 17 Tanzania 46.6 45.8
exchange rate movements for many producers as a result
18 15 Chile 48.6 44.2
of the rally in the US dollar.
19 19 Colombia 41.2 43.1
20 20 Philippines 40.5 42.6
• All-in Costs dropped by almost one-quarter, as the Rest of World 506.4 546.9
frequency and magnitude of asset impairments both World Total 3,061.5 3,133.1
reduced when compared with 2013. The drop in All-in Source: GFMS, Thomson Reuters
Costs, excluding impairments, was a less dramatic 3%, at
an average of $1,208/oz in 2014.
MINE PRODUCTION
• Producers collectively added 103 tonnes to the global
hedge book last year, with two companies, Polyus and INTRODUCTION
Fresnillo, behind much of the activity.
MINE SUPPLY

Last year reflected a period of strategy consolidation

• At the margin, the strong dollar phenomenon also elicited for many producers, after the year of turmoil in 2013
hedging activity as producers sought to hedge small which in many cases necessitated lifting reserve cut-off
volumes in domestic currency terms to lock in improved grades, consequent heavy and widespread impairments,
local gold prices. and headcount reductions both at mine sites and head
offices, all in response to the fall in metal prices.
• Mine production is expected to be broadly flat in 2015, as
the contribution from projects fades. Mine production delivered a sixth consecutive year of
growth, increasing by just over 2% last year, to reach a
GLOBAL GOLD PRODUCTION record volume of 3,133 tonnes. Much of 2014’s growth
Australia Russia Other
came from new operations that have been brought
4000
Other Africa South America Other Asia online following investments made during the boom
3500 South Africa North America China years. Geographically these were diverse, with the key
3000 beneficiaries of project-related growth having been
2500 Canada, the Democratic Republic of the Congo (DRC),
and Mongolia. Russia saw a strong gain with production
Tonnes

2000
up by 5%, with the majority of growth having come from
1500
expansion of existing operations, as did China, which was
1000 also up by 5% year-on-year, to represent the strongest
500 absolute growth in 2014. Heavy losses were few in
0 number, but included the United States, Peru and South
2005 2007 2009 2011 2013 Africa.
Source: GFMS, Thomson Reuters

32

MINE PRODUCTION WINNERS AND LOSERS, 2014 VERSUS 2013
Source: GFMS, Thomson Reuters
Nevertheless, this lift in output represented a substantial
slow-down in the rate of growth relative to that seen
in the previous year. Much of this has been due to the
thinning of the project pipeline; a key factor in the growth
of recent years has been the advancement and delivery
of greenfield projects into production, particularly in the
period that followed the global financial crisis, which
coincided with the gold price progressively achieving
record levels between 2009 and 2012. To underscore
this point, the top five growth stories at the asset level
in 2014, which collectively added 60 tonnes year-on-
year, were all projects that had seen substantial capital
investment before the gold price receded. Specifically,
these were the Kibali, Oyu Tolgoi, Tropicana, and Akyem
GLOBAL PROCESSED GOLD GRADE VS PRICE
Ch5 Scrap Share of Total Supply
2.0 Gold Price
Processed Ore Grade
1.8
Processed Ore Grade (g/t)
1.6
1.4
1.2
2005 2009
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
-15 t -10 t -5 t -0.5 t +0.5 t +5 t +10 t +15 t
operations, all of which produced first gold in 2013, and
Pueblo Viejo, which poured first gold in 2012. Indeed,
the only project of global significance to have entered
production in 2014 was Cerro Negro in Argentina, having
contributed almost five tonnes of gold production in its
debut year.
MINE SUPPLY
After a campaign to control costs that has now been
underway for two years, Total Cash Costs in dollar
terms fell last year, albeit by a modest 3%. The key
influence behind this positive outcome, however, was
predominantly beyond producers’ control in the form of
favourable moves in exchange rates to the US dollar; with
the dollar rally in the second half of 2014, the majority
of currencies weakened, in some cases substantially,
such as the Russian rouble and Ghanaian cedi. Another
factor supporting a reduction in costs has been a shift by
2000 producers to process higher grades ore, where feasible,
as reflected by the inflection point in 2013, charted below
1500 left.
Annual Average US$/oz
Looking at All-in Costs, a proprietary GFMS metric
1000
developed to reflect the long term cost of mining, costs
were reined in more dramatically, as asset impairments,
500 although still a relatively common occurrence in 2014,
came in substantially lower year-on-year. To this end,
0
All-in Costs for 2014 totalled $1,314/oz, a 25% year-on-
2013 year reduction. Stripping out the effects of impairments,
33
 GFMS GOLD SURVEY 2015
however, leaves a more modest outcome, with All-in
Costs less write-downs reduced by 3% year-on-year at
just above $1,208/oz.
Although sustaining capital has, by necessity, been
maintained, projects have in the main been kept on
hold as part of an industry-wide move to keep non-core
expenditure to a minimum. This has been compounded
by mining companies’ apparent renewed recognition
of their role as custodians of their investors’ capital.
With most companies’ boards reluctant to take on new
tranches of debt, and following the punishing run that
most mining companies’ share prices have suffered,
equity raisings are almost inconceivable. As such there
has been an increasingly visible theme for investments
to be funded from internal cash flow and to demonstrate
sufficiently attractive returns to make any proposal
more compelling to the board than returning that cash
to shareholders. As a result of this, the near-term
pipeline of projects has thinned and the scope for new
developments to continue to deliver production growth
in 2015 has waned. The GFMS team at Thomson Reuters
expects that global production growth will stall next year
as the project pipeline delivers less incremental growth
and a handful of depleted mines close.
M&A remained subdued last year, with the value of
deals in the gold space having dropped by 9% compared
with 2013 to $7.3 billion, amounting to just one-fifth of
the recent peak in deal flow recorded in 2011. Although
several larger companies are sitting on cash and have
MINE SUPPLY
outlined that in principle they are ready to do deals
should the right opportunity be presented, there have
only been a small handful of meaningful transactions.
It is also of note that the industry engaged in net
producer hedging in 2014. This was only the second
such occurrence on an annual basis since 1999 (the
other having been in 2011) and of the two, at 103 tonnes
2014 was the first occurrence of meaningful volume.
This switch in activity back to the supply side of the
market, coupled with record levels of mine production,
meant that total supply from the mining industry was
3,237 tonnes; another record, breaking the previous 1999
high by more than 100 tonnes, albeit then from a much
heavier balance of hedging in 1999.
The dominant reason for the shift to producer hedging
was a move by two producers, Polyus Gold International
and Fresnillo plc., in both cases to manage cash flow
risk associated with planned investments. In the case
of Polyus, which entered into a series of exotic hedge
contracts in the second quarter, the purpose was to
provide cash flow stability over the medium term,
34
during which time elevated investment (and production
volumes) were planned to take place, associated with the
development of its Natalka project. For Fresnillo, which
hedged in the fourth quarter, the rationale was similar;
to provide additional price stability as it purchased
the minority 44% stake of the Penmont Joint Venture
(comprising the Herradura and Noche Buena mines,
among other assets) from Newmont.
Aside from the above two players, that were collectively
responsible for almost two-thirds of the outstanding
hedge book at year-end, relatively smaller-scale hedging
took place by a number of companies. Many of these
followed the strengthening of the US dollar, with hedges
denominated in Australian dollars that sought to take
advantage of a higher domestic gold price. We would
caution that in many cases investors remain staunchly
opposed to producer hedging and we would not describe
these events as being reflective of a return to producer
hedging en masse.
AFRICA
African gold output was up nine tonnes or 1% year-on
year, bringing the total to 588 tonnes. The region’s
output was characterised by strong gains in the western
and central parts of the continent being offset by lower
production in the south of the continent.
Output in South Africa followed the long-running
downward trend in production with year-on year output
down 7% or 13 tonnes to a total of 164 tonnes. This
was despite limited industrial action during the period,
following on from the two-year wage agreement struck
in 2013 by a number of the major producers. Suffering
the heaviest year-on-year fall in output was South
Deep, heavily impacted in the first half by a four month
suspension of underground production while a ground
support programme was implemented. Although higher
SOUTH AFRICAN MINE PRODUCTION
350
300
250
200
Tonnes
150
100
50
0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters

grade ore was processed in the second half, this was not
enough to offset the shortfall in processed tonnes, which
resulted in a three tonne drop in production. Higher
processed grades were not enough to offset lower mill
throughput at both Mponeng and Doornkop where
combined output fell by three tonnes. In August, South
Africa’s strongest earthquake for 45 years was recorded
near Orkney and caused infrastructure damage to nearby
mining operations including Moab Khotsong, Kopanang
and Great Noligwa. Although no significant damage was
reported to the underground and surface infrastructure
at Tau Lekoa, the operations suffered a four day loss of
production following the earthquake. Kopanang was also
affected by a fall-of-ground fatality and a subsequent
temporary production halt contributing to a tonne of lost
production.
Increases in production in South Africa were led by
Kusasalethu where higher ore grades more than offset
lower throughput volumes leading to a one tonne
increase in output. The Kloof operations recorded a one
tonne increase as mill throughput continued to increase.
Despite the operational setbacks at Moab Khotsong, the
operation recorded a one tonne increase in output thanks
to an improvement in head grades.
In Namibia output was up slightly to a total of
two tonnes, primarily due to the commissioning
of the Otjikoto operation. Here, construction was
completed ahead of schedule in early December 2014
and the company announced the first gold pour on
11th December. The operation is scheduled to produce
up to five tonnes of gold in 2015 and will add significantly
to Namibian gold output. During the year, the country’s
other major gold mining operation, Navachab was
acquired by QKR Corporation Limited from AngloGold
Ashanti. In Zambia, production fell 8% to five tonnes
due to a decline in gold output from the Kansanshi
copper mine.
OTHER AFRICAN MINE PRODUCTION
Tanzania Other
450
Mali Congo (DRC)
400
Ghana Burkina Faso
350
300
250
Tonnes
200
150
100
50
0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
In Zimbabwe gold output was up 1% to 20 tonnes.
Privately-owned Metallon, following efforts to
recapitalise its five mines delivered a modest increase,
while Blanket mine was fractionally lower year-on-
year. In September 2014, the Zimbabwean Government
announced a reduction in the gold royalty rate from 7%
to 5% in an attempt to boost production. More recently,
in February 2015 the state-owned refinery reduced its
refining fees in a further attempt to attract feeds from
artisanal producers.
Despite the spectre of Ebola hanging over parts of west
Africa during the second half of the year, the region
continued to post increases in gold output. Akyem and
Agbaou, new operations in Ghana and Côte d’Ivoire
respectively, contributed an additional 15 tonnes.
Production in Côte d’Ivoire increased 33% or four tonnes
to a total of 18 tonnes, continuing the decade-long
growth trend. Guinea recorded an 11% increase in output
to 21 tonnes with Lefa and Siguiri each contributing an
additional tonne. Loulo in Mali added an additional two
tonnes due to a combination of increased head grade and
mill throughput. Mali recorded a 2% decline in output
to 47 tonnes. Behind this drop, output at Yatela fell by
one tonne in line with the planned cessation of mining
activities. Morila also suffered a one tonne drop in
output due to a decrease in the mill throughput and the
treatment of lower grade stockpiles. Also lower year-on-
year was Niger, which we estimate to have declined by
one tonne after SEMAFO moved to place the Samira Hill
operation on care and maintenance prior to its sale.
MINE SUPPLY
After a decade of strong growth, Ghanaian output was
relatively flat, rising by just one percent to 108 tonnes.
Despite the new operation at Akyem, a number of the
more established mines recorded drops in output year-on
year. At the Ahafo operation, lower mill throughput and
lower grades resulted in a four tonne reduction to a total
output of 14 tonnes. Tarkwa recorded a two tonne drop
in output where higher ore grades were not sufficient to
offset lower throughput, while lower grades but higher
throughput at Wassa also led to a two tonne drop.
Iduapriem saw a one tonne drop, in line with plans to
process existing stockpiles and mine less volume.
Production in Burkina Faso continued to grow, with
output up 10% to 39 tonnes. Leading the increase
were Essakane and Mana which added a combined five
tonnes, largely due to the processing of higher grade ore
at both operations. In Mauritania, steady production at
the Tasiast and Guelb Moghrein operations resulted in a
1% increase in production to ten tonnes. At Sabodala in
Senegal, production was steady at seven tonnes.
35
 GFMS GOLD SURVEY 2015

WORLD GOLD MINE PRODUCTION

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Europe
Russia 175.4 172.8 169.3 188.7 205.2 203.4 215.6 229.7 248.8 262.2
Turkey 5.1 8.1 10.1 11.4 14.5 16.6 24.1 29.6 33.5 32.3
Finland 1.2 1.1 1.5 1.7 3.8 5.6 6.4 8.9 8.4 7.3

Sweden 6.1 6.7 5.0 4.9 5.5 6.3 5.9 6.0 6.4 6.4

Bulgaria 2.3 2.8 2.9 2.8 3.3 2.5 3.4 4.3 4.6 5.4

Spain 1.4 2.2 0.5 0.0 0.0 0.0 0.4 1.5 2.1 2.0

Others 4.0 3.8 4.0 4.1 3.7 3.1 2.4 2.4 3.7 3.1
Total Europe 195.5 197.6 193.4 213.6 235.9 237.5 258.3 282.3 307.5 318.7
North America
United States 262.3 251.8 238.0 233.6 221.4 229.7 233.3 232.3 229.5 205.0
Canada 119.5 103.5 102.2 95.0 96.0 103.5 107.8 108.0 133.3 153.8
Mexico 30.6 39.0 43.7 50.8 62.4 79.4 88.6 102.8 119.8 118.2
Total North America 412.5 394.3 383.9 379.4 379.9 412.5 429.7 443.1 482.6 477.0
South America
Peru 217.8 213.5 183.6 195.5 201.4 184.8 189.6 184.4 187.7 172.6

Brazil 44.5 49.2 58.1 58.7 64.7 67.5 67.3 67.3 80.1 80.7

Argentina 27.8 43.4 42.5 40.3 48.8 63.5 59.1 54.6 50.1 59.8

Chile 39.6 40.4 41.5 39.2 40.8 38.4 44.5 48.6 48.6 44.2

Colombia 24.8 26.0 26.0 26.0 27.0 33.5 37.5 39.1 41.2 43.1

Dominican Republic 0.0 0.0 0.0 0.0 0.3 0.5 0.5 4.1 26.5 35.6

Venezuela 21.1 26.5 24.3 24.3 24.8 24.9 25.5 21.8 22.9 23.2
Suriname 18.2 16.9 16.1 17.9 20.8 22.9 24.6 26.5 27.0 26.6

Ecuador 11.9 14.0 14.0 14.0 14.0 17.2 17.6 17.6 17.4 17.8

Guyana 10.1 8.4 9.7 10.5 11.9 12.8 14.4 14.4 14.4 14.4

Nicaragua 3.9 2.9 3.1 2.9 2.6 4.9 6.3 6.9 8.7 8.8
Guatemala 0.7 5.2 7.7 8.0 9.0 9.4 12.1 6.6 6.5 6.3

Bolivia 8.0 9.6 8.8 8.4 7.2 6.4 6.5 6.4 6.1 6.3

Honduras 4.4 3.9 3.1 1.9 2.6 2.4 1.9 1.9 2.0 2.8

Panama 0.1 0.1 0.1 0.1 0.9 1.8 2.1 2.3 1.3 1.9
MINE SUPPLY

Other 6.8 8.0 8.1 6.4 6.0 5.6 5.7 5.9 6.0 5.7
Total South America 439.6 468.1 446.9 454.2 483.0 496.6 515.2 508.4 546.6 549.8
Asia
China 229.8 247.2 280.5 292.0 324.0 350.9 371.0 413.1 438.2 461.8
Indonesia 167.0 114.1 149.5 95.9 160.5 140.1 121.1 93.0 109.6 116.4
Uzbekistan 75.5 74.1 72.9 72.2 70.5 71.0 71.4 73.3 77.4 80.4
Kazakhstan 19.2 21.8 22.6 22.0 22.5 29.9 36.7 40.0 42.6 49.2
Philippines 33.3 36.1 38.8 35.6 37.0 40.8 37.1 41.0 40.5 42.6
Kyrgyzstan 16.6 10.6 10.5 18.4 17.0 18.5 19.7 11.3 20.2 19.2
Mongolia 18.4 18.9 18.4 16.5 14.1 13.9 12.4 12.8 17.8 30.5

Laos 6.7 6.5 4.5 4.7 5.4 5.5 4.4 6.7 7.2 5.6

Japan 8.3 8.9 8.9 6.9 7.7 8.5 8.7 6.7 6.4 6.7

North Korea 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3

Thailand 5.2 4.3 3.3 2.5 5.4 4.2 3.2 5.2 5.3 5.3

Malaysia 5.7 4.9 4.3 3.8 4.2 5.2 5.0 5.3 5.1 4.5

Saudi Arabia 7.5 5.2 4.5 4.0 5.1 4.5 4.6 4.7 4.5 5.2

Vietnam 2.4 2.5 2.7 2.7 3.1 3.4 3.7 3.9 4.1 2.6

Tajikistan 2.4 2.3 2.3 1.7 1.4 2.0 2.2 2.4 2.7 3.4

Armenia 1.6 1.1 0.4 0.5 1.4 1.6 2.1 2.1 3.5 4.7

India 3.0 2.5 2.9 2.6 2.1 2.8 2.3 1.7 1.6 1.6
Georgia 1.6 1.5 1.2 1.1 0.8 3.6 3.2 3.5 2.0 2.5

Other 4.8 4.3 4.3 4.3 5.0 6.7 6.4 6.2 6.2 7.5
Total Asia 615.3 573.2 638.9 593.7 693.5 719.5 721.4 739.2 801.0 855.8

36
 GFMS GOLD SURVEY 2015

WORLD GOLD MINE PRODUCTION

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Africa
South Africa 315.1 295.7 269.9 233.8 219.8 202.9 202.0 177.3 177.0 163.8
Ghana 62.8 69.9 77.3 80.4 90.3 92.4 91.0 95.7 107.4 108.2
Mali 46.7 56.9 51.9 47.0 49.1 43.9 43.5 50.3 48.2 47.4
Tanzania 49.3 44.8 40.1 35.6 40.9 44.6 49.6 49.1 46.6 45.8
Burkina Faso 1.7 2.1 2.9 6.9 13.8 25.3 34.1 31.3 35.0 38.5
Dem. Rep. of the Congo 5.3 5.6 6.5 7.2 10.0 17.0 22.0 26.1 25.3 40.0
Sudan 5.6 3.6 3.1 2.7 4.0 10.1 22.5 27.9 20.1 20.5

Zimbabwe 19.5 17.2 13.5 8.9 9.8 16.3 19.0 19.5 19.6 19.9
Guinea 14.3 16.6 18.0 23.9 22.5 20.4 19.7 18.4 19.0 21.0

Ivory Coast 3.0 3.0 3.0 5.3 8.6 7.3 13.4 14.0 13.6 18.0

Ethiopia 3.8 4.0 3.9 3.8 5.5 6.6 11.5 12.0 12.0 12.0

Egypt 0.0 0.0 0.0 0.0 0.0 4.7 6.3 8.2 11.1 11.7
Mauritania 0.5 0.6 1.9 6.8 8.4 9.1 8.7 8.2 10.0 10.1

Senegal 0.1 0.1 0.1 0.1 5.2 4.5 4.3 6.8 6.5 6.7

Zambia 0.5 1.0 1.3 1.9 3.1 3.4 3.5 4.2 5.2 4.8

Eritrea 0.5 0.5 0.5 0.5 0.5 0.5 12.8 10.2 3.4 1.3

Other 20.6 18.3 19.8 21.4 18.6 20.7 20.3 20.4 19.4 18.3
Total Africa 549.5 539.9 513.6 486.2 509.9 529.8 584.1 579.7 579.4 587.9
Oceania & Other
Australia 262.2 246.8 247.4 215.2 223.5 260.8 258.6 251.7 268.1 272.9

PNG 70.9 61.7 61.7 70.3 70.6 69.7 63.5 57.2 60.5 58.2

New Zealand 10.6 10.6 10.6 13.4 13.4 13.7 11.6 10.2 12.4 11.3

Solomon Islands 0.1 0.1 0.1 0.1 0.1 0.1 1.7 2.0 2.0 0.8

Fiji 2.9 1.5 0.1 1.1 1.1 2.1 1.6 1.6 1.4 0.6

Other 2.5 2.7 1.8 1.7 0.9 0.0 0.1 0.1 0.0 0.0
Total Oceania & Other 349.1 323.4 321.8 301.8 309.7 346.4 337.1 322.8 344.3 343.8
World Total 2561.5 2496.4 2498.5 2428.9 2611.8 2742.4 2845.9 2875.4 3061.5 3133.1
Source: GFMS, Thomson Reuters

In Egypt, continued ramp up of mill throughput at
Sukari led to an increase in output of one tonne to a
total of 12 tonnes. At the polymetallic Bisha mine in
Eritrea, completion of mining in the oxide gold cap led
to a two tonne fall in production. Tanzanian production
declined by two percent or one tonne to 46 tonnes. The
completion of mining at Golden Pride and Tulawaka led
to a year-on-year loss of two tonnes, while higher grades
at Buzwagi contributed an additional tonne. Production
at Bulyanhulu increased by one tonne to seven tonnes.
The operation benefited from increased head grades
and the commissioning of the new CIL circuit to treat
reclaimed tailings. The Geita and North Mara mines
continued to operate strongly, adding a combined one
tonne and contributing an aggregate 23 tonnes to the
Tanzanian country total.
Production in the Democratic Republic of the Congo
surged 15 tonnes or 58% last year to a total of 40
tonnes, primarily due to the commissioning of new
operations. The largest increase in output of any
individual operation on the continent occurred at
MINE SUPPLY
Kibali. This mine, commissioned in 2013, continued to
ramp up production and contributed an additional 14
tonnes, bringing total production to 16 tonnes. Likewise,
Namoya, commissioned in the first quarter, continued to
gradually ramp up and contributed half a tonne last year.
Output from Sudan was slightly up year-on-year, due
to a moderate increase in production from the domestic
small-scale sector, from a depressed level in 2013.
NORTH AMERICA
Total mine production in North America contracted by
six tonnes in 2014, breaking the trend of five years of
consecutive growth. This left total production in North
America at 476 tonnes. The drop was largely driven by
the United States, where production fell by 24 tonnes, or
11% year-on-year, to 205 tonnes. A significant portion
of the fall was attributed to the two largest operations
in the country, Barrick’s Cortez and Newmont’s Nevada
complexes, which declined by a combined 21 tonnes.
The most pronounced fall was registered at Cortez,
where a 48% drop in processed grades led to a 14 tonne

37
 GFMS GOLD SURVEY 2015
contraction. Whilst lower grades were expected, a 33%
increase in throughput rates failed to offset the drop in
contained gold in the process stream. At the latter, a
14% drop in mill grades, lower throughput and the sale
of Midas in early December 2013 led to an eight tonne
drop by year-end. Further declines were recorded at
Fort Knox, where lower grades led to a one tonne drop in
production. In addition, Kettle River-Buckhorn registered
a one tonne fall in output as the mine nears the end of its
life. In addition, the suspension of operations at Hollister
resulted in a three tonne drop in output.
Elsewhere in the country, small gains partially countered
these losses, with Bald Mountain and Bingham Canyon
making the largest contribution. At these operations
processed grades rose by 17% and 43%, respectively,
resulting in a combined three tonne increase in output. A
further one tonne increase came from Turquoise Ridge,
on the back of higher throughput and ore grades. Since
a change of ownership in April 2014, production at
Marigold increased substantially quarter-on-quarter as
higher grade tonnes were mined from the lower benches.
Nevertheless, output remained broadly flat primarily due
shortfalls in the second quarter when mining activities
focused on the stripping of waste material from the pit.
Gold production in Mexico also broke trend and, after ten
years that saw volumes rise six-fold as the industry firmly
established itself, output in 2014 fell by two tonnes, to
118 tonnes. The slight decline was led by lower processed
grades at Los Filos, Mulatos, El Sauzal, Cerro San Pedro
MINE SUPPLY
and Palmarejo. Aggregate production at these five
properties fell by seven tonnes. Further losses were
recorded at Soledad-Dipolos, Cieneguita and Mina Moris,
where mining activities ceased, leading to a two tonne
drop in output in total. These losses were partially offset
by new supply from recently commissioned operations
such as La India, and El Concheño which combined
contributed an extra four tonnes. The most significant
NORTH AMERICAN MINE PRODUCTION
300
United States Canada Mexico
250
200
Tonnes
150
100
50
0 where output fell by under half a tonne.
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
38
change at the mine level came from Peñasquito, where
production rose by five tonnes on the back of a 44%
increase in average head grades, as well as improved
recoveries and throughput, as operations focused on the
higher grade ore from lower benches of Phase 4 mine
plan.
Providing a meaningful offset to the losses in the United
States and Mexico, Canadian output grew by 15%, or
21 tonnes, to total 154 tonnes. This second year of strong
growth was driven by a continued ramping up of output
from Detour Lake, Canadian Malartic, Young-Davidson,
and two operations commissioned in 2013 (Mount
Milligan and a restart at Goldex). On an aggregate basis,
these operations added 17 tonnes. At Detour Lake,
head grades rose by 17% coupled with a 59% increase in
throughput. At Canadian Malartic and Young-Davidson,
processed grades also rose, though at the latter, mining
operations at their open pit ceased in the second quarter
of 2014 having reached its end of life. Further gains
were seen at Timmins West, where higher grades and
throughput yielded a two tonne increase in output
primarily due to mine sequencing and a mill expansion
over the third quarter of 2013.
SOUTH AMERICA
Following a strong recovery in 2013 of 38 tonnes, mine
production in South America registered a small increase
of three tonnes in 2014, to a total of 550 tonnes. Though
the ramp up in production at new mines and recently
commissioned operations continued well into the end
of the year and contributed to some strong increases at
the country level, another theme, of losses from aging
operations and mine closures partially offset these gains.
After three years of consecutive decline, mine supply
from Argentina grew by ten tonnes or 19% year-on-year
to total 60 tonnes, despite limitations on the exchange
of Argentine pesos into US dollars and inflationary
pressures in the country. The result was mainly driven
by new supply from Cerro Negro, where 2014 production
reached five tonnes, while at Veladero, production rose
by nearly three tonnes, primarily due to higher grades
mined from the Federico pit. Although output was
partially offset by a 14% fall in tonnes mined due to
mining equipment availability issues, heap leach ore
processed remained flat. The third largest increase was
registered at Gualcamayo, where a 63% increase in feed
grade added almost two tonnes relative to 2013. This
was partially countered by lower production at Alumbrera

In the Dominican Republic, gold production rose by nine
tonnes, or 34%, to nearly 36 tonnes. At Pueblo Viejo,
full production was achieved over the second quarter
of 2014 following major modifications to the autoclave
facility in the prior year. As a result, output rose by nine
tonnes, supported by a 52% increase in throughput,
albeit partially countered by a 10% fall in grades. At Las
Lagunas, production remained relatively flat despite
technical issues that impacted recoveries at the CIL plant
over the fourth quarter.
We estimate that Colombian gold production rose by two
tonnes, or 5%, to 43 tonnes. The majority of production
in the country originates from informal operations, which
were supported by a 22% increase in the Colombian peso
gold price relative to 2013. Modest gains were posted
at Mineros S.A.’s El Bagre alluvial operations and La
Ye underground mine. A further drop was registered
at Segovia, where old hoisting equipment and other
material handling systems caused additional delays. At
Marmato, production remained flat. Mine production in
Suriname stood at 27 tonnes, where the steady increase
in output over the last couple of years has justified
investment for the construction of a gold refinery which
was opened in early 2015.
Brazilian production remained broadly flat at 81 tonnes
as gains from the ramp ups at Pilar and Salobo were
partially offset by losses from the drop in grades and
closure at Tucano-Amapari and Sao Vicente, respectively.
Similarly, we estimate that Bolivian domestic mine
production stood broadly flat at six tonnes with much of
the industry being informal in nature.
In Venezuela, gold production was steady at 23 tonnes.
We estimate that an ongoing initiative to formalise
the unofficial sector was broadly countered by an
accommodating trend in the parallel exchange rate. To
provide an update on Venezuela’s latest currency reforms,
MAJOR SOUTH AMERICAN PRODUCTION
500 Argentina Colombia Dominican Republic
Brazil Chile
Peru
400
300
Tonnes
200
100
0 0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
President Maduro’s government recently announced
a third mechanism called Simadi that allows for legal
buying and selling of the bolivar at a higher rate than in
two preceding systems, SICAD I & II. Since its inception,
the parallel rate has plummeted keeping this initiative on
the back foot.
Elsewhere in the region, production fell significantly.
The largest decline came from Peru, the region’s largest
producer, where output fell by 15 tonnes, or 8%. At
Yanacocha, output fell by one tonne, or 5%, due primarily
to ongoing depletion of gold inventory on the leach
pads. The drop in output from Yanacocha accounted
for almost half of a three tonne drop registered in the
region of Cajamarca. Following the fall in gold price
in 2013, several Peruvian mines including Antapite,
Ares, Coricancha and Pierina were placed on care &
maintenance activities during 2014, which collectively
led to a loss of three tonnes. A more pronounced fall was
recorded for the jungle region of Madre de Dios, where
attempts by the government to formalise small scale
mining and stamp out illegal mining activities have led to
an eight tonne drop in output, according to the Ministry
of Energy and Mines (MEM). On the other hand, gains
registered at Parcoy and La Arena amounted to nearly
two tonnes, where at the latter, production rose by 3%
due to more ore placed on the leach pads.
Total mine production in Chile fell by four tonnes due
primarily to the suspension of mining operations at La
Coipa in October 2013. Having reached the end of its
MINE SUPPLY
mine life, La Coipa was responsible for a four tonne drop
in output. Lower grades at two of the largest operations
in the country, El Peñón and Centinela, in 2014 drove a
combined three tonne contraction. On the other hand,
gains at Maricunga were posted as a result of higher
processed grades due to favourable mine sequencing,
combined with better recoveries, which led to a two tonne
increase in production.
REST OF SOUTH AMERICAN PRODUCTION
140
Ecuador Guatemala Other
120 Suriname Guyana
Venezuela
100
80
Tonnes
60
40
20
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
39
 GFMS GOLD SURVEY 2015
ASIA
With an increase of almost 24 tonnes or 5%, China’s mine
production increase to total 462 tonnes was the strongest
absolute gain globally. This continued to cement its
position as global leader and represented the fifteenth
consecutive year of expansion of the country’s gold
output. The principal driver was an uplift in the volumes
produced by small and mid-sized miners that sell their
ores and concentrates to third party gold smelters.
Accordingly, the volumes of domestically mined gold
that was smelted by third parties increased by 19% while,
conversely, ‘mine-produced gold’, which comprises
integrated mine-to-market production, fell by 11% year-
on-year. As has been the case elsewhere, cognisant of
the drop in metal prices, a number of producers have
over the course of the past 18 months sought to optimise
operations and fast-track capital-efficient projects with a
strategy of expanding production and lowering unit costs.
Zhaojin Mining Industry Co Ltd., one of China’s larger
producers of both mined and refined gold, pushed
ahead with several projects across the value chain,
which included extensive underground development,
refurbishment of the gold mill at its Xiadian Mine, and
the commissioning of the calcining plant at its Gansu
smelter.
A feature of last year has been consolidation of smaller
producers by the larger companies, such that corporate
production volumes in some cases were supported
MINE SUPPLY
in the face of a drop in mine-produced gold at the
country level. Zhaojin, a company whose production
footprint has traditionally had a focus on assets close
to its headquarters in Zhaoyuan City in Shandong,
implemented a diversification plan targeting similar
volumes in the future from both Zhaoyuan and from
outside the city. This strategy was in line with an
announced plan to expand its portfolio through
CHINESE MINE PRODUCTION
500
450
400
350
300
Tonnes
250
200
150
100
50
0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters; China Gold Association
40
acquisitions, which included the purchase of a controlling
stake in the Gantan mine in Gansu Province. Thanks to
M&A, the company’s mined output was flat year-on-year
at 20 tonnes. In a similar vein, Zhongjin Gold Co Ltd
acquired six smaller mining companies last year under
a consolidation initiative by its holding company, China
National Gold Group Corp.
Bucking the trend, a number of companies delivered
firmer mine output year-on-year. Zijin Mining registered
a 5% increase in its domestic mine output, with gains
from the Hebei Chongli and Longnan Zijin mines more
than counteracting a drop in gold output from its flagship
Zijinshan gold-copper mine. China Gold International’s
Chang Shan Hao asset increased output by 24% last
year to five tonnes and has provided market guidance
of further growth expectations for 2015. The operation
implemented a project to double its crushing capacity in
late 2013 which allowed throughput to ramp up through
last year. Providing a modest offset, Hong Kong-listed
Real Gold announced in August that a combination of
factors, including a drop in the gold price and persistent
issues with ore dilution, which has progressively led
to lower head grades, rendered its Luotuochang mine
unviable since 2013, leading to a decision to suspend
mining activities.
On the smelting side, firm growth was recorded by the
gold smelting industry, which was tempered by a drop
in domestic gold-bearing feeds to base metals smelters.
Regarding the gold smelters, Lingbao Gold, although
having delivered a relatively flat output from its mining
business, saw its smelting business source and process
12% more gold in the first half of 2014. Similarly, building
on the 5% growth from its own mines, Zijin’s sourcing
and refining activities of third party feeds grew by 63%
last year.
Falling outside our numerical analysis for Chinese mine
supply, but nevertheless noteworthy, gold production
from base metal concentrates imported to China rose
appreciably last year, in the form of shipments of
precious metals-bearing copper concentrates, which
included increased flows of contained gold from
Mongolia (Oyu Tolgoi) and from Chile. Historically,
many Chinese base metals smelters employed older
technology, which meant that the payment rates on offer
for precious and minor metals recovery were often not
internationally competitive.
With optimisation efforts having not only been focused
on mining but also on downstream investments in recent

years, it is likely in our view that China may win additional
market share for international concentrates with higher
precious metals assays, that previously may have been
considered off-limits.
Outside China, Asian mine supply rose by 9%, or
31 tonnes. Growth continued to be supported by the
ramp up of new mining properties. First among these
was Oyu Tolgoi, in Mongolia. Operations there continued
to ramp up to design capacity and accounted for a
13 tonne increase year-on-year. This was the second
largest gain globally at the mine site, second only to the
ramp up of Kibali in the DRC, another recently started
mine. Dampening this growth slightly, output from
Boroo fell by one tonne due to lower processed grades
and lower recoveries from the leach pads.
In Indonesia, the region’s second largest producer,
output grew by just under seven tonnes. Three tonnes
of this rise came from the operations of J Resources,
with a near tripling of output from North Lanut and the
onset of production at Seruyung. Gosowong and Batu
Hijau both posted a one tonne rise associated with higher
grades. Some losses dampened the increase; Grasberg,
the county’s largest producer and usually the source
of significant moves in Indonesian output, saw output
almost flat. Production at Martabe also contracted
slightly which, when combined with the cessation of
production at Mt. Muro, saw just less than one tonne lost
between these two properties.
Potential legislative problems surrounding a mooted
ban of copper concentrate exports from Indonesia slated
to become effective from 2017, look to have relaxed
somewhat, with talks ongoing on the construction of
domestic smelters to process copper concentrates.
Despite interruptions to exports in 2014, on an annual
basis these have not had any real impact on the
international gold market.
INDONESIAN MINE PRODUCTION
200 50 Grasberg's Share of
Total Production (%)
64
58
54
150 42
50 38
38
Tonnes
100
50
0 0
2005 2007 2009 2011
Source: GFMS, Thomson Reuters, Freeport McMoran
GFMS GOLD SURVEY 2015
Kazakhstan also saw an increase of seven tonnes, or
16%, leaving output at 49 tonnes in total. Much of the
increase we ascribe to the activities of state‑held miner
Tau‑Ken Samruk, tied in to the start up of a third Kazakh
gold refinery, to develop and exploit new feedstock
sources, such as at Eshkeolmes, which should have been
ramping up production last year. Additionally, we take
the view that operational improvements at many existing
properties and the start of production at several smaller
copper‑gold and primary gold operations helped lift
output last year.
Results were not all positive, however, as output from Kaz
Minerals’ assets in Kazakhstan was down slightly year-
on-year, due to a 30% reduction in grade at Artemyevsky
as mining transitioned to lower grade areas. Glencore’s
production from Kazzinc fell by 13%, or two tonnes,
primarily due to lower grades at Vasilkovskye. Elsewhere,
production at AltynAlmas was broadly flat in 2014.
The country is developing a new mining code that
it hopes to adopt in 2015, and is tabling revisions to
legislation on subsoil use law, with the aim to simplify
and streamline the bureaucratic process of acquiring
subsoil rights to therefore encourage further mineral
exploration and foreign direct investment.
Uzbek output is estimated to have risen once again, by
three tonnes, or 4%, as a result of continuing investment
in improving operational efficiencies and prolonging the
life‑of‑mine at the large, state‑run Muruntau complex,
MINE SUPPLY
as well as development and modernisation works at
several other properties, such as at Kochbulak. In 2014
the main state run operators are reported to have begun
work on a significant programme of exploration and
development of further gold deposits, in addition to
rebuilding and expanding Uzbekistan’s ore processing
capacity. One such processing circuit for refractory ores
at Mardjanbulak was commissioned late in 2013.
OTHER ASIAN MINE PRODUCTION
Other 350
Uzbekistan Other
Grasberg
Mongolia Kazakhstan
300
Philippines Kyrgystan
250
30
32
200
Tonnes
29
150
100
50
2013 2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
41
 GFMS GOLD SURVEY 2015
Production in the Philippines grew by two tonnes, due to
gains of one tonne at both Didipio and Co‑O. The former
posted a 9% increase in grade, while the latter recorded
a 60% increase in throughput. Azerbaijan and Armenia
both also saw an increase in output, of one tonne each.
Saudi Arabian production also rose modestly, by just less
than one tonne, due to increased volumes from Ma’aden;
it’s As Suq mine achieved commercial production in July.
Only six of the region’s producing countries saw a decline
in production, and between them losses totalled only five
tonnes. Among the meaningful losses was a two tonne
loss in Laos, with the largest contributor a one tonne
drop at the Sepon copper-gold mine as gold operations
ceased in December 2013. Vietnamese production fell by
a similar degree, due to the suspension of operations at
Bong Mieu and Phuoc Son.
After a recovery in 2013, production in Kyrgyzstan fell
slightly, by one tonne, with output falling at Kumtor due
to the processing of lower grade ores. Additional small
losses were seen in Malaysia, India and Thailand.
EUROPE
European output grew for a seventh consecutive year,
albeit slower than in 2013, rising by 11 tonnes, or 4%.
Whilst this was the second largest increase globally,
it was nevertheless only one fifth as strong as the rise
seen in Asia. The region’s largest producer, Russia, was
responsible for nearly all of this growth. Output in Russia
MINE SUPPLY
rose by 13 tonnes, or 5% year-on-year, cementing the
country’s place as the world’s third largest producer.
At the mine level the standout gain was at Kupol, where
we estimate that production rose by seven tonnes, due to
the contribution of higher grade ore from the Dvoinoye
operation. The continued ramp up of several properties
provided further gains. Mayskoye recorded a production
RUSSIAN, TURKISH AND OTHER EUROPEAN MINE PRODUCTION
350
Other
300 Turkey
Russia
250
200
Tonnes
150
100
50
0 0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
42
increase of three tonnes in its first full year of output.
At Albyn and Verninskoye, recovered volumes increased
by two tonnes apiece as throughput and grade rose
at both properties. An estimated one tonne increase
also came from Belaya Gora. Other gains came from
increased throughput at both Olimpiada and the Kubaka
mill, where production grew by a combined three tonnes.
Additionally, gold as a by-product of Russia’s base metal
mining industry also rose year-on-year, by two tonnes.
Some losses were seen, with output at Petropavlovsk’s
Pioneer, Pokrovskiy, Malomir and Alluvial operations
estimated to have fallen by a combined four tonnes.
In addition, output fell slightly at Titimukhta,
Mnogovershinnoye and Novoshirokinskoye.
Due to the targeted nature of western sanctions against
Russia, these have largely not impacted the operational
activities of Russia’s gold miners. Of significantly more
importance has been the fall in global benchmark oil
prices, and the knock-on weakening of the rouble, which
has meant that Russian miners have seen a degree of
respite from the low price environment in recent quarters.
The annual average rouble gold price increased by 8%
year-on-year, compared to a drop of 10% in the London
p.m. fix. Similar to other jurisdictions, however, there are
still instances of reductions in capital expenditure and
a focus on achieving operational efficiencies at existing
properties, rather than pursuing organic growth through
greenfield projects. Polyus Gold, for example, initiated
a strategic review process for the development of its
globally significant Natalka project, and is conducting a
strategic review to identify low-capex growth options.
Aside from Russia, the only other increase was seen
in Bulgaria, where higher grades and volumes at
Chelopech, coupled with the start up of the pyrite
flotation circuit, led to a gain of less than one tonne.
OTHER EUROPEAN MINE PRODUCTION
30
Sweden Spain
Finland Bulgaria Other
25
20
Tonnes
15
10
5
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters

Elsewhere in Europe, losses were widespread, although
limited in magnitude. The largest decline was seen in
Finland, where production fell by one tonne due to the
suspension of operations at Laiva in the first quarter of
2014, and the bankruptcy of Lappland Goldminers early
in 2014. Greek output contracted by half a tonne, due
to a drop in output at the Olympias tailings retreatment
operation. Turkish output also fell by one tonne,
attributable to Çöpler, where output contracted due to a
12% drop in processed grade.
Production in Sweden, Spain and Poland was virtually
flat last year, with the largest movement a near halving
of output at Svartliden in Sweden, as the operation
transitioned to processing lower grade stockpiles after
underground mining ceased at the end of 2013.
OCEANIA & OTHER
Output in Oceania was steady at 344 tonnes. Gains in
Australia were offset by losses in the smaller producing
countries. In Australia, the region’s largest gold
producer, output increased by five tonnes to 273 tonnes.
This represents the highest gold production in Australia
since 2003. Gains were largely driven by strong
contributions from the ongoing ramp up in production
from recently commissioned mines including Tropicana,
Tomingley, Andy Well and Mount Carlton. Together these
operations contributed an additional 17 tonnes. Of this,
the majority can be attributed singularly to Tropicana,
which saw an increase of 13 tonnes year-on-year, having
achieved first production during September 2013.
Production at the largest gold producer in Australia,
Boddington, was almost unchanged at 22 tonnes.
Likewise the Kalgoorlie Superpit contributed a steady
21 tonnes. The Cadia Ridgeway operation recorded a
one tonne increase after the continued ramp up of Panel
Cave 1 and the commencement of commercial production
AUSTRALIAN MINE PRODUCTION
300
250
200
Tonnes
150
100
50
0 10 Agbaou Côte d'Ivoire 0.2 4.6 4.4
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters; BREE
GFMS GOLD SURVEY 2015
from the Cadia East Panel Cave 2. Tanami recorded
a one tonne increase from improved mill throughput,
while combined gold output from the Prominent Hill and
Olympic Dam copper mines, added one tonne.
However, a number of the other established operations
recorded slight declines in production with St Ives,
Telfer, Jundee, Ravenswood, Mount Monger and Cowal
contributing a combined six tonne loss. Adding to the
year-on-year decrease, a suite of smaller operations
including Bronzewing, Coolgardie, Laverton, Wiluna,
Meekatharra and Coyote were placed on care and
maintenance during the prior period, contributing to
a five tonne decline. In 2014 the Mount Murchison
operation was also placed on care and maintenance due
to disappointing production and unit costs achieved from
the lower grade open pit reserves.
Production in Papua New Guinea fell by 4% to a total
of 58 tonnes. At Lihir, the country’s biggest producer,
an increase in mill throughput was more than offset by
a drop in milled grade resulting in a three tonne drop
in output. Production at Porgera was steady while
continued ramp up at Hidden Valley produced a one
tonne increase.
Gold production in New Zealand declined by one tonne
to a total of 11 tonnes. Lower grades at Macraes and
Reefton contributed to a combined two tonne decrease.
However, countering part of the drop, Waihi recorded
a one tonne increase, where higher mill throughput
MINE SUPPLY
more than offset a decline in milled grades. Elsewhere,
production in Fiji fell due to operational issues at
Vatukoula; while in the Solomon Islands production fell
one tonne due to the suspension of mining at Gold Ridge.
TOP TEN MINE SITE COMMISSIONS AND RAMP UPS
(tonnes) Production Change
Mine name Country 2013 2014 yoy
1 Kibali DRC 2.8 16.4 13.6
2 Oyu Tolgoi Mongolia 4.9 18.3 13.4
3 Tropicana Australia 2.9 15.9 13.0
4 Akyem Ghana 4.0 14.7 10.7
5 Pueblo Viejo Dominican Rep. 25.3 34.2 8.9
6 Detour Lake Canada 7.2 14.2 7.0
7 Peñasquito Mexico 10.6 16.8 6.2
8 Mount Milligan Canada 0.6 5.5 4.9
9 Cerro Negro Argentina - 4.7 4.7
Source: Company Reports
43
 GFMS GOLD SURVEY 2015
CORPORATE ACTIVITY IN 2014
Over the last year, corporate activity in the gold mining sector
continued along a downward trajectory. The aggregate value
of completed deals reported during 2014 was US$7.3 billion,
approximately 9% lower than in 2013 according to data from
ThomsonOne Investment Banking.
On the M&A front, major gold miners generally refrained
from engaging in aggressive takeovers. Priorities tended
towards rationalising existing portfolios and strengthening
balance sheets by reducing debt levels. As the sentiment in
the gold industry deteriorated, the focus to run more efficient
operations became pivotal. The largest transaction of the year
was the acquisition of Osisko Mining, a Canada-based gold
producer, jointly by Yamana Gold and Agnico-Eagle Mines
for US$3.7 billion. The duo out-bid Goldcorp’s US$3.6 billion
hostile offer through a ‘white knight’ takeover. Yamana Gold
and Agnico-Eagle Mines now jointly operate Canadian Malartic,
one of Canada’s largest gold mines. In April 2014, talks of
a potential merger between Barrick and Newmont, the two
largest gold producers in the world, fell through for the third
time in seven years. Some commentators suggested this deal
could have provided both companies with operational synergies
to reduce costs, most notably in Nevada where Barrick and
Newmont both manage a substantial portfolio of operations.
This year saw smaller mining companies take a more ambitious
stance in expanding their portfolios in different regions across
the globe. B2Gold and Papillon Resources merged in a deal
MINE SUPPLY
valued at US$570 million; a merger focused on the development
of the high grade Fekola project in Mali and the optimisation of
B2Gold’s four operating mines. Agnico-Eagle also expanded
its operations in Mexico, acquiring Cayden Resources and its
exploration-stage El Barqueño property for C$205 million.
According to Agnico-Eagle, El Barqueño bears several technical
similarities to its Pinos Altos during the early stages.
GOLD M&A PLUS INITIAL PUBLIC OFFERINGS
50 80
40
60
Aggregate deal value ($Bn)
Number of deals
30
40
20
20
10
0 0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
44
2014 TOP 10 GOLD PRODUCERS
Rank Output (t)
2014 2013 2013 2014
1 1 Barrick Gold 222.9 194.4
2 2 Newmont Mining 157.5 150.7
3 3 AngloGold Ashanti 127.7 138.0
4 4 Goldcorp 82.9 89.3
5 5 Kinross Gold 1
77.7 82.2
6 6 Newcrest Mining 73.5 72.4
7 7 Navoi MMC 1 70.5 73.0
8 8 Gold Fields 1 58.1 63.6
9 9 Polyus Gold 51.3 52.8
10 10 Sibanye Gold 44.5 49.4
1
Estimate
Source: Company Reports; GFMS, Thomson Reuters
Coeur Mining, the largest US silver producer, announced plans
to acquire Paramount Gold and Silver Corp in an all-stock
agreement valued at US$146 million. The merger would expand
Coeur’s mining presence in Mexico, and potentially create
opportunities for synergies between its Palmarejo silver-gold
mine complex and Paramount’s adjacent San Miguel project.
The transaction remains pending at the time of writing.
As the appetite for M&A among shareholders remained in the
doldrums, divestment continued to be a strategic move for many
“Tier 1” gold producers. Among them were Barrick, Newmont,
Goldcorp and Kinross Gold, which took the opportunity to divest
either mature or non-core operations over 2014. Barrick’s
Plutonic and Kanowna mines were acquired by Northern
Star Resources in an all-cash transaction for A$100 million.
Newmont’s Jundee operation was also acquired by Northern
Star for US$91 million. In early 2014, Goldcorp and Barrick
sold the Marigold joint venture in Nevada to Silver Standard
Resources for US$275 million in cash. Newmont disposed of its
44% stake in the Penmont Joint Venture, which was acquired by
the majority owner, Fresnillo plc, for $450 million in cash.
GOLD EQUITY INDICES AND PRICE
150
S&P 500
Index (2nd January 2013 = 100)
Philadelphia
100
Gold & Silver
Exchange Index
50
Gold
0
Jan-13 Jul-13 Jan-14 Jul-14 Jan-15
Source: GFMS, Thomson Reuters

PRODUCTION COSTS
• Average Global Total Cash Costs decreased by 3% in
2014, to $749/oz.
• Upward pressure on Total Cash Costs came from labour
and power costs, and lower by-product credits. These
factors were outweighed by favourable foreign exchange
movements and the effects of higher processed grades.
• The average total cash margin fell by 19%, to $517/oz, as
the gold price decreased by 10% year-on-year.
• Total Production Costs (including depreciated capital
expenditure) fell by 1%, to $983/oz.
• All-in Costs, which include all cash and non-cash costs,
sustaining capital expenditures, indirect costs and
overheads, decreased by 25% to $1,314oz.
• The fall in the average All-in Cost was driven by a
substantial decrease in the extraordinary non-cash
cost component, as fewer producers reported asset
impairment charges during 2014.
• Excluding impairments, All-in Costs fell by $34/oz, or
3%, in 2014.
WORLD TOTAL CASH AND ALL IN COST CURVES
3000
2500
2000
US$/oz
1500 2013 Average Gold Price ($1,411.23/oz)
2014 Average Gold Price ($1,266.40/oz)
1000
500
0 0
0 10 20 30
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
PRODUCTION COST REPORTING
Total cash costs and total production costs, as referred to in this
report, conform to the Gold Institute standard for cost reporting.
Where data reported by miners do not conform, adjustments, and
in some cases, estimates have been made. Readers should note
that cost analysis undertaken in GFMS Gold Survey 2015 draws
on annual data within our Gold Mine Economics service, and
incorporates both data for primary gold mines and significant
gold producing by-product gold producers (costed on a co-
product accounting basis). Earlier data have been restated
to reflect this change, from analysis that in the past has been
presented for primary gold mines only.
Co-product costs are derived by multiplying the total cash cost
by the percentage revenue contribution from gold. This is in
contrast to by-product costing, whereby non gold revenue is
netted off as a credit against the total cash cost. The co-product
analysis method has been employed where gold represents 65%
or less of a mine’s revenue.
Total Cash Cost comprises mine site cash expenses (mining, ore
processing, on-site general and administrative costs), refining
charges, royalties and production taxes, net of by-product credits.
Total Production Cost is Total Cash Costs, plus depreciation,
amortisation and reclamation cost provisions.
All-in Cost is a proprietary Thomson Reuters GFMS cost
parameter, designed to reflect the full marginal cost of gold
mining. In addition to Total Production Costs, it includes ongoing
capital expenditure, indirect costs and overheads.
MINE SUPPLY
3000
2500
2000
US$/oz
1500
1000
2014 All-in Cost
2013 All-in Cost 500
2014 Total Cash Cost
2013 Total Cash Cost
40 50 60 70 80 90 100
Cumulative Production %
45
 GFMS GOLD SURVEY 2015

GOLD PRODUCERS’ CURRENCIES AGAINST THE US$

240 130

220 AUD
120
Index, 2nd January 2013 = 100

Index, 2nd January 2013 = 100

200

180 RUB
110 CAD
160
100 MXN
140
ZAR
120
BRL 90
100

80 80
Jan-13 Jul-13 Jan-13 Jul-14 Jan-15 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15
Source: Thomson Reuters Source: Thomson Reuters

YEAR-ON-YEAR COST CHANGES The first step in the variance analysis process is to
quantify these effects of the changes in exchange rates,
In 2014, the global average Total Cash Cost, which by calculating the extent to which mine site production
includes mine site cash costs and realisation costs, net costs would have changed from one year to the next in
of by-product credits, plus royalties, decreased by 3%, dollar terms, were exchange rates the only driving factor.
to $749/oz. In order to better understand this year- Given the weakening of local currencies experienced in
on-year change, the main drivers of changes in $/oz a number of the major gold mining jurisdictions, it is
mine production costs can be isolated and estimates perhaps unsurprising that the exchange rate effect on
quantified, in the form of a year-on-year variance global Total Cash Costs was significant, reducing costs
analysis. This is undertaken by utilising the detailed by an estimated $70/oz in 2014. South Africa, Russia,
mine-by-mine analysis in Thomson Reuters’ Gold Mine Australia, Canada, Peru, Ghana and Mexico, all major
Economics database. gold producers, saw their currencies depreciate against
the dollar in 2014. The Australian dollar fell by 7% during
The outcome of this exercise suggests that the reduction the period, while in Russia, political events contributed
in annual production costs observed in 2014 cannot towards a particularly marked fall in the rouble during
be considered an unqualified success story. Although the second half of 2014.
producers have undertaken a range of initiatives aimed
MINE SUPPLY

at reducing costs, with some evidence of success, our In GFMS Gold Survey 2014, we reported that the average
analysis indicates that many gold miners have favourable grade of ore processed had stabilised in 2013, following
foreign exchange movements to thank for their improved a multi-year decreasing trend. In 2014, this downward
production costs expressed on a US$/oz basis. The effect trend reversed, with the average grade of ore processed
of weakening local currencies in many of the major gold increasing by 2%. Although modest in magnitude, this
mining countries sharply moderated upward pressure move to processing higher grade ore meant that the
from other cost drivers, particularly labour and power combined change in processed grade and volume lent
costs. downward pressure to Total Cash Costs in 2014, by an

TOTAL CASH COST VARIANCE, 2014 VERSUS 2013

860

+3 +1 -2
-7
+12 -8
By-Product Credits

Royalties
Power

820
Recovery
Labour

Fuel

-17
Grade & Volume
US$/oz

780

+66
Miscellaneous

740 -70
FX

770 749
700
2013 2014
Source: GFMS, Thomson Reuters

46

estimated $17/oz. This outcome is the consequence of
some producers amending mine plans to bring higher-
grade ore into production sooner, or deciding to defer
the processing of lower-grade stockpiles. The average
process plant (mill) gold recovery saw a modest
increase year-on year; consequently this cost driver
reduced costs by approximately $7/oz in 2014.
Although many producers continued to reduce mine
site headcount during 2014, labour costs saw an overall
increase in dollar terms, contributing an additional
$12/oz to Total Cash Costs in 2014. This cost component
benefited from currency effects outlined on the previous
page.
The average WTI crude oil price was $93.03/bbl in 2014,
a 7% decrease year-on-year. Given that producer fuel
costs are often subject to local factors such as tax rates,
and the tendency for producers to enter into long-term
fuel supply arrangements or hedging contracts, it is
reasonable to expect that volatility in global spot prices
will not necessarily have a corresponding dramatic effect
on producer costs. It does appear that gold miners saw
some benefit from the oil price fall however; we estimate
that the fuel component contributed a $8/oz decrease to
producer costs during the period.
The effect of power (electricity) cost increases was
to push up Total Cash Costs by $1/oz in 2014. As for
some other components of producer costs, currency
movements have a significant effect on dollar-
denominated power costs. For example, in Ghana, the
local electricity price saw a steep increase of 25%, which
was equivalent to a 15% decrease in dollar terms, due to
the 47% year-on-year depreciation in the Ghanain cedi.
In general, royalty payments are linked to the gold
price, which saw a year-on-year decrease of $145/oz, or
2014 GLOBAL AVERAGE ALL IN COST BREAKDOWN
Mining
Ore Processing
General & Admin
Smelting & Refining
Royalties By-Product
Credits
Depreciation/Amortisation (-$20/oz)
& Inventory Changes
Corporate Admin
& Interest
Extraordinary Costs
Sustaining Capex
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
10%. This translated to an estimated $2/oz decrease
in royalties year-on-year. By contrast, lower commodity
prices for by-product metals were a source of upward
pressure on gold production costs during 2014, adding an
estimated $3/oz. Price trends for the major by-product
metals were mixed during the period, with silver seeing
the most dramatic decline, of 20% year-on-year, while
average copper and lead spot prices decreased by 6%
and 2% respectively. On the other hand, the zinc price
increased by 13% in 2014, benefiting production costs at a
handful of operations including Peñasquito.
The miscellaneous costs category represents the
balance of the difference between Total Cash Costs
year-on-year, and amounts to approximately $66/oz of
upward pressure. This category includes various cost
drivers that cannot satisfactorily be stripped out, such
as reagents, other mine site consumables, maintenance
costs and strip ratios. Given that not all mining costs
are incurred in local currency, there is a propensity for
the role of exchange rates to be somewhat overstated,
and in turn the miscellaneous balancing item to be
magnified. With overall throughput higher year-on-
year, usage of consumables will have, in the main, been
correspondingly higher. For example, reagent costs
at Cortez were higher in 2014, and explosives costs at
Peñasquito and Musselwhite also increased year-on-year.
In some cases, such as Bulyanhulu and Pueblo Viejo,
maintenance costs were higher as producers strove
to minimise equipment downtime. The net effect of
MINE SUPPLY
changes in the amount of stripping undertaken and
capitalised will also be reflected in this residual category
of the variance analysis. In some cases producers have
cited reduced capitalisation of stripping as an upward
pressure on costs during 2014, for example at Cortez,
Buzwagi and North Mara.
$/oz Au
Mining 331
Ore Processing 258
General & Administration 123
Mine Site Cash Cost 712
Smelting and Refining 15
By-Product Credits -20
Royalties 41
Total Cash Cost 749
Depreciation/Amortisation, Inventory Change 234
Total Production Cost 983
Corporate Administration, Interest 107
Extraordinary Costs 106
Sustaining Capital Expenditure 118
All in Cost 1,314
47
 GFMS GOLD SURVEY 2015
2014 ALL-IN COST CURVE
3000 Sustaining Capex, Indirect costs, Corporate Overheads & Extraordinary Costs
Depreciation & Amortisation
2500
Total Cash Costs
2000
US$/oz
1500
1000
500
0 0
0 10 20 30
Cumulative Production (%)
Source: GFMS, Thomson Reuters
*The top 5% of mines in the cost curve have All-in Costs greater than $3,000/oz; the chart has been truncated accordingly.
GOLD MINE PROFITABILITY: KEY ISSUES
The ‘All-in Cost’ parameter developed by the GFMS team
at Thomson Reuters is intended to represent the ‘stay-
in-business’ capital cost, or the expenditure necessary to
maintain production at current rates. In addition to the
components included in the Total Production Cost, the
All-in Cost also incorporates corporate administration
costs (head office overheads), interest charges,
exploration expense, extraordinary charges (such as
retrenchment costs and asset carrying value write-
downs), plus sustaining/on-going capital expenditure.
As such, the All-in Cost may be viewed as a measure of
MINE SUPPLY
‘real’ industry margins.
We estimate that in 2014 the All-in Cost of gold mine
production was $1,314/oz, which represented a
$427/oz, or 25%, reduction year-on-year. This
contraction is not wholly reflective of cost-cutting success
in 2014; rather, it underscores the exceptional scale of
industry asset impairments reported during 2013, when
these extraordinary non-cash charges contributed
$499/oz to the All-in Cost. By contrast, both the number
and scale of impairments reported for 2014 has been
substantially lower, resulting in a contribution of
$106/oz to the All-in Cost. Asset write-downs in 2014
were charged for varied reasons; for example at Cortez,
a mine plan revision led to a cessation of mining in
one of the open pits; at Lihir, the impairment was a
consequence of revised operating and capital cost
assumptions and Yamana reported write-downs to a
number of its assets following a review of life-of-mine
plans. Excluding impairments, the trend in the All-in
Cost is considerably less volatile, with 2014 seeing a
$34/oz, or 3% year‑on‑year decrease.
48
* 3000
2500
2000
US$/oz
1500
1000
500
40 50 60 70 80 90 100
Our analysis indicates that most components of the
All-in Cost saw year-on-year reductions in 2014.
Corporate administration costs fell by 5%, in line
with reports from many producers that they have cut
back on corporate spending. Expensed exploration
is estimated to have fallen by approximately $8/oz
in 2014, as many miners focused on optimisation of
existing operations. Depreciation and amortisation
has increased year‑on‑year by approximately $17/oz,
due to higher production and/or a smaller reserve base
(when depreciation is charged according to the units-
of-production method), in some cases because project
capital is being depreciated over shortened mine lives.
The average gold price during 2014 was $1,266/oz, and
of the population of gold mines included in the Gold
Mine Economics dataset, 120 mines, representing 64%
of costed production, have All-in Costs lower than this.
Despite the $145/oz year-on-year decrease in the gold
price, the proportion of supply produced at an All-in Cost
lower than the gold price increased between 2013 and
2014. This is illustrated in the All-in Cost curve for 2014,
which has flattened relative to that for 2013. The shift
in the All-in Cost curve reflects factors including lower
impairment charges, producers’ efforts to bring down
costs, and the closure of some operations that were
found in the upper quartiles of the 2013 All-in Cost curve.
The lower quartiles of the cost curve feature large,
mature operations such as Lagunas Norte ($751/oz),
Cadia Hill ($883/oz), Olimpiada-Titimukhta ($886) and
Goldstrike ($958/oz), as well as newer mines such as
Akyem ($689/oz), Kibali ($897/oz) and Pueblo Viejo
($925/oz), all of which had All-in Costs below the
average gold price during both 2013 and 2014.

REGIONAL TRENDS
Production costs for the major gold-producing regions
can be examined to reveal the trends contributing
towards the overall 3% decrease in global Total Cash
Costs. This analysis reveals that Australian and South
African operations saw decreases in their costs, in South
America Total Cash Costs remained stable year-on-year,
while in North America Total Cash Costs rose in 2014.
In North America, Total Cash Costs increased by 4%, to
$711/oz in 2014. Unlike many of their peers operating
elsewhere in the world, gold producers based in the
United States have not shared in the benefits of a
strengthening dollar. The country’s average production
cost is also heavily influenced by the very large
operations such as Cortez, where unit costs rose in 2014
on lower output due to planned processing of lower
grade ore. Mexican Total Cash Costs saw a 4% increase
in 2014, as relatively low-cost new production from La
India, together with cost reductions at mines such as
La Herradura were not sufficient to offset increases
elsewhere, such as the impact of the new mining royalty
introduced in 2014.
Higher costs in the United States and Mexico outweighed
an overall decrease in cash costs for Canadian
operations, which fell by 7% in 2014. Canadian
production costs have benefitted from new lower-cost
operations including Canadian Malartic, the country’s
largest producer in 2014, as well as cost reductions at
more established mines such as Meadowbank.
The flat year-on-year Total Cash Costs for South America,
at $668/oz, saw the region placed as the lowest-cost of
the four major gold-producing regions discussed here.
South America’s largest producer in 2014 was Pueblo
Viejo, where cash costs decreased by 20% as the mine
COMPANY REPORTED QUARTERLY TOTAL CASH COSTS
1800 South Africa
Australia
1600
World
1400
1200
1000
US$/oz
800
600
400
200
0 0
Q1.10 Q1.11 Q1.12 Q1.13
Source: GFMS, Thomson Reuters; Company Reports
GFMS GOLD SURVEY 2015
GOLD PRODUCTION COSTS
(US$/oz)
2013 2014
North America Total Cash Costs 686 711
Total Production Costs 906 968
All-in Costs 1,438 1,234
South America Total Cash Costs 668 668
Total Production Costs 930 925
All-in Costs 1,512 1,288
Australia Total Cash Costs 885 809
Total Production Costs 1,163 1,086
All-in Costs 2,015 1,325
South Africa Total Cash Costs 970 931
Total Production Costs 1,154 1,107
All-in Costs 1,576 1,361
Other Total Cash Costs 775 743
Total Production Costs 978 954
All-in Costs 1,964 1,358
World Total Cash Costs 770 749
Total Production Costs 995 983
All-in Costs 1,741 1,314
Source: GFMS, Thomson Reuters
continued its ramp-up to full production. Performances
such as this were sufficient to balance cost increases
elsewhere, such as at Yanacocha and Lagunas Norte.
Average Total Cash Costs for South African producers
decreased by 4% in 2014. As was the case in 2013, South
African gold miners benefited from the weakening rand.
At Sibanye’s core mines, comprising Beatrix, Kloof and
Driefontein, costs increased in rand terms, but posted a
MINE SUPPLY
year-on-year decrease when expressed in dollars.
Australian producers saw a 9% drop in their reported
Total Cash Costs in 2014. As was the case in a number
of other major mining jurisdictions, favourable currency
movements were of benefit to Australian producers,
with low-cost new production from Tropicana also
contributing to the downward trend.
COMPANY REPORTED ANNUAL TOTAL CASH COSTS
1800
South America Gold Price
North America 1600 Total Cash Costs
Gold Price
1400
1200
1000
US$/oz
800
600
400
200
Q1.14 2004 2006 2008 2010 2012 2014
Source: GFMS, Thomson Reuters; Company Reports
49
 GFMS GOLD SURVEY 2015

WEIGHTED AVERAGE STRIKE PRICES OF CONTRACTS GLOBAL HEDGE BOOK HOLDERS*, END-DECEMBER 2014

(weighted by number of contracts, end-December 2014) 38% Polyus Gold International

Contract Type Trigger USD AUD 24% Fresnillo
Bought Puts - $1,122 $1,381 5% OceanaGold
Sold Calls - $1,489 $1,677 3% Evolution Mining
Forward Sales - $1,348 $1,475 3% Sumitomo Metal Mining
Knock-in Barrier Sold Calls $1,680 $1,519 - 2% B2Gold Corp

Knock-out Barrier Bought Puts $925 $1,195 - 2% Industrias Peñoles

Source: GFMS, Thomson Reuters 2% Regis Resources

2% Carpathian Gold
2% Torex Gold
PRODUCER HEDGING 18% Others

Source: GFMS, Thomson Reuters *Numbers on a nominal (number of contracts) basis

• The volume of delta-hedging grew by 103 tonnes in 2014,
the largest volume of net hedging since 1999. COMPOSITION OF THE DELTA-ADJUSTED HEDGE BOOK

(tonnes, end-period) 2014

Last year saw the largest volume of net hedging, and only
the second year of net hedging (the other being 2011)
since 1999, the year in which the hedge book peaked.
Net hedging was seen in all quarters except the third,
with volumes very much skewed to the second and fourth
quarters, due to relatively large positions entered into by
Polyus Gold International and Fresnillo plc respectively.
In the second quarter of 2014 Polyus entered into
price protection arrangements covering 88 tonnes of
production, using a combination of zero cost Asian
barrier collars and forward sales, in order to de‑risk cash
flow through to 2018 while the company invested in the
Natalka project. Including the maturity of the company’s
2014 contracts, this resulted in a net 55 tonne increase
to the delta‑hedge book. In the fourth quarter Fresnillo
MINE SUPPLY
13.Q4 14.Q1 14.Q2 14.Q3 14.Q4 yoy
Forward Sales 77 83 91 86 100 29%
Options 14 16 119 117 143 928%
Total 91 99 157 150 195 113%
Source: GFMS, Thomson Reuters
Aside from these two companies, which held a combined
62% of all hedge contracts recorded at end-year,
hedging remains confined to mid-tier and smaller gold
miners. In total we recorded increases to the delta-
hedge positions of a further 25 companies. Notably a
majority (16) of these companies were Australian, taking
advantage of the weakening local currency, and included
Northern Star Resources (+6 t), OceanaGold (+6 t),
Evolution Mining (+4 t), Norton Gold Fields (+4 t),
Troy Resources (+2 t), Regis Resources (+2 t) and

entered into what was then the first stage of a hedging
programme to manage the cash flow from its acquisition
of the remaining 44% of the Penmont Joint Venture.
The contracts cover 47 tonnes of production between
2015 and 2019 using a collar option structure. We
calculate that the delta-hedge against these contracts at
end‑December was 30 tonnes.
Independence Group (+2 t). Together the Australians
represented an additional 32 tonnes of delta‑hedging.
This can be contrasted with the fact that just four of the
hedged Australian companies saw their positions decline
over 2014; a clear skew towards additions. Excluding
Fresnillo and Polyus, the population of companies
from other jurisdictions such as Canadian, Mexican and
London listed entities were net de-hedgers last year.

GLOBAL DELTA HEDGE BOOK VOLUME AT END-DECEMBER 2014

3300
3300 1999 Peak 300300 Non-Vanilla Options
3000
3000 270 Vanilla Options
2700
2700 250
240 Forward Sales
Global Hedge Book (tonnes)
Global Hedge Book (tonnes)

2400
2400
210
200
2100
2100
delta-adjusted

180
1800
1800
150150
1500
1500
120
1200
1200
100
90
900
900
600
600 60
50
300
300 30

00 00
94 96 98 00 02 04 06 08 10 12 14 Q1-10 Q4-11 Q4-12 Q4-13 Q4-14
Source: GFMS, Thomson Reuters

50

The additions from Polyus reintroduced more exotic
options to the hedge book composition, not seen since
the mid-2000s, meaningfully altering the makeup of the
global book. When combined with the Fresnillo hedge,
within the space of one year the previous dominance of
forward sales has been reversed; on a nominal (number
of contracts) basis, forwards have been diluted from 59%
of the global hedge book to just 26%. The balance of
the book is arranged almost entirely in collar structures,
with a near equal number of bought puts and sold calls.
We therefore estimate the level of mine production
covered by some form of price protection or cap to be
a more modest volume than the nominal hedge book
suggests, with around 250 tonnes of output protected
over the period 2015-2019. That constitutes less than 2%
of projected total global production over the same time
frame.
The volume of delta-hedging outstanding at
end‑2014 stood at just 195 tonnes. While this is a
more‑than‑doubling of the level of the hedge book
since the multi-decade low of 91 tonnes at end-2013,
it nevertheless represented only 6% of the total of just
under 3,100 tonnes at end‑1999, when producer hedging
was in its heyday. The level of outstanding hedging does,
therefore, remain limited by comparison to historical
standards.
Excluding the activity from Polyus and Fresnillo, the
volume of net hedging each quarter was much closer
to neutrality throughout the year, indicating more of
a balance between new hedging and the maturity of
existing positions. We noted earlier that 27 companies’
positions grew over 2014; 20 companies saw their
positions decline. These numbers are only representative
of a mild skew to hedging, considering the still limited
volume of the hedge book, and the population of active
gold companies, which number in the hundreds.
CHANGING COMPOSITION OF THE GLOBAL HEDGE BOOK.
Forwards Vanilla Puts Vanilla Calls Barrier Puts Barrier Calls
End-2013 Nominal Volume: End-2014 Nominal Volume:
4.20 Moz (131 t) 12.53 Moz (390 t)
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
TOP HEDGING ACTIVITY IN 2014
(delta-hedging) % of Gross Change
Company Hedging (tonnes)
Polyus Gold International 41% 55
Fresnillo plc. 22% 30
Torex Gold 5% 6
Northern Star Resources 5% 6
% of Gross
Company De-hedging (tonnes)
Petropavlovsk plc. 17% -5
Veris Gold Corp. 16% -5
Beadell Resources 13% -4
St. Barbara Limited 9% -3
Note: Delta-adjusted volumes are calculated on the basis of
published company data. As such disclosures are not exhaustive,
the GFMS calculated position may not exactly correspond to the
delta position reported by the company. In addition, GFMS values
the contracts on a spot delta basis, whereas some companies
report positions on a forward delta basis. This can lead to minor
discrepancies between the calculated and reported delta-adjusted
volumes. Where published data was unavailable, an estimate
based on the scheduled expiry of contracts has been made.
Source: GFMS, Thomson Reuters
We therefore would suggest that despite this being a
relatively strong year for hedging, we do not think that
2014 has provided evidence enough for a “turning point”
to have been reached regarding the practice of producer
hedging. It remains confined to a subset of producers,
with (excluding outliers such as Fresnillo and Polyus)
an almost neutral market impact. The delivery profile
indicates there is approximately 50 tonnes of hedging
due to unwind in the first half of 2015. We expect that,
MINE SUPPLY
with a continuation of a thin undercurrent of fresh project
hedging and the renewal of cover by established hedgers,
net producer hedging will persist into 2015, at similarly
modest volumes. It will remain relatively insignificant to
the supply‑demand balance this year in comparison to
other market drivers, such as physical demand and scrap
recycling.
DELTA-ADJUSTED DELIVERY PROFILE AT END-DECEMBER 2014
30
Non-Vanilla options
25 Vanilla Options
Forwards
20
Tonnes
15
10
0
Q4-15 Q4-16 Q4-17 Q4-18 Q4-19
Source: GFMS, Thomson Reuters
51
 GFMS GOLD SURVEY 2015
4. SUPPLY FROM ABOVE-GROUND STOCKS
• During 2014, total above-ground stocks, by definition
cumulative historical mine production*, increased by
2% to 183,600 tonnes.
• The stock of fabricated products (excluding coins)
reached 112,300 tonnes by end-2014, a net gain of
1,800 tonnes. This was equivalent to 61% of total above-
ground stocks.
• The largest component of fabricated products, jewellery,
rose by a net 1,100 tonnes and amounted to
87,000 tonnes at year-end, representing 47% of total
above-ground stocks.
• Private and official bullion holdings ended 2014 at
67,700 tonnes, equal to 37% of above-ground stocks.
Just over half of that was held by private bullion holders.
• Net official sector purchases accounted for 466 tonnes
last year. However, net producer hedging of 103 tonnes
means that net official stocks rose 363 tonnes, or 1%.
• At 36,800 tonnes, and valued at $1,400 billion by
end-2014, privately-held bullion stocks were up by
1,300 tonnes from their end-2013 level.
• When including ETF sales and hedging supply, the visible
supply of gold to the market from above-ground stocks
was 1,388 tonnes, equivalent to 31% of demand in 2014.
This comprised 1,125 tonnes of scrapped, 103 tonnes of
hedging supply and 160 tonnes of ETF sales.
* Some material has been lost from the market over time; the estimate for this became the embodiment of the strong correction in the
is carried as “unaccounted” in the chart below.
GOLD TRANSFERS (NET) TO AND FROM GLOBAL ABOVE-GROUND STOCKS, 2014
SUPPLY FROM ABOVE-GROUND
Above-ground Stocks, end-2014 = 183,600t
Jewellery (87,000t)
Total Stocks
Official Holdings*
(30,900t)
Private Investment**
STOCKS
(36,800t)
Other Fabrication &
Unaccounted
(28,900t)
* Excluding gold lent or supplied
** Includes bar investment, coin investment and physical deficit
*** Includes changes in lending from both the official and private sectors
Source: GFMS, Thomson Reuters
52
OVERVIEW
Supply of gold into the market can be sourced either
from new mine production or from the recycling or
mobilisation of the existing, and substantial, above-
ground stocks of metal. The former (as well as producers’
hedging activities) is discussed in detail in Chapter 3 of
this Gold Survey, while the latter topics are covered in
this chapter. At present, the official sector is a source
of significant net demand in the gold market and is
accordingly not detailed in this chapter but instead in a
separate following chapter.
In this chapter, we examine the recycling of scrapped
fabricated products. Another possible source of supply
from above-ground stocks of gold, namely bullion held
by private individuals and non-official institutions, is
discussed in more detail in Chapter 2. As was the case in
2013, some areas of the investor side of the market were
again a source of supply last year, with substantial ETF
sales, albeit far less than compared to 2013.
The table on the next page provides a summary of
annual supply to the market from mine production and
above-ground stocks over the 2012-2014 period. Also,
in addition to hedging supply, we have incorporated
the supply of metal from ETF sales, which prior to 2013
had not been an annual source of supply to the market.
Indeed, gold ETFs have enjoyed steady inflows for years
until the start of 2013, driven by adoption among the
retail and institutional sectors. However, since 2013, that
robust uptake came to an abrupt end and gold ETF sales
gold price that followed.
Jewellery (2,213t)
Official Sector
Purchases (466t)
(4,362t) Industrial Fabrication (400t)
Private Investment* (1,283t)
Transformed/Transferred (4,362t)
Old Scrap (mostly jewellery)
(1,125t)
Mine Production (3,133t)
Changes in lending***
(103t)
 GFMS GOLD SURVEY 2015

VISIBLE SUPPLY OF GOLD TO THE MARKET

Mine supply increased by 2% to
3,133 tonnes, a record high, in world mine 2012 2013 2014
tonnes share tonnes share tonnes share
production, despite lower prices. Much of
Mine Production 2,875 63% 3,061 78% 3,133 69%
the increase was due to various producers
Above-Ground Stocks 1,677 37% 2,167 22% 1,388 31%
mining higher grades in order to contain

- Scrap 1,677 -
1,287 - 1,125 -
costs and as well as the ramp up of mines

- Hedging Supply - - - - 103 -
which started in prior years.
- ETF Inventory Drawdown - - 880 - 160 -
Total 4,552 5,228 - 4,521 -
Supply from above ground stocks, on the Source: GFMS, Thomson Reuters
other hand, dropped by 36% compared to Note: This is “visible supply” and therefore for the purposes of this table, the
2013, mainly driven by a strong decline in withdrawal of metal via ETF growth or via de-hedging has been treated as zero.
scrap supply in combination with reduced
ETF sales. Scrap supply significantly
retreated in all regions but China in 2014, pushing the the year before. The diversity, liquidity, easy access
global total by 13%, or 162 tonnes, down to 1,125 tonnes. and therefore robust uptake by retail and institutional
Despite the drop last year, the contraction in scrap supply investors of the various gold ETF’s in the market was
was significantly lower compared to 2013, which can be been a strong supporter of the price during the twelve
explained by a variety of reasons. First, due to the slight year bull run; the massive liquidation in 2013, however
improvement in the global economic sentiment, distress meant that ETFs were as much price makers as they were
selling fell. Second, the continued low prices deterred price takers and they continue to command attention.
consumers from selling their old jewellery or coins back ETF net-sales slowed to 160 tonnes, or $6bn, last year
to the market. Some regional differences did occur, from 880 tonnes in 2013. In summary, visible supply of
however, mainly due to currency fluctuations. Third, we gold (other than from mine production) in 2014 fell by
estimate that near market stocks in many countries have 707 tonnes (-14%) year-on-year to 1,388 tonnes.
fallen substantially following gold’s price boom over the
past 12 years. The absence of official sector supply on the above table
is a function of the shift to net purchases earlier this
Net hedging turned positive again in 2014 and to the decade. The tiny level of sales remains dwarfed by
tune of 103 tonnes; the highest level of annual hedging purchases from emerging markets, as discussed in detail
since 1999. A few producers increased hedge cover last in the next chapter.
year, predominantly through the use of options, led by
Polyus Gold. This specific example used exotic options, Finally, another aspect that involves strong focus on
something which typically still engenders substantial central banks in the gold market is the lending market,
shareholder aversion, as complicated structures are still although this has materially declined over the last
viewed as non-transparent. decade. The gold lending market spent much of 2014
in a relatively becalmed fashion with exceptionally low
As already briefly outlined, the final component of the lending rates particularly for the 1- and the 3-month
above ground stocks component is ETF sales, which timeframes. However, the end of last year saw a
continued in 2014, at a far less pronounced level than spectacular escalation in short term lending rates which
was fuelled by an upturn in physical demand from the
SUPPLY FROM ABOVE-GROUND

LEASING RATES Middle East and Asia, driven by another dip in the gold
price. Although the spike was short lived, leasing activity
2.5
in China has significantly increased in 2014 due to tighter
12-month
STOCKS

2.0 3-month liquidity (see focus box in Chapter 7).

1-month
1.5

1.0
%

AVERAGE GOLD LEASING RATES

0.5 1-mth 3-mth 6-mth 12-mth

2012 -0.15% -0.02% 0.17% 0.45%
0.0
2013 0.10% 0.15% 0.24% 0.44%
-0.5 2014 0.15% 0.19% 0.25% 0.41%
2002 2004 2006 2008 2010 2012 2014 Source: GFMS, Thomson Reuters
Source: GFMS, Thomson Reuters

53
 GFMS GOLD SURVEY 2015
SCRAP SUPPLY
——Global scrap supply fell 13% last year to a five-year
low of 1,125 tonnes due to a continued weak price
environment and reduced distress selling.
Last year, global scrap supply continued to slide across
all major regions to 1,125 tonnes. Much of the 13%
decline was driven by a combination of factors. First,
the persistent low price environment motivated fewer
consumers to liquidate their holdings. Second, due to
the slightly less precarious state of some, particularly
European, economies, distress selling fell. Third, the high
US dollar prices of 2010-2011 brought record amounts
of material back to the market and consequently near to
market stocks have depleted in various regions in 2014.
EUROPE
Scrap supply in Europe continued to slide last year,
falling by another 17%, to a seven-year low of 289 tonnes.
This was one of the largest percentage declines among
all the major regions, only giving way to the Americas. It
is interesting to observe that, despite marked declines
in the past couple of years, the continent’s share of the
global total remained elevated by historical standards.
To put this in perspective, Europe’s portion of the world
total stood at 26% last year, compared to an annual
average of 20% for the pre-crisis period between 2000
and 2007. This is thanks to spectacular growth rates
seen during the years of financial crisis, when many
countries suffered economic recessions and consumers
took the opportunity of elevated gold prices to sell
their gold assets to pay down debts or to meet other
immediate expenditure needs.
While the European scrap market tends to be less price
sensitive than most other markets, the lower gold price
in euro terms was integral to the 2014 decline. This
was evidenced by a noticeable decline of 21% in scrap
SUPPLY FROM ABOVE-GROUND
ABOVE-GROUND SCRAP STOCKS BY REGION 2004
Asia
STOCKS
3% 1%
Europe
8%
North America
Africa
10%
South America
Oceania
59%
19%
Source: GFMS, Thomson Reuters
54
volumes in the first half of the year, when the price
averaged €30.3/g, down by 19% year-on-year, compared
to a less marked drop of 12% in the latter half, when the
average gold price for the period was only marginally
lower year-on-year. This also suggests that there were
other factors that pushed scrap volumes lower last year.
Among such drivers were gradually improving economic
sentiment in the region, which saw a drop in distress
selling, at least, in some countries, as well as reduced
stocks of old pieces available for selling, as large volumes
were sold previously at higher prices. Electronic scrap
also failed to show much growth last year, on the back of
lower gold prices and shrinking margins.
NORTH AMERICA
North America generated 116 tonnes of scrap in 2014, a
22% decline from the previous year. This rate of decline
was an improvement over the 30% fall in scrap generated
in 2013. The smaller decline in the annual average gold
price of 10% in 2014 against 15% in 2013 helped curb the
drop in scrap last year.
Scrap from price-sensitive sources, namely jewellery,
dental, and coins, fell last year. Dental scrap continued
to decline at an aggressive rate due to dwindling above-
ground stock. Gold use in the dental lab industry
continues to decline to the benefit of metal-free
alternatives. An improved economy, higher disposable
incomes, and lower unemployment weighed on jewellery
and coin scrap. In contrast to previous years, electronic
scrap volumes fell in 2014 due to lower precious metals
content in material returned to recyclers.
US scrap fell to 84 tonnes in 2014, down 21% from the
previous year when scrap volumes dropped 29%. The US
economy continued to improve, with the unemployment
rate falling from 6.7% in December 2013 to 5.6% in
December 2014. Per capita disposable incomes rose
3% last year compared to a 5% decline in 2013. While
ABOVE-GROUND SCRAP STOCKS BY REGION 2014
Asia
2% 1%
Europe 7%
North America
Africa 10%
South America
Oceania
54%
26%
Source: GFMS, Thomson Reuters
 GFMS GOLD SURVEY 2015

this boost in disposable income helped push jewellery MIDDLE EAST

purchases higher, it was negative for scrap supply. US
households fared better financially last year, resulting in Scrap volumes continued to suffer in Turkey in 2014, with
fewer people liquidating gold assets for cash. prices stuck in a 85-90 lira/gramme range for most of
the year. We estimate that volumes fell by a quarter to 41
In addition to lower scrap from jewellery sources, tonnes in 2014. However, towards the end of the year, the
gold recovered from electronic scrap declined last trend turned with volumes significantly increasing in the
year. Although electronic scrap feedstock increased, early part of 2015 on the back of the local gold price rise
the volume of gold recovered declined due to lower towards 100 lira/gramme. As a result, for a short period,
gold content. Material turned in to recyclers last year the Turkish market even traded at a $4-5/oz discount to
contained around 15% less gold than the previous year. the London price.
Electronic waste returned last year, given the average life
cycles of the most common gold-bearing electronics, was Scrap volumes have also been undermined by two
likely to be material from years in which more aggressive additional trends in the Turkish market. First, it is
thrifting was occurring within the electronics industry due increasingly common in Turkey to use old jewellery
to rapidly rising gold prices. scrap directly in the fabrication of new designs. As
such, no additional scrap is generated and no new gold
Scrap collected in Mexico fell to 27 tonnes in 2014, down consumed. Volumes, therefore, net off, and the activity in
27% from the previous year. Mexico accounted for 23% both instances will not be captured in our data. Likewise,
of North American scrap last year, up from 10% a decade the increase in bar demand in Turkey over the past years
earlier. Mexico’s scrap supply has increased significantly has also seen more of this material coming back to the
over the past decade due to weak economic conditions market. The bar market (minted and cast) is tracked on
and limited access to credit driving households toward a net-consumption basis so this material moving around
gold’s liquidation value. Last year, the Mexican economy the system also doesn’t show in the scrap figures. Fees
expanded 2.1%, up from 1.1% growth in 2013. With a for exchanging bars, however, are lower compared
slight improvement in economic conditions, households to exchanging 22-carat jewellery (due to the design
liquidated less gold assets. and labour cost) which encourages bars to be the first
material to come back to market when sales are made.
Canadian scrap supply fell 15% to 5.7 tonnes in 2014,
which is a significant improvement from the 32% Going forward, industry participants expect that the
decline in 2013. Similar to the US and Mexico, improved scrap market in Turkey has reached its nadir with volumes
economic conditions slowed the volume of old jewellery well below the peaks seen in the financial crisis. Turkish
sales from households last year. The decline in scrap, scrap volumes peaked in 2008 and 2009 at 199 and
however, was more muted than in Mexico and the US 217 tonnes respectively before quickly falling back below
because of the Canadian dollar’s depreciation against the 80 tonnes in 2011. To some degree the past two-years
US dollar. Gold prices in Canadian dollars, as a result, have seen stocks of available scrap in the market increase
only declined 3.7% in 2014, compared to the 10% decline and the beginning of 2015 demonstrated how dynamic
in US dollar terms. and price sensitive the Turkish market really is. Indeed,
due to the local market discount and excess gold in the
SUPPLY FROM ABOVE-GROUND

SCRAP SHARE
Ch5 Scrap OF
Share of TOTAL
Total SUPPLY
Supply ABOVE-GROUND JEWELLERY STOCKS & % RETURN OF SCRAP

50 Gold Price 100

2000 Jewellery Stocks 2.5
Scrap Share of Total Supply
Above-ground Jewellery Stocks (000 tonnes)

Scrap
STOCKS

40 90
Scrap Share of Total Supply (%)

2.0
1500
Scrap return rate (%)
Gold Price US$/oz

30 80 1.5
1000
20 70 1.0

500
10 60 0.5

0 0 0.0
50
1991 1996 2001 2006 2011 2004 2006 2008 2010 2012 2014

Source: GFMS, Thomson Reuters Source: GFMS, Thomson Reuters

55
 GFMS GOLD SURVEY 2015
system in January saw gold become Turkey’s number one
export for the month.
Old scrap supply entering the system in Egypt is
estimated to have dropped 8% in 2014, to 40 tonnes.
This reflects the fifth consecutive decline and was the
lowest level of recycling since the start of the millennium.
Aside from 2009, when scrap flows surged over 80%,
the supply from old scrap has been receding as a large
proportion of close to market gold assets has already
found its way back to market. An improved economic
and political backdrop has also reduced distress selling
which was a feature in recent years. A softer gold price,
not surprisingly, also contributed to the decline; the
weaker domestic currency limited the drop in the average
gold price in local terms to just 7%. Prices within the
country were relatively high at the beginning of 2014,
encouraging an increased level of liquidation, especially
when gold passed through EGP 300 in late-February.
In Saudi Arabia, scrap volumes declined broadly in
line with the global average, slipping 12% to around
21 tonnes. The extent to which the volume of gold
being returned to market has fallen in recent years has
been quite extraordinary. Our estimated volumes for
2014 are 85% or 113 tonnes below the level in 2006
when consumers first rushed to take advantage of
the rise in the price (dollar gold peaked at $725 that
year). This initial wave of liquidations coupled with a
declining consumption market has left a depleted supply
chain and led to the current declining trend. With the
domestic price pegged to the US dollar, scrap flows
largely mirrored movements in the dollar gold price last
year, rising in the first quarter as gold trended higher
(breaching SR165 per gramme), but tailing off thereafter.
INDIAN SUB-CONTINENT
For the second consecutive year in a row, Indian scrap
supply declined by 26% to 74 tonnes, the lowest level
SUPPLY FROM ABOVE-GROUND
in three years. As a result, the share of global scrap
that is Indian fell 1% to 7% in 2014. Sales of gold scrap,
however, did increase in the first and the fourth quarter,
STOCKS
driven by higher prices for the former and a rise in
delinquency-driven collateralised gold auctions in case of
the latter.
Direct sales from consumers, however, continued to be
prevalent. Research conducted in tier three towns and
discussion with jewellers revealed a significant decline
in consumers willingness to exchange jewellery for cash.
This can be explained by a stronger presence of financial
institutions in the market, offering gold collateralised
56
loans, which has been a factor deferring the motive to
sell at time of distress. Our discussions with co-operative
banks and private money lending institutions revealed
that 1-2% of total gold loans disbursed has been declared
as a non-performing asset (NPA). Since NPA’s eventually
reach the open market through auctioning, they get
included in our scrap numbers. In addition, defaults
on agricultural gold loans also add to scrap supplies,
however, such NPA’s occur less frequent due to their
lower interest rate.
Looking ahead, poor crop yields are forecast and with
falling gold prices this is more likely to see increases in
loan defaults. In addition, banks tend to prefer to oppose
populist measures introduced by the state heads Andhra
Pradesh and Telangana in regards to waiving defaulting
agriculture gold loans, which could result in increased
gold jewellery reaching the market for auction.
EAST ASIA
Scrap supply in East Asia rose 1% in 2014 to an estimated
359 tonnes. In what would appear at first glance to be
counter intuitive, given the 10% fall in the dollar gold
price last year, the annual increase was entirely due to a
12% jump in scrap supply from China where significant
supply chain destocking, due to weak consumer demand,
drove scrap receipts materially higher. Meanwhile, the
remaining region, excluding the Chinese contribution,
was more broadly in line with the global average,
retreating 11% year-on-year. Despite weaker currencies
that limited the impact of the softer dollar gold price,
and in some instances pushed gold higher in local terms,
scrap supply was largely muted. A rising price profile in
the first quarter, combined with a recharged supply chain
after the demand strength in 2013 helped limit the fall in
the first half to 5%, while supply in the second half was
less price responsive, slipping 8% year-on-year.
Turning firstly to Indonesia, scrap supply was almost
unchanged at 36 tonnes in 2014. This represents the
first year since 2009 that scrap has not retreated.
Indeed, scrap flows emanating from the Indonesian
archipelago have slumped 55% from the 2009 peak. A
weaker domestic currency that saw the average gold
price in rupiah terms rise 3% last year, encouraged an
increase in recycling, with supply most abundant in the
first quarter and in mid-June when gold pushed through
500,000 rupiah per gramme. Thailand, in contrast, saw
a further reduction in scrap supply last year, falling 16%
over 2013 volumes, the third successive drop that has
now seen Thai scrap decline over 60% from the 2009
peak.
 GFMS GOLD SURVEY 2015

SUPPLY OF GOLD FROM FABRICATED OLD GOLD SCRAP

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Europe
Italy 46.7 53.5 57.1 61.0 78.0 98.0 116.5 122.6 85.5 75.4
Turkey 67.7 82.5 71.5 199.0 217.2 122.0 78.0 72.3 56.3 41.4
United Kingdom 4.5 10.7 11.7 38.7 59.4 69.8 76.0 69.0 41.0 31.2
Germany 7.6 11.4 18.8 24.4 32.7 44.1 45.5 40.3 31.1 23.8

France 12.1 18.6 16.8 21.2 24.9 29.2 40.3 33.5 26.7 21.5
Spain 3.7 6.1 5.8 10.6 20.1 31.9 32.7 35.9 23.5 21.1
Russian Federation 18.9 19.3 20.7 21.4 28.7 26.4 23.5 24.2 18.6 19.2
Portugal 0.6 1.0 0.9 1.1 1.5 8.6 15.5 16.0 11.2 9.1
Belgium 1.3 2.7 2.6 3.7 6.1 8.2 9.1 8.6 7.8 6.7

Austria 3.4 3.9 3.7 4.7 6.4 7.9 8.0 7.6 6.7 6.1

Poland 2.0 2.8 2.8 2.8 3.1 3.9 7.7 7.5 5.1 4.1

Sweden 2.0 4.1 4.6 4.7 6.4 6.6 6.7 6.4 4.5 4.0

Switzerland 3.8 4.8 4.8 5.3 6.5 6.3 6.5 6.2 4.3 3.5
Finland 0.3 2.2 1.8 2.1 2.6 6.0 6.1 5.8 3.6 3.2

Other Countries 11.7 15.3 14.5 16.0 23.6 28.7 32.9 32.1 22.4 18.3
Total Europe 186.2 238.9 238.1 416.6 517.1 497.6 505.0 488.0 348.2 288.7
North America
United States 60.4 81.0 84.5 93.5 124.0 143.0 159.9 149.4 105.8 83.5

Mexico 7.2 12.0 17.6 28.1 40.8 45.6 47.6 54.1 37.2 27.2
Canada 5.0 7.5 6.3 6.9 9.2 11.1 10.8 9.8 6.7 5.7
Total North America 72.6 100.5 108.4 128.5 174.0 199.7 218.3 213.3 149.7 116.3
South America
Brazil 4.3 6.8 6.4 7.5 11.4 16.1 22.2 24.6 16.0 9.8

Colombia 3.8 4.1 4.3 5.1 6.6 8.1 8.7 9.5 1.4 1.4
Venezuela 3.7 4.3 5.7 6.0 7.1 8.3 8.7 8.1 6.2 5.6

Dominican Republic 4.0 4.2 4.2 4.3 4.2 5.0 5.9 6.1 1.4 1.2

Argentina 3.6 5.1 4.4 4.4 5.9 5.6 5.8 6.1 0.5 0.6
Other 4.6 6.1 7.9 9.2 16.1 21.9 20.7 20.4 7.0 7.1
South America 24.0 30.6 32.9 36.5 51.2 65.0 72.0 74.8 32.5 25.6
Asia
China 41.7 44.6 41.6 70.3 116.3 133.2 143.6 165.6 176.3 197.7
India 94.0 80.0 73.0 89.5 115.5 81.0 58.5 113.0 100.8 74.2
UAE 28.2 34.0 43.8 59.4 70.6 110.0 71.4 73.4 57.0 51.4
Pakistan 30.9 33.4 31.7 35.5 53.9 50.4 42.7 47.2 37.2 28.8
Indonesia 67.0 71.9 68.0 72.5 79.9 64.9 58.3 49.0 36.2 36.3
Japan 24.5 27.0 25.9 53.6 35.3 43.9 55.1 42.2 36.2 26.1
Thailand 12.4 19.1 37.4 51.7 66.0 44.7 52.4 43.6 30.6 25.7
Vietnam 7.8 8.3 9.0 12.2 51.5 49.8 41.1 36.4 28.2 26.2
Iran 16.1 21.9 23.1 26.0 32.2 32.7 32.4 32.9 24.3 22.1
SUPPLY FROM ABOVE-GROUND

Saudi Arabia 92.5 133.7 56.4 69.4 57.3 44.1 37.1 33.5 23.6 20.8

Syria 10.1 17.4 13.6 14.5 15.3 17.7 19.0 17.8 14.5 5.1
Malaysia 11.0 19.1 16.4 18.4 19.3 22.2 19.2 16.7 13.3 12.4
Taiwan 13.0 18.4 18.5 33.6 34.9 27.5 19.5 15.4 12.0 11.1
STOCKS

Iraq 4.3 6.5 5.4 7.4 20.3 19.1 17.1 15.3 10.8 10.4

Lebanon 6.6 9.9 4.9 6.2 15.1 19.7 14.9 12.7 9.6 8.5
S Korea 17.5 30.7 13.7 20.5 21.3 18.1 17.4 13.9 9.5 9.4
Jordan 4.6 8.7 7.0 5.6 9.2 12.7 10.8 9.7 7.2 7.4

Hong Kong 6.5 7.1 7.5 8.0 8.4 8.0 7.3 6.8 6.0 6.4
Kuwait 12.4 21.8 9.8 10.2 10.4 8.5 7.7 6.2 5.0 4.5

Singapore 3.3 4.2 5.0 5.4 6.1 5.8 8.9 7.4 4.8 4.5
Israel 5.2 11.4 5.0 6.1 6.6 8.3 7.0 5.6 4.4 4.5

Bahrain 1.8 3.8 3.8 3.8 4.7 4.5 4.0 3.5 2.6 2.5

Oman 2.2 3.8 3.1 3.8 4.5 4.4 3.4 3.1 2.4 2.2

57
 GFMS GOLD SURVEY 2015

SUPPLY OF GOLD FROM FABRICATED OLD GOLD SCRAP

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Bangladesh 2.1 2.5 2.5 2.7 3.0 2.7 2.6 2.7 2.3 1.8
Qatar 0.9 2.3 2.6 2.5 2.8 2.4 2.0 1.8 1.5 1.4

Philippines 1.5 1.5 1.5 1.9 2.7 2.3 2.1 1.9 1.5 1.4

Other 9.5 11.0 11.4 12.4 13.7 13.8 13.6 13.0 11.4 10.4
Total Asia 527.6 654.0 541.4 703.0 876.6 852.1 769.0 790.1 669.0 612.9
Africa
Eqypt 72.7 77.5 56.5 35.8 65.0 48.0 47.6 53.6 43.2 39.9

Morocco 5.9 6.3 6.3 6.4 9.7 9.3 12.0 11.3 9.4 9.0
Libya 4.6 9.7 9.5 10.4 13.4 15.8 16.6 14.4 8.8 8.2

Algeria 2.7 2.8 3.4 3.6 5.8 6.1 7.9 7.6 6.8 6.6

Other 4.5 11.0 8.5 8.9 12.2 12.7 14.7 14.2 12.2 11.6
Total Africa 90.4 107.3 84.1 65.0 106.1 91.8 98.8 101.0 80.4 75.2
Oceania

Australia 1.9 1.5 1.5 2.0 3.1 6.8 12.0 10.2 7.3 6.6
Total Oceania 1.9 1.5 1.5 2.0 3.1 6.8 12.0 10.2 7.3 6.6
World Total 902.6 1,132.8 1,006.3 1,351.6 1,728.0 1,712.9 1,675.0 1,677.5 1,287.0 1,125.3
…of which:-
Middle East* 325.3 435.2 306.3 449.8 531.1 453.8 352.3 341.4 262.4 222.0
East Asia* 208.2 254.2 246.7 350.2 444.1 423.5 427.9 401.1 356.5 358.8
CIS* 23.5 24.0 25.4 26.7 35.3 32.8 30.1 31.2 25.0 25.2
Indian Sub Continent* 129.8 119.8 111.7 132.5 176.9 138.3 107.7 166.5 143.3 107.4
Source: GFMS, Thomson Reuters * The key regional bullion markets

Elsewhere, Japan experienced a sizeable fall in scrap
supply last year, despite a 3% drop in the average
yen gold price. The GFMS team at Thomson Reuters
estimates recycling volumes fell 28% last year to just
over 26 tonnes, the lowest level since 2007. An uncertain
economic environment, coupled with a lack of volatility
reduced profit taking for much of the year, only picking
up in the final quarter as gold in yen terms breached the
5,000 yen per gramme level. Vietnam and Malaysia
both recorded an annual fall of 7% while scrap supply
from South Korea retreated just 2% on an annual basis.
tonnage accordingly, as Chinese scrap is largely
dependent on jewellery recycling. China’s scrap total
in 2014 rose 12% year-on-year, to 198 tonnes. Despite
weaker gold prices, the uptick in scrap supply did not
necessarily stem from typical end-user liquidation.
Indeed, last year the increase was largely attributable
to an unusual phenomenon in the jewellery sector
with jewellery fabricators clearing out their jewellery
inventory (usually older designs and slow moving stock)
to refineries to boost liquidity on their balance sheet, and
counter sluggish jewellery demand in China.

As we have made a major upward revision on Chinese

jewellery fabrication, we also revised up the scrap

WORLD SCRAP SUPPLY LARGEST SUPPLIERS OF GOLD SCRAP

SUPPLY FROM ABOVE-GROUND

2000 Gold Price 2000 200 Gold price

Oceania 2000
Italian Scrap
Africa
STOCKS

Chinese Scrap
1600 South America
Indian Scrap
1500 150 1500
North America US Scrap
Gold Price US$/oz

Europe
1200
Asia
Tonnes

US$/oz
Tonnes

1000 100 1000

800

500 50 500
400

0 0 0 0
2004 2006 2008 2010 2012 2014 2004 2006 2008 2010 2012 2014
Source: Thod Source: GFMS, Thomson Reuters Source: GFMS, Thomson Reuters

son Reuters GFMShomson Reuters GFMS

58

E-SCRAP SUPPLY
Almost 49 million tonnes of electronic waste (e-waste)
were generated in 2012, according to StEP (Solving the
E-waste Problem), an international e-waste solutions
initiative. This amount compares to 19.5 million tonnes
generated in 1990. Only a small portion of e-waste,
however, has potential for precious metals recovery. Cell
phones, computers, and telecommunications equipment
are among the most sought after waste streams in terms
of precious metals value. Additionally, a large portion
of e-waste generated does not feed into the recycling
circuit, but is refurbished for re-use or not collected at all.
As an example, the United States, the largest source of
e-waste today, generated 9.3 million tonnes of e-waste
in 2012. Four million, or 43%, of this total was actually
collected. Of this four million, 70% was recycled, while
the remaining 30% was refurbished and re-used. As
such, only 25% of e-waste generated enters the recycling
circuit. The e-scrap recycling market is a stark contrast to
the high-grade gold scrap market in which nearly 100%
of the scrap generated is collected and recycled.
Findings of the GFMS team at Thomson Reuters suggest
that of the 49 million tonnes of e-waste generated, 5%,
or 2.5 million tonnes, is in the form of cell phones and
computers. The most valuable components in these
electronics are printed circuit boards and memory cards.
To demonstrate, one metric tonne of printed circuit
boards contained about 250 grams of gold in 2013. This
yield compares to 1.3 grammes per metric tonne of ore
treated at mines. Work on other electronic waste streams
is ongoing.
It may be prudent at this point to describe the e-scrap
value chain. When an end-user disposes of an electronic
product, e-scrap has been generated. The scrap must
now be collected; collectors will source e-waste from a
variety of sites, such as retail stores and office buildings.
Collectors then typically sort through the e-waste and
transport it to relevant treatment facilities, often by the
type of electronic product and/or its relative value profile.
At the treatment stage of the value chain, e-scrap is
dismantled and/or shredded. This material will then
either be shipped to landfill, recycled for valuable
resources, or used for refurbishment/re-use. Those
who recycle material are most often international in
scope, collecting e-material from all over the world then
smelting and refining it to produce precious metals and
other raw materials.
GFMS GOLD SURVEY 2015
The main drivers behind precious metals recovery growth
from e-waste are commodity prices, thrifting of metals
among electronics manufacturers (mostly in response
to commodity prices), regulations, and the development
of the e-waste supply chain. The biggest factor behind
e-waste volumes in recent years has been gold prices,
which have boosted the collection and recycling of
precious metals-intensive e-waste. To illustrate, we
estimate that smelter feedstock volumes increased at a
15% compound annual rate between 2008 and 2013 to
408,000 tonnes.
Another major factor that has weighed on growth
has been increased thrifting and substitution among
electronics manufacturers. The high and rising gold price
in recent years pushed manufacturers to use less gold
and other precious metals in order to maintain costs.
This thrifting activity actually is expected to weigh on
refined gold output from e-scrap recycling over the next
five years, more so than during the period of rising prices
due to the lag time between production and end-of-life.
By our estimates, 41 metric tonnes of gold are contained
in computer and mobile phone scrap expected to
be generated in 2014, up 3% from a year ago. Gold
contained in these electronic waste streams is expected
to decrease by 0.2% per annum over the next five years,
through 2019. This is a stark change from the 7.8%
compound annual growth rate seen since 2000. Much
of the slowdown can be attributed to thrifting of gold
in newer generation computers, as mentioned earlier.
Indeed, recyclers and smelters have seen declines in gold
contained in e-waste feedstock of between 5% and 20%
in 2014.
GOLD USAGE IN ELECTRONIC APPLICATIONS
SUPPLY FROM ABOVE-GROUND
150 Computers
Cell Phones
140
130
Index, 1st January 1996 = 100
STOCKS
120
110
100
90
80
70
60
1996 1999 2002 2005 2008 2011 2014
Source: GFMS, Thomson Reuters
59
 GFMS GOLD SURVEY 2015
5. OFFICIAL SECTOR
• For the fifth successive year, central banks were a
significant source of net demand in the gold market in
2014. Net purchases by the official sector were
466 tonnes last year, up by 14% from 2013, reaching the
OFFICIAL SECTOR
second highest annual total since the end of the gold
standard.
• Heightened geopolitical tensions in 2014 resulted in
Russia and several CIS countries increasing their gold
holdings, with gold being held as a means to diversify
their reserves. Russia was the largest reported purchaser
for the third consecutive year, with a record of 173 tonnes.
• Sales rose in 2014 by 280% year-on-year, to 54 tonnes.
Ukraine was responsible for the largest transactions with
sales concentrated in the final quarter of the year.
OVERVIEW
The estimates derived by the GFMS team at Thomson
Reuters for official sector transactions are based on a
combination of publicly available information, such as the
statistics regularly published by the IMF and information
extracted from individual central banks’ websites, plus
our own proprietary data on undeclared central bank
activity, compiled using information collected through
field research. Due to the lag that often exists between
activity taking place and being identified, it is possible
that our estimates will be revised in the future.
The official sector witnessed another year of strong
central bank interest in gold in 2014. After buy-side
activity reached a 48-year peak in 2012, the pace of gold
acquisitions from central banks slowed in 2013, albeit
staying at historically high levels. Last year, however,
WORLD OFFICIAL SECTOR SALES AND PURCHASES
600
Net Purchases
400
200
0
Tonnes
-200
-400
-600
Net Sales
-800
2004 2006 2008 2010 2012 2014
Source: GFMS, Thomson Reuters
60
central bank buying actually recovered with net official
sector purchases at 466 tonnes, up by 14% year-on-
year. This increase in gold holdings portrays the fourth
consecutive year of substantial purchases, which are
rapidly becoming the industry norm. Indeed, net central
bank purchases from 2011 to 2014 inclusive amounted
to almost 1,880 tonnes. To put this in context, this is
equivalent to approximately seven months of global
annual mine production.
This is a fundamental change to the market, as it was
preceded by more than two decades of persistently heavy
selling. As recently as 2005 net official sector activity was
equivalent to a sixth of supply. Over 2014 as a whole, net
official sector purchases were responsible for 11% of gold
demand, a swing of over 1,100 tonnes in just nine years.
The shift in central bank activity has in our view been a
key element in supporting cyclically higher gold prices.
Central to this has been not just the direct impact on
supply and demand dynamics, but also the influence
on investor confidence. The substantial private investor
selling in 2013 was the first such onslaught for many
years, overwhelming any price impact from official sector
activity. Central bank purchases increased in 2014, but
the overall fundamental dynamics of the market meant
that prices declined by 10% on average year-on-year.
Emerging economies continued to dominate the
purchases, as has been the case since the market
returned to net purchasing (on an annual basis) in 2010.
In 2014, these economies had accounted for over 90% of
the total volume of gross purchases and activity chiefly
came from CIS countries and Iraq.
GOLD AND OTHER RESERVES (END - 2014)
Gold Total %
Reserves Reserves Held in
(tonnes) (US$ bn)* Gold*
United States 8,134 434.4 72.6%
Germany 3,384 193.5 67.8%
IMF 2,814 n/a n/a
Italy 2,452 142.8 66.6%
France 2,435 144.0 65.6%
Russian Federation 1,208 385.4 12.1%
China, P.R.: Mainland 1,054 3,900.0 1.0%
Switzerland 1,040 545.8 7.4%
Japan 765 1,260.7 2.4%
Netherlands 612 43.1 55.2%
Source: IMF
*Gold valued using market prices

Underpinning the strong buying has been the continued
desire of the emerging nations to diversify their foreign
exchange reserves away from US dollars, regardless of
an appreciating greenback and weakening gold prices.
However, while diversification remained crucial for many
countries the specific timings and scale of buying by the
largest acquirers appear to have been fuelled by other
drivers.
This was demonstrated most clearly by the activity by
Russia, and to a lesser extent by Kazakhstan, which seem
to have been buoyed by geopolitical tension given the
events in Ukraine. We view this as not only reinforcing
the desire to diversify away from US dollars but also
to attempt to provide support to faltering domestic
currencies. In a similar vein, the purchases by Iraq were
also driven by a desire to support the dinar.
Overall sales almost tripled in 2014 but this was from an
exceptionally low base and as demonstrated by the net
figure is dwarfed by the scale of acquisitions. Meanwhile,
sales from the CBGA signatories continued, as they have
for a number of years, inconsequential but this did not
prevent the same entities announcing a fourth CBGA deal
on 19th May and it came into effect on 27th September.
Indeed, more media attention was actually focused on
the (ultimately) unsuccessful Swiss referendum on 30th
November which if passed would have seen its gold
holdings have to rise to 20% of its official reserves, and a
potential repatriation of gold. This theme also garnered
focus as the Netherlands announced on 21st November
that it had repatriated 122.5 tonnes, and as a result they
now have the same amount of its gold reserves held
domestically as in the Federal Reserve (at 31% each). In a
similar vein, in January 2015, the Bundesbank announced
that “In 2014, 120 tonnes of gold were transferred to
Frankfurt am Main from storage locations abroad: 35
FOUR LARGEST CUMULATIVE PURCHASERS IN 2014
200
Russia
Iraq
Kazakhstan
150
Azerbaijan
Tonnes
100
50
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
tonnes from Paris and 85 tonnes from New York”. This
marked a substantial acceleration from the 37 tonnes
that was transferred in 2013, of which only five tonnes
had come from the Federal Reserve. The Bank also
stated “The Bundesbank took advantage of the transfer
from New York to have roughly 50 tonnes of gold melted
down and recast according to the London Good Delivery
OFFICIAL SECTOR
standard”. There are also growing movements in a
host of other western European countries attempting to
persuade their authorities to also repatriate central bank
holdings from traditional custodians.
Turning to the prospects for 2015, we see little appetite
for central bank sales activity, discouraged by low gold
prices. However, we do not rule out the potential for
Ukraine to further reduce its holdings on a faltering
economy; although with a bailout already agreed
from the IMF, we expect sales to be at a reduced level
compared to 2014. Meanwhile, we expect central bank
buying to remain strong in 2015, again dominated by
emerging markets, fuelled chiefly by the diversification
rational.
Looking to Russia, we expect to see continued net
purchases over the year, albeit at a substantially reduced
level against last year, while much media attention will
continue to focus on the repatriation of gold to central
banks, especially in Europe.
Gold will therefore remain a useful means of reserve
diversification and a hedge against currency debasement.
Overall, we therefore expect gold purchases by the official
sector to remain elevated, at roughly 75-100 tonnes per
quarter, throughout this year.
SALES
The year 2014 was the fourth consecutive year in which
gross sales from the official sector remained minimal,
despite recording an increase of a seemingly impressive
280%, to reach 54 tonnes. Ukraine was responsible for
just over one third of the transactions, selling
19 tonnes of gold over the year, with 17 tonnes occurring
in October and November alone. The contraction in
holdings developed as a reaction to the continued conflict
with Russian-backed separatists, weighing down on
the economy, resulting in the hryvnia almost halving in
value over 2014 to a historic low, and it then tumbled by a
further 60% in the first two months of 2015.
The second largest seller in 2014 was Ecuador, which
undertook a swap transaction with Goldman Sachs and
hence its holdings dropped by 14 tonnes in the second
61
 GFMS GOLD SURVEY 2015

ANNUAL NET OFFICIAL SECTOR PURCHASES (TONNES)

quarter. (This technically shows up as a sale, because a
swap is a simultaneous sale and repurchase transaction, 2010 2011 2012 2013 2014
with title passing for the duration of the exercise). 77 457 544 409 466
Source: GFMS, Thomson Reuters

Consistent with the previous couple of years the difference

with the prior period is the absence of large scale selling geopolitical events in Ukraine and accompanying
from countries within the CBGA. Germany continued sanctions. As a result of this, there was a further
OFFICIAL SECTOR

its regular pattern of small scale sales as part of its
official coin program, of roughly three tonnes, with the
transactions taking place within the first half of the year,
while Latvia, (which became a member of the Euro on
1st January), sold one tonne in January, the country’s first
contraction in holdings since 2006. Additionally, Belarus
sold just over five tonnes in 2014, however this was largely
swap activity and it is notable that the fourth quarter saw
the country purchase just over three tonnes.
PURCHASES
After a multi-decade high of 571 tonnes in 2012, gross
official sector purchases are estimated to have totalled
520 tonnes in 2014, an increase of 23% year-on-year.
It is important to emphasise that our gross figure does
not include the reported net increase in Turkish official
reserves (as was also the case in the last four years) as
this is reflected in changes in local commercial banks’
gold deposits with the central bank. In 2014 this showed
as an increase of nine tonnes in Turkey’s gold reserves.
For the third successive year, Russia was the largest
announced buyer in 2014, raising its official gold
holdings by a reported 173 tonnes. While Russia is a
long term regular purchaser of gold, this level of buying
was markedly higher than previously and was more
than double the level achieved in 2013, with purchases
concentrated in the last three quarters of the year, (with
37 tonnes bought in September alone). Underpinning
the substantial upturn was clearly, in our view, the
hardening of the view by Russian authorities that it
wanted to move its central bank holdings away from US
dollars, while the rouble lost half its value over 2014 as
the economy suffered.
Substantial buy-side interest was also apparent from
other CIS countries. In particular this came from
Kazakhstan, which bought 48 tonnes chiefly through
regular purchases of domestic gold output over the year.
It is also noticeable that, just like in Russia, the pace of
purchases accelerated with almost 25 tonnes bought
in August alone. Furthermore, Azerbaijan purchased
10 tonnes over August, September and October, while
Tajikistan also bought four tonnes in 2014.
The third largest purchaser in 2014, however, came
from outside this region, with Iraq purchasing just over
47 tonnes in the first third of the year, in order to help
defend the dinar. While this is somewhat out of the blue
as the country had not reported any purchases for over
12 months, it is worth remembering that it is also made a
purchase of almost 24 tonnes in August 2012.
Elsewhere, modest purchases were also reported by a
number of countries, including Mauritius, which bought
four tonnes in 2014. In addition, shortly before publishing
this document, the government announced that it plans
to buy more gold in 2015 from the Perth Mint to defend
the country’s currency from volatility. In 2014, additional
purchases of between one and two tonnes were each
recorded for Jordan, Nepal, Philippines and Serbia.

HISTORICAL NET OFFICIAL SECTOR PURCHASES & SALES

900
700
500 Net Purchases

300
100
-100
Tonnes

-300
-500
-700 Net Sales
-900
-1100
-1300
-1500
1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013
Source: BIS; IMF; GFMS, Thomson Reuters

62
 GFMS GOLD SURVEY 2015

CUMULATIVE 2014 TRANSACTIONS

RUSSIA VS UKRAINE
200
Many of the themes of central bank activity continued tried Russia
Ukraine
and tested patterns in 2014, with substantial net buying
150
from emerging markets and virtually no sales from the
traditional holders such as CBGA signatories. However,
100
events in Ukraine and the geopolitical fall out from them

Tonnes

OFFICIAL SECTOR
were arguably behind the key changes in central bank 50
activity in 2014. We will not dwell here on the political and
social implications of events in Ukraine but instead focus 0
on what happened and why from the perspective of the
economy in general and the central banks in particular. -50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Political instability and economic problems existed in Source: IMF; GFMS, Thomson Reuters

Ukraine before 2014 but events escalated in the first quarter

IMF bailout it is unsurprising that the authorities sold a total
of last year. As can be seen in the charts at the bottom
of 19 tonnes in 2014, with almost 90% of this taking place in
of this page this started to have a major impact on the
the final quarter of the year.
exchange rate of the hryvnia and total central bank reserves
(particularly European and US government bonds).
This was dwarfed however by the actions of the Russian
central bank which every month from May onwards made
That said, from a purely gold perspective the first quarter
purchases of at least seven tonnes and every quarter
saw very little activity from either of these countries;
they acquired at least 54 tonnes. As a result, Russia
indeed Russia purchased less than usual, possibly due to
was the largest official sector purchaser of gold in 2014
higher gold prices, arguably sparked in part by the same
at 173 tonnes. Even though Russia had been a regular
geopolitical events. However, March was also the first
purchaser of gold for many years this was the highest since
month in which sanctions towards Russia were introduced
the inception of the Russian Federation.
by many western governments. This was then tightened
in late April and a third round of sanctions was introduced
Underpinning this upturn in the regularity and scale of
from July onwards (the exact timing depended on different
acquisitions was clearly the geopolitical events. This was
countries decisions).
fuelled by two factors. First, a desire to try and support
the ailing rouble - a policy which has proved unsuccessful.
The impact of this can be seen in the charts on this page,
Second, a growing belief that the Russia does not want to
although we would readily acknowledge that the slump
buy US dollars (or other western currencies and assets).
in the oil price also had a significant role. Focussing on
Ukraine first, the depth of the recession due to the fighting
Finally we would note that in addition to this move by Russia
has led to central bank reserves plunging and by January
the same period has seen Kazakhstan buying its record
2015 they were barely one fifth of the level just two years
annual total of 48 tonnes.
previously. Given this backdrop and the inadequacy of an

RUSSIAN CENTRAL BANK RESERVES UKRAINIAN CENTRAL BANK RESERVES

600 20 30 5
Total Central Bank Reserves Total Central Bank Reserves
US$ / Russian Rouble Spot Rate (Inverted) US$ / Hryvnia Spot Rate (Inverted)
30 25

500 40 20 10
Exchange Rate

Exchange Rate
$US Bn

US$ Bn

50 15

400 60 10 15

70 5

300 80 0 20
Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15
Source: IMF; GFMS, Thomson Reuters Source: IMF; GFMS, Thomson Reuters

63
 GFMS GOLD SURVEY 2015
6. GOLD BULLION TRADE
• India’s gross bullion imports increased by 5% to 822
tonnes, a result of the 80:20 rule leading to forced
exports. The permission for trading houses to import
helped to lift volumes in the second half of the year.
• Bullion flows to East Asia retreated significantly from the
record levels of 2013 as weaker jewellery and investment
demand across the region reduced fresh bullion
purchases.
• In the Middle East, bullion imports were materially
weaker in 2014 as consumer demand across most of the
region retreated, despite the near 10% drop in the dollar
gold price.
GOLD BULLION TRADE
• Turkish bullion imports fell 47% to 178 tonnes in 2014 as
high local prices saw more scrap come into the market
and dissuaded purchases of physical bullion. On a net
basis Turkey imported just over 102 tonnes in 2014.
• Relative normality returned to European bullion trade
after an extraordinary year in 2013. The pattern of bullion
moving from the west to east continued, however. The
UK, Switzerland and Italy posted strong declines in
imports and Switzerland and Italy saw much reduced
exports.
• North American imports rose to 318 tonnes in 2014, up
14%, after declining at a double-digit pace in the previous
two years. Exports fell 11% to 740 tonnes, due to a 21%
decline in US exports.
Whilst official trade statistics are quoted in our analysis,
these figures should not be taken at face value. Our
assessment of trade flows also incorporate substantial
research with market participants.
INDIAN SUB CONTINENT
——India’s gross bullion imports increased by 5% to
822 tonnes, a result of 80:20 rule leading to forced
exports.
——Allowing trading houses to import helped lift
volumes in second half of the year.
India’s net gold imports for 2014 are estimated at
591 tonnes, after deducting the 20% of required exports
as stipulated under the 80:20 scheme. This includes
gold refined from doré supplied to domestic market. This
number also nets off the quantity imported for export
64
purposes. Compared to 2013, imports were down by 9%
from 647 tonnes. The official hand-carried trade, which
is not part of the above numbers, was 5 tonnes, although
that activity eased later in the year due to lower premia
and a crackdown on agents carrying kilo bars on behalf
of others, to discourage the circumvention of law for
financial gains.
Gross imports increased by 5% from 2013 to 822 tonnes.
Nearly 80% of the metal originated from Switzerland
(60%), UAE (11%) and US (8%). That said, the share of
UAE exports dropped from 20% in 2013, largely in favour
of direct shipments from Zurich. The increase in imports
is a reflection of the 80:20 rule, which mandated 20% of
imported metal to be exported. Also to note was the shift
in point of exports from Special Economic Zone (SEZ) to
Export Oriented Unit. This change was primarily due to
restrictions on export of medallions and coins from SEZ.
According to our sources, nearly 60 tonnes equivalent of
gold medallions with purity of 995 were exported from
India, destined to Sharjah due to lower duty at that port
compared to Dubai. These were then re-melted and
returned to the supply chain.
Gold doré was another key source of supply; total volume
is estimated to be 91 tonnes against 53 tonnes in 2013 on
a net purity basis, registering growth of more than 70%.
Higher premia have proved to be a key benefit for refiners
last year. Refining activity increased despite the fact
that refiners had to pay customs duty on the 20% of gold
that was to be exported eventually, tying up funds until
the export materialised. This is evident in the number of
refiners with licence to import, which increased from 13 in
2013 to 21 in 2014. While the source of gold doré largely
originated from the United States, Brazil and Tanzania,
Ghana has taken a major spot catering for 12 to 15% of
INDIAN BULLION NET IMPORTS AND EXPORTS*
500 Gold Price 35
Exports
Net-Imports 30
400
Rupees/10g (thousands)
25
300
20
Tonnes
200 15
10
100
5
0 0
Q1-10 Q1-11 Q1-12 Q1-13 Q1-14
Source: GFMS, Thomson Reuters
*Exports include bars, jewellery medallions and coins

GROSS INDIAN BULLION IMPORTS*
(tonnes) 2007 2008 2009 2010 2011 2012 2013 2014
Gross Imports* 862 760 779 1,123 1,208 969 781 877
Local Price (Rs./10g) 9,378 12,319 15,310 18,386 24,003 29,730 29,310 28,278
*including Direct Imports (imports by premier trading houses), NRI Imports, Export Replenishments; 2012 to 2014 also includes
unofficial imports.
Source: GFMS, Thomson Reuters
the requirement at any given month, with gold purity
averaging more than 90%.
India’s bullion trade discussion is incomplete without
touching upon unofficial imports. We estimate cross-
border smuggling of gold into the country was at an
average rate of 2.7 tonnes a week in 2014, 13% less than
2013. Cross-border smuggling was at its peak when
premiums exceeded $100, and continued in greater
volumes until premier and star trading houses were
allowed to import gold. Smuggling activity had reduced
significantly by the end of the year as markets traded at
a discount following the circular on relaxation of gold
imports. Notable volumes were also registered from
export zones due to unchecked pilferage of metal from
these zones. A total of 35 agencies imported gold last
year. Premier and star trading houses led the market
share at 51% despite only importing from June onwards.
This was followed by banks at 39% and government
nominated agencies at 10%.
EAST ASIA & OCEANIA
——Bullion flows to East Asia retreated significantly from
the record levels seen in 2013 as weaker jewellery
and investment demand across the region reduced
demand for fresh bullion.
Bullion flows to mainland China retreated last year,
driven lower by weak domestic demand. Demand
last year was limited by the range-bound gold price
performance, excessive purchase in 2013, and a
lacklustre economic environment, while investment
demand was further impeded by anti-corruption policies
from the government. We estimate that gold imported
into mainland China was 1,136 tonnes in 2014, 24% lower
than in 2013.
As expected, the proportion of imports into Shanghai
increased significantly last year compared to Hong
Kong. Among the reasons are improving logistics, the
establishment of the Shanghai Gold Exchange (SGE)
International Board, and encouragement by the PBOC to
use the alternative port. However, most of the importing
banks still use Hong Kong as the prime conduit for
GFMS GOLD SURVEY 2015
bullion imports owing to logistic convenience as well as
lower costs. We believe Hong Kong will continue to be
the major hub for imports unless there is a breakthrough
solution with logistics companies to reduce the cost of
shipping directly to Shanghai, and more sophisticated
cargo handling systems to compete with Hong Kong.
Meanwhile, the prevalence of gold leasing business in
China, which was originally aimed to help lower the
risk of using gold as collateral for borrowing, has been
GOLD BULLION TRADE
abused by some Chinese companies as a way to gain
cheap finance. This business not only largely inflated
the domestic trading volumes by a 28% year-on-year
increase, but also partially explained the high level of
import volumes, as banks had to build stocks to support
the gold lending business. We estimate that 2014 alone
saw over 400 tonnes outstanding for fresh leasing
business.
The round-tripping mechanism has been in the
market for arbitrage purposes in the past few years to
take advantage of the floating yuan against the U.S.
dollar. Although the Chinese government attempted
to eliminate this problem during and before last year,
more diverse forms of the practice developed, with gold
jewellery export volumes, a rough indication of the level
of round-tripping, reaching a new high of 580 tonnes
last year, a 29% increase from 2013. Our conservative
assumptions put total volumes for round-tripping last
year at 370 tonnes. Excluding this volume from imports
and factoring in specific bullion export quota and imports
HONG KONG BULLION IMPORTS AND EXPORTS*
700
Imports Exports
600
500
400
Tonnes
300
200
100
0
Q1-10 Q1-11 Q1-12 Q1-13 Q1-14
Source: GFMS, Thomson Reuters
*Calculated quantites based on reported export and import values.
65
 GFMS GOLD SURVEY 2015

from Shanghai and Hong Kong, we estimate that net total, with Hong Kong and Singapore the remaining main
bullion imports in 2014 totalled 766 tonnes. official trade routes. One statistic of note was the sharp
uptick in shipments to Cambodia last year, which were
Gold imports into Taiwan exceeded 22 tonnes in 2014, a most likely destined for the closed market of Vietnam.
13% year-on-year increase and the highest volume since
2002. Among the dominant import regions, volumes A weaker jewellery market and a return to net
from Hong Kong dropped back to 2012 levels, while disinvestment, as higher domestic prices encouraged
imports from Japan increased by 130%. Bullion exports profit taking, saw Japanese bullion exports gain 7% in
rose by 46%, predominantly driven by bars flowing out 2014 to an estimated 80 tonnes. Outward flows were
of the country for refining in Hong Kong. The increase in dominated by shipments to Hong Kong (47% of the
exports primarily stemmed from the shut-down of some total) with Thailand the second largest destination at
bullion retailers over the year due to weak investment 20%. Both markets recorded a modest rise over 2013
sentiment at home. volumes. Large bar shipments to the UK also rose by
almost a quarter to just over seven tonnes. Bullion
Calculating Vietnam’s bullion flows in recent years has imports remained modest at just 12 tonnes, although in
become an arduous task given the tight control the percentage terms they fell by 48%, with significant falls
State Bank now has on both the import and export of in supply from Canada and Switzerland.
bullion and scrap supplies. The domestic market in 2013
GOLD BULLION TRADE

featured a series of auctions whereby gold imported Singapore’s bullion imports surged 19% in 2014 to an
by the State Bank was auctioned and released into the estimated 284 tonnes. This may appear somewhat
market. Last year the market tightened even further counterintuitive, given that demand in the region last
with no officially-sanctioned imports of gold. This meant year was considerably weaker than in 2013, but this
that fabricators have had to source gold in the domestic market is increasingly being used for vaulting and
market which is now largely unofficially imported from has become a terminal market for supplying to China.
neighbouring countries. We estimate these combined Imports were dominated by flows from Switzerland (47%
volumes from Cambodia, Laos and Thailand surged last of the total) and Australia, which at 25%, increased
year to exceed 75 tonnes. over 250% to an estimated 70 tonnes. We believe
exports jumped nearly 30% in 2014 to 250 tonnes,
An acute drop in investment demand, coupled with a driven predominantly by a surge in flows to China (at a
double-digit decline in jewellery fabrication in Thailand touch over 100 tonnes), although deliveries were also
last year, accounted for the bulk of the 52% fall in gold augmented by a healthy rise in shipments to Malaysia,
bullion imports. On a calculated basis, imports slumped Taiwan and Hong Kong.
to an estimated 164 tonnes with flows from the largest
supplier Switzerland reduced by over 60%. Elsewhere, Reviewing Australia’s bullion flows can often provide an
shipments from the U.S., South Africa and Australia indication of demand trends across Asia as historically
retreated by 26%, 60%, and 33%, respectively. Turning the majority of bullion exports are destined for these key
to exports, bullion flows (which includes scrap deliveries) markets. In recent years flows to China have dominated
slipped 5% in 2014. Switzerland again featured as the bullion exports while the tightening of the import
main destination for Thai exports at close to 40% of the regulations in India has seen shipments to this market

THAI BULLION IMPORTS* AUSTRALIAN GOLD EXPORTS

140 30 150 China Singapore 200
Rupee
UK Others
Gold Price (Baht per 15.244g, thousands)

120 125
25 India
Gold prices (Index, Q1 -10 = 100)

100 150
Gold Price 100
RMB
80 20
Tonnes

Tonnes

75 100
60
15
50
40
50
10
20 25

0 5 0 0
Q1-10 Q1-11 Q1-12 Q1-13 Q1-14 Q1-10 Q1-11 Q1-12 Q1-13 Q1-14
Source: GFMS, Thomson Reuters Source: GFMS, Thomson Reuters
*Calculated quantities based on reported import values

66
 GFMS GOLD SURVEY 2015

Ch6 BULLION
Turkey Official Bullion Imports
ANDand Exports
contracted significantly. Last year, bullion exports to TURKISH IMPORTS EXPORTS
China still dominated total shipments, at over 50%, 150

although declining by an estimated 10% to 156 tonnes, Imports

125
reflecting the weaker demand in the Asian giant, while
flows to India halved according to trade statistics. 100
Elsewhere, deliveries to Thailand slumped by 47%, while
Exports

Tonnes
in an indication of the general weakness in most regional 75

markets, shipments to the UK jumped 44% year-on-year

50
to 21 tonnes.
25
MIDDLE EAST
0
Q1-09 Q1-10 Q1-11 Q1-12 Q1-13 Q1-14
——In the Middle East, bullion imports were materially Source: Turkstat; GFMS, Thomson Reuters

weaker in 2014 as consumer demand across most of

the region retreated, despite the near 10% drop in the Bullion imports into the United Arab Emirates (UAE)
dollar gold price. were considerably weaker in 2014. A considerable
——Turkish bullion imports fell 47% to 178 tonnes in slowdown in jewellery consumption across the region
2014 as high local prices saw both more scrap come following the price-driven surge in 2013, and a generally

GOLD BULLION TRADE

into the market and dissuaded purchases of physical
bullion. On a net basis Turkey imported just over 102
tonnes in 2014.
Last year was somewhat disappointing for the Turkish
bullion market after net imports of 266 tonnes in 2013
and total imports of 337 tonnes. The lack of wild price
moves, surging demand and periods of sustained
premia to the London price, which had characterised the
previous year, saw net imports fall 62% to 102 tonnes and
total imports decline 47% to 178 tonnes in 2014. Demand
for imported bullion was heavily affected by the weaker
Turkish lira, with annual prices increasing 3.5% to 88.9
lira/gramme, this in spite of a 10% decline in the dollar
gold price. Over 2013 domestic demand for bullion and
investment grade jewellery manufactured from bullion
had peaked when prices neared 80 lira/gramme. This
was not to be repeated in 2014 with prices only briefly
dipping below 85 lira/gramme; this move, however, did
stir up imports in November to 53 tonnes, three and a
half times the average for the year.
weaker sentiment among investors, limited the need
for fresh imports. Direct flows from Switzerland (which
dominate imports) dropped by almost 50% while flows
from the UK and Turkey slipped 22% and 43%.
A feature of the UAE market last year, and another
explanation as to why genuine bullion imports fell so
markedly in 2014, was the Indian influence. Indeed,
the introduction of the much discussed 80:20 rule in
India, whereby 20% of all bullion imports had to be
re-exported in jewellery form fuelled significant flows to
the UAE where this “ jewellery” (often very rough and
semi finished) was refined into kilobars and sold into the
domestic market or exported to India or Switzerland. We
estimate that this figure topped 165 tonnes last year.
Often sold at a discount, these flows partly negated the
requirements for banks and trading houses to import
from abroad. In addition to the Indian supply, the UAE
remains an important collection point for African scrap
and doré, with a handful of new refineries opening in
recent years to accept this trade. Dominated by flows

A weaker jewellery market and a hefty drop in investment TURKISH BULLION IMPORTS SEASONALITY

demand accounted for the 8% drop in Saudi Arabian 60 130

bullion imports last year. Despite the decline in these
50
key demand segments, bullion shipments remained
110
at historically elevated levels as scrap volumes in the 40
Lira/g (thousands)

Gold Price
domestic market have fallen dramatically in recent
Tonnes

years, falling well short of the fresh supply needed for 30 90

fabrication. Direct shipments from Switzerland eased

20
just 6% last year while flows from Dubai and South Africa 70
(the two other main conduits) declined by double digits. 10
In contrast, exports (a combination of scrap and bullion)
0 50
were almost nonexistent, with all gold returned to market Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14
consumed domestically. Source: GFMS, Thomson Reuters; Turkstat

67
 GFMS GOLD SURVEY 2015
UAE BULLION IMPORTS*
200
Gold Price
150
Tonnes
100
50
0 Both countries exported 87 tonnes to Britain, a 145%
H1-09 H1-10 H1-11 H1-12 H1-13 H1-14
Source: GFMS, Thomson Reuters
*excludes various round tripping and scrap related imports
from Ghana, Sudan, Tanzania and Suriname, this supply
eased marginally in 2014 on the back of the weaker gold
price and increasing competition from Indian refineries.
As for exports, we estimate official deliveries to India fell
GOLD BULLION TRADE
sharply in 2014, declining by almost 50% to an estimated
90 tonnes. However, unofficial flows, which chiefly
originated from Dubai, we estimate at 122 tonnes, while
shipments to Europe rose by a fifth to around 60 tonnes.
Looking briefly at Egypt, bullion imports declined sharply
last year as demand for both investment and jewellery
dipped from the elevated levels of 2013. In addition,
a rise in scrap and supply from the liquidation of gold
investment products during the occasional price peaks
during the year also lessened the need for fresh bullion
flows. Exports dominated the bullion trade in the
first quarter as gold in domestic terms breached EGP
300 per gramme for the first time since September 2013,
encouraging profit taking. This pattern was repeated in
the middle of the year before buying activity and imports
returned in the second half as gold trended lower,
providing an opportunity to restock. That said, imports
from the largest conduit of supply, Switzerland, still
retreated by 60% in 2014.
EUROPE
——Relative normality returned to European bullion trade
after an extraordinary year in 2013.
——The UK, Switzerland and Italy posted strong declines
in imports and Switzerland and Italy saw much
reduced exports.
The year 2014 was the first year since 1980 that a full
country-by-country monthly breakdown of Swiss gold
bullion imports and exports was released. In addition,
country-by-country annual trade back to 1982 has now
been released. On a calculated basis, Switzerland
imported 1,660 tonnes of fine gold in 2014, a 36% decline
68
year-on-year on the extraordinary year that was 2013,
2000
while against 2012, a more meaningful comparison, it
was up 8% year-on-year. Exports were similarly down
37% compared with 2013 to 1,741 tonnes, but up 26%
from 2012 indicating continued physical demand.
1500
US$/oz
Last year, British official import data showed a marked
increase of 38% to 439 tonnes. Imports from Canada
1000
were up 7% year-on-year to 161 tonnes, but the story of
the year in terms of import was the huge increases of
metal flowing from the United States and South Africa.
500
year-on-year increase for the United States and 203%
increase for South Africa. As with last year exports far
exceeded imports, with the total figure in 2014 at 735
tonnes down 57% from 1,701 tonnes of 2013. The bulk
of the bullion (62%), went to Switzerland. From May
exports began to flow to the Chinese mainland for the
first time, with 112 tonnes in total, more even than the
total going to Hong Kong, which was 100 tonnes, down
29% year-on-year. November saw the largest outflows
with 119 tonnes going to Switzerland and 30 tonnes to
China as ETF and price movements had their effects.
Swiss offical statistics indicate that they exported to
Germany 90 tonnes of gold bullion on a calculated
basis to that country, a 50% year‑on‑year increase. The
substantial rise in imports in Germany in 2013 and 2014
ties in with the Bundesbank’s stated policy of repatriating
300 tonnes of its gold from New York and Paris over a
period stretching out to 2020. Indeed in early January
2015 the Bundesbank stated publicly that 120 tonnes of
gold were transferred to Frankfurt from these locations
in 2014. The bank also refers to the upgrading of some
of this material to London Good Delivery standard. The
surge in imports from Switzerland over the year implies
that this is where the work was carried out. Taking this
into account, underlying overall German imports actually
fell in 2014, which ties in with a 15% year-on-year fall in
exports and weaker fabricaton demand.
Italian official calculated bullion imports fell in 2014,
with the first eleven months of data showing a drop of
3% to 87 tonnes. Shipments to South Africa increased,
to represent 25% of imports. This comes despite a rise
in total Italian fabrication of 4% to 96 tonnes and a 12%
reduction in total scrap to 75 tonnes. The result of these
moves was that Italy was a net importer of gold bullion
for the first time since 2009. In the first eleven months
of 2014, exports were down a third to 81 tonnes, with
Switzerland remaining the main destination though
much of this comes as a result of imported scrap needing
to be re-exported for VAT to be reclaimed.
 GFMS GOLD SURVEY 2015

SWISS GOLD BULLION TRADE

2014 Imports
Imports Exports 2014 Exports
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec

250 200 150 100 50 0 0 50 100 150 200 250

Tonnes Tonnes

UK USA Italy Germany UAE Russia Turkey Others

1,660 tonnes 1,741 tonnes
India Hong Kong China Singapore
One cm2 is equal to 50 tonnes of gold and each countries’ flag is proportional to it’s trade. The whole rectangle for
Source: GFMS, Thomson Reuters; Swiss Impex* imports and exports is equal to the total trade and the grey area denotes trade with a country not represented by a flag.
2014 MONTHLY TRADE

GOLD BULLION TRADE

Imports Imports Exports Exports
Jan Jan
Feb Feb
Mar Mar
Apr Apr
May May
Jun Jun
Jul Jul
Aug Aug
Sep Sep
Oct Oct
Nov Nov
Dec Dec

250 200250 150200 100150 50 100 0 50 0 0 50 0 100 50 150100 200150 250200 250
Tonnes Tonnes Tonnes Tonnes
UK USA UK Italy USA Germany
Italy UAE
Germany Russia
UAE Turkey
Russia Others
Turkey Others

India HongIndia
Kong China
Hong Kong Singapore
China Singapore

Source: GFMS, Thomson Reuters;

Source: GFMS, Swiss Impex*
Imports
Thomson Reuters; Swiss Impex* Exports
ANNUAL TRADE SINCE 1982 Jan
Feb
Mar
3000 Apr 150

May Real 2014 Value of Imports Bullion Imports into Switzerland

2500 Jun Real 2014 Value of Exports Bullion Exports from Switzerland 120
Jul
2000 Aug
US$ billion

90
Tonnes

Sep
1500 Oct
Nov 60
1000 Dec

250 200 150 100 50 0 0 50 100 150 200 250 30

500 Tonnes Tonnes

UK USA Italy Germany UAE Russia Turkey Others

0 0
1982 1987 India Hong
1992 Kong China
1997 Singapore 2002 2007 2012

Source:Source:
GFMS,GFMS, Thomson
Thomson Reuters;
Reuters; Swiss Impex*
Swiss Impex*

Imports from the UK were high in the first two months of 2014
at 233 tonnes, representing outflow from ETFs in November
and December 2013, which saw investment bars re-refined to
the kilo bars favoured by China. Exports to India were high
from September to November, as fabricators started to stock up
towards the festival season. Exports to Greater China were even
larger, with Hong Kong imports in February dwarfing any other
export at 99 tonnes, as buyers took advantage of lower prices.
In the last quarter more flowed into the mainland, 109 tonnes,
than Hong Kong at 104 tonnes.

* All tonnages calculated from trade values in Swiss francs.

69
 GFMS GOLD SURVEY 2015
Official statistics of Russian gold bullion exports became
available for the first time in 2014, showing a 44% fall
year-on-year to 76 tonnes, though this is still the second
highest level since 2007. Flows to Hong Kong were down
96% year on year to two tonnes. Meanwhile local gold
supply, including mine production and scrap, posted
a 5% year on year rise to 281 tonnes. The total was
comfortably sufficient to cover local fabrication, as well
as strong Russian central bank purchases of 173 tonnes.
NORTH AMERICA
——North American imports rose to 318 tonnes in 2014,
up 14%, after declining at a double-digit pace in the
previous two years.
——Exports fell 11% to 740 tonnes, due to a 21% decline in
US exports.
GOLD BULLION TRADE
North America imported 318 tonnes from countries
outside the region in 2014, up 14% from the previous
year. Including imports within the region, North America
imported 465 tonnes, a 6% increase. North America
is home to over 1,800 tonnes of exchange-approved
installed gold refining capacity. The U.S. accounts
for 60% of this, while Canada and Mexico account for
37% and 3% respectively. North American imports a
significant volume of gold doré from South American
countries, capitalising on that region’s surge in mine
production over the past two decades and a lack of
refining capacity. Indeed, South American countries
accounted for 75% of North American imports last year.
The U.S. imported 286 tonnes of gold bullion and doré,
up 8% from the previous year. The bulk of the increase
came from a near tripling of Bolivian imports, an almost
doubling of imports from Ecuador, and a 22% surge
in Canadian imports. Imports from South America as
a whole were nearly flat year-on-year, accounting for
44% of gross imports. Early last year, the Peruvian
US BULLION EXPORTS*
1000 UK Other
Hong Kong India
800 Switzerland
600
Tonnes
400
200
0 0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
*Calculated quantities based on reported export values.
70
government imposed stricter export rules to curb exports
of illegally mined gold. Peruvian exports consequently
fell 24%, with exports to the US suffering the steepest
decline of 66%. Imports from Mexico fell 10%, in line
with the country’s decline in mine production. US exports
totalled 467 tonnes, a 24% decrease from the previous
year, the heftiest decline in the past decade. The largest
export destinations, Switzerland and Hong Kong, saw
declines of 34% and 30% respectively. Exports to the
UK saw a 185% increase to 76 tonnes. This substantial
increase suggests refiners shipped bullion from London
vaults due to lack of demand elsewhere.
Canada imported 178 tonnes of bullion and doré in 2014,
up 3% from 2013. Contrary to the U.S., Canadian imports
from Peru rose 5% last year. Imports from Argentina
and the Dominican Republic both increased at a double-
digit pace. South America’s share of Canadian imports
has grown from 56% in 2005 to 64% in 2014. Canada
exported 333 tonnes last year, a 14% increase over 2013,
with exports to Canada’s two largest export partners, the
UK and the US, increasing 31% and 28%, respectively.
Exports to Hong Kong fell 12% last year. Canada’s
reliance on Hong Kong as an outlet for gold output has
increased over the past decade. Hong Kong accounted
for less than 1% of Canadian exports in 2005. In 2014,
Hong Kong accounted for 14% of exports.
Mexican bullion and doré imports amounted to
1.3 tonnes in 2014, down 6% from the previous year.
Exports fell 8% to 84 tonnes. Mexico produced 118
tonnes of gold last year and has limited gold refining
capacity. Mine output fell 1%, which weighed on exports.
CANADIAN BULLION EXPORTS*
500 Other
Hong Kong
400 USA
UK
300
Tonnes
200
100
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
*Calculated quantities based on reported export values.
 GFMS GOLD SURVEY 2015

7. FABRICATION DEMAND
• Global fabrication declined 12% in 2014 from 2013’s CARAT JEWELLERY
elevated levels, to an estimated 2,834 tonnes.
INDIAN SUB-CONTINENT
• The bulk of the drop was due to a 9% drop in jewellery
fabrication, despite the weaker US dollar price ——Indian jewellery fabrication increased by 14% in
environment, mainly due to a hefty fall in Chinese output. 2014, as lower prices and advance purchases under
the gold savings scheme helped boost demand.
• Jewellery fabrication, excluding the use of scrap, saw a ——A 60% surge in second half demand helped negate
similar contraction, slipping 8%, equivalent to a loss of an 18% decline in the first half.
141 tonnes of new gold demand. ——Jewellery fabrication in Pakistan declined by 15%,
despite a fall in gold prices as a drop in bullion
• Following the remarkable surge in 2013, jewellery imports affected fabrication.
demand across East Asia retreated 29% last year, chiefly
as a result of a 33% drop from China. Last year jewellery fabrication in India rose to a record
level of 690 tonnes, rising 14% year-on-year and thereby
• In contrast, Indian jewellery fabrication rebounded bringing a pause to three consecutive years of declining
14% in 2014 to a five-year high, as weaker rupee prices growth. The rise in offtake, by almost 83 tonnes, is to
boosted domestic consumption. be viewed in the context of developments in two distinct
halves last year. While the first half saw demand decline
• Jewellery fabrication in the Middle East declined 6% in by 18% on a yearly basis, the second half delivered
2014, while an improved economic environment and an annual gain of 60%. Lower prices were one of the
weaker prices helped lift North American and European obvious triggers as it led to restocking, but the most
demand by 5% and 10% respectively. important was the unplanned replenishment following
the closure of advance payment schemes run by retailers
• Following a record level in 2013, Official coin minting is to purchase gold through monthly savings; this by itself is
estimated to have slumped 37% to 173 tonnes, the lowest estimated to have created 75 tonnes of demand.

level since 2007.
• A weaker price environment failed to arrest the slide in
global dental demand which retreated 7% in 2014 to a
record low 34 tonnes.
• Other industrial and decorative demand slipped 6% last
year, dragged lower by a 24% drop in offtake from the
Indian Sub-Continent.
FABRICATION DEMAND
The decline in demand during the first half though can
be attributed to the higher base level in 2013. Indeed
the import restrictions introduced on the 22nd July 2013
to import under the 80:20 scheme continued to weigh
heavily on the market. Lofty and volatile premia due to
supply tightness deferred large scale replenishment by
retailers during the first half. Retailers who continued
with their expansion plans were largely moving their

WORLD GOLD FABRICATION JEWELLERY’S SHARE OF TOTAL FABRICATION DEMAND

4000 2000 100 2000

Jewellery’s Share of Total Fabrication Demand (%)

Other Electronics
Jewellery’s Share
Official Coins Jewellery Real Gold Price
Real Gold Price
90
3000 1500
Constant 2014 US$/oz

Constant 2014 US$/oz

1500
80
Tonnes

2000 1000

70
1000
1000 500
60

0 500 50 0
2005 2007 2009 2011 2013 2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters Source: GFMS, Thomson Reuters

71
 GFMS GOLD SURVEY 2015

WORLD GOLD FABRICATION (INCLUDING THE USE OF SCRAP)

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Europe
Turkey 303.4 242.0 276.8 236.7 111.3 109.0 136.3 114.2 178.1 155.8
Italy 290.2 235.9 228.4 186.7 134.6 126.3 103.3 95.9 92.3 96.0
Russia 61.1 65.2 79.4 76.0 57.5 61.0 66.2 72.2 74.3 70.1
Switzerland 55.5 60.7 62.2 58.2 37.5 40.8 47.9 47.8 47.8 46.2
Germany 51.8 51.3 51.5 49.1 38.1 40.8 38.8 36.4 36.8 36.3
United Kingdom 28.6 24.4 16.9 15.6 15.2 13.9 15.5 15.2 13.9 15.4
Austria 8.5 5.7 6.5 26.3 34.6 19.1 22.3 13.7 21.5 14.8
France 16.4 14.4 14.0 13.0 11.0 11.1 10.1 8.4 7.6 7.8
Spain 27.4 24.2 23.6 19.3 13.6 8.4 7.1 6.3 5.8 5.5
Greece 8.6 7.8 8.5 7.4 6.2 6.2 4.5 4.0 3.5 3.9
Poland 4.5 4.5 6.0 6.1 4.6 3.2 3.0 2.7 2.5 2.8
Netherlands 5.5 5.3 4.2 3.3 2.9 3.0 2.8 2.6 2.4 2.3
Czech Republic 2.8 2.7 2.9 2.9 2.6 2.5 2.2 2.1 1.9 2.1
Portugal 7.2 5.3 4.6 3.6 2.9 2.3 1.7 1.4 1.4 1.7
Serbia 1.6 1.5 1.5 1.5 1.3 1.2 1.0 1.0 1.0 1.0
Romania 0.7 0.6 0.5 0.5 0.3 0.5 0.5 0.5 0.7 0.8
Sweden 1.9 1.7 1.3 1.1 0.9 0.9 0.8 0.8 0.8 0.8
Other Countries 13.0 11.5 11.0 10.3 8.1 7.6 7.1 6.5 6.2 6.6
Total Europe 888.7 764.7 799.9 717.4 483.3 457.7 471.1 431.8 498.5 469.8
North America
United States 218.8 210.9 179.0 175.2 173.4 179.1 166.7 146.9 160.0 149.8
Canada 26.8 22.0 22.2 40.1 48.4 43.7 44.9 32.4 44.5 31.7
Mexico 35.4 28.5 25.3 23.0 18.9 18.2 13.2 13.2 7.7 8.5
Total North America 281.0 261.4 226.5 238.3 240.7 241.0 224.9 192.6 212.2 189.9
South America
Brazil 25.9 22.6 23.5 25.5 24.9 29.8 28.6 30.1 32.9 34.0
Chile 4.3 3.9 3.6 3.2 2.8 2.9 2.2 2.2 2.4 2.5
FABRICATION DEMAND

Dominican Republic 6.1 4.8 4.5 4.3 2.8 2.5 1.9 1.8 1.2 1.3
Other Countries 20.4 18.2 15.9 13.0 9.8 9.2 8.0 7.8 7.6 8.0
Total South America 56.7 49.6 47.5 46.0 40.3 44.3 40.7 41.9 44.2 45.9
Asia
India 695.2 633.8 684.4 708.1 571.0 783.4 761.0 736.0 715.8 770.6
China 276.7 289.1 345.0 382.7 431.3 522.5 650.7 697.7 1,058.3 732.2
Japan 165.0 175.0 177.8 163.7 140.5 157.5 147.2 126.1 124.2 118.6
South Korea 83.3 82.3 86.1 77.5 65.0 68.1 62.2 54.1 49.1 46.8
Indonesia 86.5 64.8 63.2 61.4 46.0 38.9 39.3 44.1 51.6 44.5
Malaysia 74.3 58.0 61.0 56.3 45.0 43.7 37.1 34.7 44.6 40.7
Saudi Arabia 124.6 89.6 99.6 85.0 53.5 46.6 36.8 32.5 41.4 37.3
UAE 55.0 46.6 49.4 46.3 35.9 32.9 28.4 27.5 37.8 36.0
Iran 40.7 36.2 40.7 41.0 37.6 39.3 37.4 36.9 41.6 31.5
Singapore 30.0 28.7 29.5 27.6 23.3 25.3 23.6 21.8 25.4 26.7
Taiwan 31.9 30.7 29.7 27.5 23.1 26.1 24.0 22.5 22.2 21.3
Pakistan 64.2 53.9 50.4 43.8 29.7 26.1 22.1 20.6 24.6 20.9
Thailand 68.5 52.7 47.5 40.3 25.2 22.0 18.7 17.0 23.7 19.9
Hong Kong 14.6 14.9 15.4 15.6 14.7 15.8 16.5 14.8 14.6 13.9
Vietnam 28.3 22.6 21.6 19.6 14.7 13.5 12.4 10.7 11.4 12.4
Kazakhstan 10.4 11.3 11.9 10.9 8.8 10.4 11.4 10.9 11.1 11.2
Uzbekistan 10.4 11.3 11.9 10.9 8.8 10.4 11.4 10.9 11.1 11.2
Jordan 6.9 4.5 4.7 4.7 5.6 5.9 5.2 4.6 5.5 7.4
Kuwait 12.3 9.7 8.9 9.5 7.4 6.6 6.2 5.6 6.3 7.0
Israel 11.9 9.9 9.0 8.7 7.2 6.3 5.5 5.1 5.9 6.9

72
 GFMS GOLD SURVEY 2015

WORLD GOLD FABRICATION (INCLUDING THE USE OF SCRAP)

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Bahrain 11.4 9.6 9.9 8.7 6.5 5.7 5.1 4.6 5.8 5.6
Iraq 4.2 4.6 5.3 4.6 3.8 3.7 3.8 3.9 5.0 4.9
Lebanon 7.6 5.4 5.5 4.8 3.4 2.6 2.9 3.7 4.6 4.2
Oman 7.7 6.8 7.1 6.0 4.5 4.1 3.5 3.2 3.8 3.6
Sri Lanka 6.2 5.1 5.2 4.5 3.8 3.7 3.2 3.1 3.5 3.5
Nepal 6.9 5.8 5.3 4.5 3.5 3.5 3.3 3.5 3.9 3.0
Bangladesh 6.7 6.0 6.5 5.8 4.6 4.2 3.8 3.7 4.3 2.7
Syria 17.6 16.0 17.7 15.6 12.0 11.7 8.4 5.4 4.2 2.5
Myanmar 4.3 4.0 4.0 3.5 3.0 2.6 2.3 2.3 2.7 2.4
Qatar 3.7 3.1 3.2 2.7 2.1 1.9 1.6 1.7 2.1 1.9
Other Countries 9.0 8.6 12.3 12.3 8.9 7.7 6.4 6.1 6.8 6.6
Total Asia 1,975.6 1,800.5 1,929.4 1,913.9 1,649.9 1,952.4 2,001.6 1,975.2 2,372.7 2,057.8
Africa
Egypt 70.8 50.3 56.5 64.5 44.9 43.3 30.2 38.7 41.8 41.7
South Africa 10.0 10.3 14.0 16.4 28.3 24.6 27.4 27.2 30.8 24.9
Morocco 13.8 10.6 10.3 9.5 7.6 7.0 6.8 6.6 6.5 6.8
Libya 5.0 4.9 5.2 4.8 3.9 3.5 2.4 2.3 2.5 2.7
Other Countries 13.8 11.6 12.4 11.5 9.9 9.4 9.2 8.8 9.2 9.5
Total Africa 113.3 87.7 98.4 106.6 94.7 87.7 76.0 83.5 90.8 85.5
Oceania
Australia 9.9 10.3 10.5 14.0 14.6 12.0 13.9 13.3 19.6 14.8
Total Oceania 9.9 10.3 10.5 14.0 14.6 12.0 13.9 13.3 19.6 14.8
World Total 3,325.2 2,974.1 3,112.2 3,036.2 2,523.6 2,795.2 2,828.2 2,738.2 3,238.0 2,863.8
...of which:-
East Asia* 871.8 830.4 887.8 882.3 837.5 941.3 1,038.5 1,050.0 1,432.7 1,083.9
Indian Sub-Continent* 779.2 704.6 751.7 766.7 612.5 820.9 793.4 766.9 752.0 800.6
Middle East* 677.7 534.2 594.3 538.7 335.5 319.3 311.4 287.5 383.7 346.3
CIS* 82.2 88.7 108.4 103.4 78.1 84.2 90.9 95.9 98.5 94.5

FABRICATION DEMAND
Source: GFMS, Thomson Reuters *The key regional bullion markets

inventory from one store to another, thereby maintaining
a lean inventory model. As a result, additional gold
required for every new store reported a sharp decline
when compared to previous years. To put this in
perspective, retailers who previously used to increase
their gold purchases by 20 to 30% with an expansion in
store numbers, estimated that they added just about 5%
during the first half of 2014.
GLOBAL JEWELLERY FABRICATION, 2005
Aggressive expansions by retailers with a lean inventory
and a minimal product range, targeting the mass
population, unfortunately did not work well during the
first half of 2014, as profit margins were disappointing
due to lower volumes. With the non availability of gold
on lease the cost of capital for procuring gold after
including hedging costs increased by 7% on outright
purchases. To keep the funds moving retailers opted to
GLOBAL JEWELLERY FABRICATION, 2014
Global Jwl Fab 13

Africa Africa Oceania 3t

Oceania 5t Europe
111t 63t
331t
Europe
730t North America
79t
South America
36t

North America
178t
Asia South America Asia
1,645t 52t 1,701t

Source: GFMS, Thomson Reuters Source: GFMS, Thomson Reuters

73
 GFMS GOLD SURVEY 2015

GOLD FABRICATION IN INDUSTRIAL AND DEVELOPING COUNTRIES (INCLUDING THE USE OF SCRAP)

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Industrial Countries*
Jewellery Fabrication 693.7 586.5 550.3 467.3 352.4 339.0 307.6 286.7 294.8 302.7

Electronics 254.1 278.5 280.3 262.1 219.1 262.4 251.5 219.1 212.7 205.9
Dentistry 59.4 57.7 54.8 52.7 50.0 45.8 40.3 36.0 33.8 31.5

Other Industrial 49.9 51.9 55.2 54.2 46.1 49.8 47.9 45.4 44.5 44.5

Official Coin 49.9 51.9 55.2 54.2 46.1 49.8 47.9 45.4 44.5 44.5
Medals 1.7 1.8 1.8 1.8 1.8 1.9 3.3 2.3 2.4 2.4
Sub total 1,108.6 1,028.3 997.5 892.4 715.4 748.6 698.5 634.9 632.7 631.5
Developing Countries*
Jewellery Fabrication 2,028.2 1,715.7 1,875.4 1,840.8 1,466.6 1,693.7 1,726.3 1,721.7 2,144.2 1,910.4
Electronics 40.2 46.4 50.9 55.8 63.9 70.1 78.4 76.0 76.7 73.3

Dentistry 3.0 3.0 2.8 2.9 2.6 2.6 2.6 2.5 2.5 2.4
Other Industrial 42.2 42.6 42.8 43.2 40.3 45.0 47.1 46.9 48.3 42.6
Official Coin 70.4 76.0 81.7 81.5 76.3 81.9 121.8 102.8 158.2 91.4
Medals 35.3 57.7 66.7 68.0 57.1 86.5 84.5 111.1 101.5 75.0
Sub total 2,219.2 1,941.4 2,120.3 2,092.1 1,706.8 1,979.8 2,060.7 2,061.0 2,531.4 2,195.0
World Total 3,325.2 2,974.1 3,112.2 3,036.2 2,523.6 2,795.2 2,828.2 2,738.2 3,238.0 2,863.8
Source: GFMS, Thomson Reuters
*Industrial and Developing countries consistent with IMF definitions

JEWELLERY CONSUMPTION * (INCLUDING SCRAP)

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
India 573.5 516.4 557.8 599.8 471.4 657.6 618.3 552.0 612.7 662.1
FABRICATION DEMAND

China 241.4 244.7 302.2 340.6 376.3 453.8 550.9 608.7 972.1 633.3
United States 349.0 306.1 257.9 188.1 150.3 121.4 111.5 104.2 122.0 130.9
Russia 64.3 70.1 85.7 92.4 56.7 60.1 64.7 69.6 73.3 70.6
Turkey 194.9 165.3 188.1 153.2 75.2 67.4 70.1 61.5 73.3 68.2
UAE 96.4 92.4 99.8 100.0 74.6 71.6 62.1 55.5 68.6 59.9
Saudi Arabia 148.4 106.3 122.0 110.9 81.8 71.6 55.7 47.1 59.0 52.8
Egypt 75.3 60.0 67.8 74.3 56.7 53.4 33.8 39.7 45.1 47.4
Indonesia 78.0 57.7 55.2 55.9 41.0 32.8 34.2 38.8 45.2 39.8
Hong Kong 16.0 15.1 18.2 17.0 16.4 20.6 35.8 34.3 53.7 38.9
Iran 47.8 41.5 47.4 45.8 37.5 37.4 35.1 35.4 39.9 27.7
UK 59.4 52.5 50.3 37.2 31.8 27.3 22.6 21.4 23.4 27.6
Brazil 33.3 29.2 30.7 29.8 26.8 29.4 26.6 26.7 32.6 26.0
Pakistan 65.1 54.7 51.8 45.5 30.9 27.3 23.1 21.4 24.6 19.2
Italy 71.0 64.8 57.4 49.1 41.4 34.9 27.6 22.3 20.2 18.8
Canada 30.1 27.4 24.7 22.3 18.6 17.5 16.3 15.7 17.1 18.1
Japan 33.5 32.8 31.7 31.2 22.3 21.3 16.6 16.7 17.6 16.0
Vietnam 26.9 22.1 21.4 19.6 15.1 14.4 13.0 11.4 12.2 12.7
France 35.1 30.7 28.9 26.1 23.6 20.2 18.2 14.2 12.6 12.1
Mexico 42.4 37.1 34.9 28.5 26.4 23.8 19.9 15.1 6.6 8.0
Source: GFMS, Thomson Reuters
*Fine gold content of all new jewellery sold at the retail level (excluding the exchange of old for new jewellery), calculated by taking jewellery
fabrication, plus imports less exports and adjusting for retail stock movements.

74

go soft on margin, offering discounts, hoping to churn
high volumes. While some were successful others lost
the race. As a result, retailers started facing credit
delinquency issues; the fall out of this was that the
industry slipped to a category of high risk lending by
banks.
These developments were in contrast to what we
observed during 2012 and early 2013 when these large
retailers were outgunning the smaller retailers, which
form the majority of stores in the Indian jewellery
retailing industry with in store inventory of between 10
to 50 kilogrammes. However both formats were losing
market share to the new versions of otherwise traditional
family jewellers, who have over the years moved to a mid-
range category (per store inventory of more than
50 kilogrammes) and large sized retailers (store inventory
of more than 120 kilogrammes) focused in a specific
region with a deeper understanding of local fashion and
culture. That said, the latter two could more easily wade
their way through procuring unofficial gold and still keep
the books clean. Also to note was the loss of gold trading
income which otherwise was a part of cash flow for most
retailers; here again, those dealing with unofficial gold
had an edge over the rest.
The second half of 2014 was a turning point for the
industry with respect to supplies, thanks to the relaxation
on 21st May whereby premier and star trading houses
were allowed to supply to the domestic market. As a
result premia dropped sharply and the availability of
metal eased, unofficial trade declined and it created a
more level playing field. This also coincided with the
requirement to end all the monthly gold savings schemes
promoted by retailers that were giving an annualised
return of more than 12% for consumers. Eventually
this resulted in early redemptions and was for mainly
22-carat plain jewellery, investment coin or medallion,
INDIAN GOLD JEWELLERY CONSUMPTION
250 35
Gold Price
30
200
Rupees/10g (thousands)
25
150
Tonnes
20
100
15
50
10
0 5
Q1-10 Q1-11 Q1-12 Q1-13 Q1-14
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
INDIAN JEWELLERY FABRICATION AND CONSUMPTION
(tonnes) Q1-14 Q2-14 Q3-14 Q4-14
Fabrication 135.0 161.0 187.0 207.0
Consumption 145.6 154.5 182.9 179.1
Average Price (Rs./10g) 30,042 28,587 27,830 26,680
Source: GFMS, Thomson Reuters
resulting in volume growth for each sector. This
advanced the consumption which would otherwise have
developed during the final quarter of 2014 or early 2015.
The scheme had been so popular that outstanding
customer deposits were often in a range of 10% to 30%
of the annual turnover of the companies involved and
in tonnage terms it was estimated near 75 tonnes.
However, under the new regulation that came into effect
from 1st April 2014 through the Companies Act 2013,
retailers had to tweak the scheme such that annualized
returns were not more than 12%. This was against 12 to
18% offered by retailers. The pricing through this new
scheme has not been attractive for customers, and, as
a result, consumers are not renewing savings accounts.
Also customers can in practice no longer use their
savings to redeem investment coins. The key reason for
this is that it is not profitable for jewellers, given that the
gross margin on a coin is only 3%, whereas for jewellery it
is at least 20%.
FABRICATION DEMAND
Low ticket instalments for a short term are therefore
nonbeneficial to retailers, but, monthly instalments
of Rs. 100,000 are acceptable if the end purchase is
going to be a minted coin. As a result liquidity tightness
emerged as customer deposits which otherwise was a low
cost funding for their business was no longer available.
Thus it would take years until customers are enticed to
the new scheme with volumes similar as seen earlier.
TOTAL INDIAN FABRICATION DEMAND
1000 Scrap used in Fabrication 250
Fabrication Excluding Scrap
Agricultural Production
800
GDP 200
Index 2005 =100
600
Tonnes
150
400
100
200
0 50
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters; Indian Ministry of Agriculture
75
 GFMS GOLD SURVEY 2015

CARAT JEWELLERY (INCLUDING THE USE OF SCRAP)

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Europe
Turkey 251.1 184.9 219.7 183.2 80.0 73.0 77.0 73.8 87.1 114.8
Italy 279.0 224.4 215.3 172.6 123.3 116.0 93.8 86.2 82.6 86.2
Russia 44.4 47.6 58.5 53.2 34.9 39.4 45.1 49.2 51.9 49.8
Switzerland 32.2 35.8 36.0 35.0 20.1 21.1 29.4 31.1 30.1 28.7
Germany 21.3 19.9 19.9 19.0 14.8 15.1 15.4 14.7 14.7 14.7
United Kingdom 23.8 19.6 12.2 10.0 9.2 8.2 6.9 6.7 7.3 8.9
France 15.3 13.4 13.0 12.0 10.1 10.2 9.2 7.6 6.5 6.3
Spain 25.6 22.4 21.8 17.6 12.3 7.4 6.2 5.4 4.9 4.6
Greece 8.2 7.4 8.1 7.0 5.8 5.8 4.1 3.7 3.5 3.9
Poland 3.9 3.9 5.1 5.4 3.7 2.6 2.3 2.0 1.8 2.1
Portugal 7.1 5.3 4.5 3.3 2.8 2.2 1.6 1.3 1.3 1.5
Serbia 1.3 1.2 1.3 1.2 1.0 0.9 0.8 0.7 0.8 0.8
Other Countries 17.1 15.2 14.4 13.2 10.3 9.7 9.1 8.5 8.6 9.1
Total Europe 730.3 601.0 629.7 532.7 328.3 311.6 300.9 290.9 301.1 331.4
North America
United States 130.0 108.0 94.5 77.0 63.0 66.0 60.3 53.7 61.4 63.8
Canada 16.2 13.3 12.8 12.1 9.8 9.3 8.7 8.2 8.7 9.3
Mexico 32.2 25.9 22.7 18.9 17.3 14.4 11.5 10.6 5.1 6.3
Total North America 178.4 147.2 130.0 108.0 90.1 89.7 80.5 72.5 75.2 79.3
South America
Brazil 21.7 17.5 18.6 19.2 17.7 22.6 19.4 19.3 21.6 25.1
Chile 4.3 3.9 3.6 3.2 2.8 2.9 2.2 2.2 2.4 2.5
Dominican Republic 6.1 4.8 4.5 4.3 2.8 2.5 1.9 1.8 1.2 1.3
Colombia 2.3 1.9 1.6 1.4 1.2 1.1 1.2 1.1 1.1 1.2
Costa Rica 1.8 1.7 1.3 1.3 1.1 1.2 1.3 1.3 1.0 1.1
Other Countries 15.6 13.8 12.0 9.5 6.5 5.9 4.4 4.2 4.2 4.7
Total South America 51.8 43.6 41.6 38.8 32.1 36.1 30.3 29.8 31.5 35.9
FABRICATION DEMAND

Asia
India 634.0 550.9 594.7 623.2 503.4 685.0 667.0 618.2 607.4 690.0
China 239.0 244.8 297.1 329.6 363.6 444.3 547.4 598.8 958.0 641.4
Indonesia 86.0 64.3 62.7 60.8 45.6 38.4 38.8 43.5 51.0 43.9
Malaysia 74.1 58.0 61.0 56.2 45.0 43.7 37.1 34.7 44.6 40.7
Saudi Arabia 124.6 89.6 99.6 85.0 53.5 46.6 36.8 32.5 41.4 37.3
UAE 53.2 45.4 48.1 44.6 34.0 31.0 26.3 24.7 34.4 33.1
Iran 36.5 32.2 36.2 35.7 30.0 29.9 27.8 27.7 31.3 24.0
Pakistan 64.2 53.9 50.4 43.8 29.7 26.1 22.1 20.6 24.6 20.9
Thailand 66.0 50.2 44.8 37.5 22.7 19.3 16.0 14.3 20.9 17.2
Singapore 11.2 9.9 10.9 10.2 7.9 8.9 9.7 10.4 15.0 16.6
Jordan 6.9 7.9 8.9 9.9 10.9 11.9 12.9 13.9 14.9 15.9
Japan 22.3 21.1 19.0 17.5 14.4 14.3 12.9 13.3 14.5 13.3
South Korea 44.5 36.4 36.1 30.3 23.4 20.3 16.7 13.9 12.9 12.9
Vietnam 28.3 22.6 21.6 19.6 14.7 13.5 12.4 10.7 11.4 12.4
Hong Kong 11.5 11.6 11.8 12.2 11.6 12.2 12.8 11.4 11.3 10.9
Kazakhstan 9.1 10.0 10.6 9.6 7.6 9.2 10.2 9.7 9.9 10.1
Uzbekistan 9.1 10.0 10.6 9.6 7.6 9.2 10.2 9.7 9.9 10.1
Kuwait 12.3 9.7 8.9 9.5 7.4 6.6 6.2 5.6 6.3 7.0
Israel 11.3 9.3 8.4 8.1 6.6 5.7 4.9 4.5 5.3 6.5
Bahrain 11.4 9.6 9.9 8.7 6.5 5.7 5.1 4.6 5.8 5.6
Iraq 4.2 4.6 5.3 4.6 3.8 3.7 3.8 3.9 5.0 4.9
Taiwan 16.1 12.3 10.3 9.1 5.8 5.3 4.6 4.6 4.9 4.5
Lebanon 7.6 5.4 5.5 4.8 3.4 2.6 2.9 3.7 4.6 4.2
Oman 7.7 6.8 7.1 6.0 4.5 4.1 3.5 3.2 3.8 3.6

76
 GFMS GOLD SURVEY 2015

CARAT JEWELLERY (INCLUDING THE USE OF SCRAP)

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Sri Lanka 6.2 5.1 5.2 4.5 3.8 3.7 3.2 3.1 3.5 3.5

Nepal 6.9 5.8 5.3 4.5 3.5 3.5 3.3 3.5 3.9 3.0
Bangladesh 6.7 6.0 6.5 5.8 4.6 4.2 3.8 3.7 4.3 2.7
Myanmar 4.3 4.0 4.0 3.5 3.0 2.6 2.3 2.3 2.7 2.4
Syria 17.0 15.4 17.1 15.0 11.4 11.1 7.7 4.8 3.7 2.4
Armenia 0.4 0.9 5.1 5.6 3.1 2.5 1.9 1.9 2.0 2.0
Qatar 3.7 3.1 3.2 2.7 2.1 1.9 1.6 1.7 2.1 1.9
Other Countries 8.6 4.2 3.0 1.5 0.5 -0.8 -3.3 -5.1 -4.6 -3.9
Total Asia 1,644.8 1,420.9 1,528.6 1,529.1 1,294.7 1,525.7 1,568.6 1,553.9 1,966.2 1,700.6
Africa
Egypt 70.8 50.3 56.5 62.4 44.0 42.1 28.7 37.5 40.7 40.8
Morocco 13.8 10.6 10.3 9.5 7.6 7.0 6.8 6.6 6.5 6.8
South Africa 8.1 7.5 7.0 7.4 5.1 4.5 3.7 3.5 3.3 3.4
Libya 5.0 4.9 5.2 4.8 3.9 3.5 2.4 2.3 2.5 2.7
Algeria 3.9 3.0 3.4 3.1 2.5 2.4 2.1 2.1 2.3 2.3

Tunisia 2.2 1.8 1.9 1.8 1.5 1.5 1.6 1.6 1.6 1.6
Other Countries 7.7 6.8 7.1 6.7 5.9 5.5 5.4 5.2 5.4 5.6
Total Africa 111.4 84.9 91.4 95.5 70.5 66.5 50.7 58.5 62.1 63.1
Oceania
Australia 5.0 4.5 4.4 4.0 3.2 3.2 2.9 2.8 2.9 2.7
Total Oceania 5.0 4.5 4.4 4.0 3.2 3.2 2.9 2.8 2.9 2.7
World Total 2,721.8 2,302.2 2,425.7 2,308.1 1,819.0 2,032.7 2,033.9 2,008.4 2,439.0 2,213.0
...of which:-
East Asia* 611.9 542.7 586.4 593.2 563.0 627.9 715.1 762.1 1151.9 820.6
Indian Sub-Continent* 718.0 621.7 662.0 681.8 544.9 722.6 699.4 649.1 643.6 720.1
Middle East* 618.2 470.8 530.1 474.9 292.6 269.6 237.6 232.7 276.7 293.3
CIS* 63.0 68.5 84.8 78.0 53.1 60.2 67.4 70.4 73.7 71.9
Source: GFMS, Thomson Reuters *: The key regional bullion markets

Amidst these negative scenarios consumption still
clocked growth of 8% last year, rising to 662 tonnes,
the highest on record. At such volumes India’s market
share to global demand was over 30%, which was a
return to levels seen in 2011. Other than the advance
purchases that occurred as a result of the gold savings
scheme, the decline in prices during the third and fourth
quarters led to pent-up demand. The quarterly price
average in the third quarter was down by 5% compared
to the corresponding period in 2013; similarly, the fourth
quarter price was down by 13% on a year-on-year basis.
The decline in prices during the fourth quarter to the
lowest average since the third quarter of 2011 was an
important trigger, both for consumers and for retailers to
replenish at the optimum level.
Jewellery imports last year were a critical source for the
domestic market. Imports from the UAE in the 22-carat
category were impressive during the early part of the
year but it dissipated as premia collapsed. The deliveries
on this arbitrage were highest to Mumbai followed by
Chennai and Ahmedabad, and were imported from the
FABRICATION DEMAND
UAE, and Singapore. This has again re-surfaced, but this
time from Indonesia and also includes 24-carat jewellery.
Helped by the Free Trade Agreement that Indonesia has
with its Asian counterparts, whereby India can import
jewellery at a concessional customs duty of 1% as against
15% applicable with other countries, it is now one of the
most profitable arbitrage routes. Our estimate is about
one tonne of equivalent jewellery was imported during
September to December 2014. This trade has only grown
over time and has already crossed one tonne in the first
quarter of 2015. This is largely delivered to Chennai,
Hyderabad and Kolkata.
Another category that has found immense interest is the
18-, 14- and 9-carat jewellery; however unlike 22- and
24-carat, which were largely being re-melted and resold
in bar form to the local market, this was for genuine
consumption. That said, the rise in such imports again
was due to a shortage of gold and came largely from
Hong Kong, Italy and Thailand. The types of products
were mainly gold mountings, findings, plain chain and
also diamond studded jewellery.

77
 GFMS GOLD SURVEY 2015
GOLD LEASING IN CHINA INFLATES IMPORTS
AND SGE TURNOVER
China’s net gold imports from Hong Kong, combined with
our estimates for imports into Shanghai and Beijing, reached
1,136 tonnes in 2014, 24% lower than in 2013. This is higher
than our estimates for consumption at 895 tonnes, itself down
38% year-on-year, and different again from SGE delivery
volumes, which fell by only 4% in 2014 to 2,102 tonnes. The
different measures capture different aspects of demand and
we believe it is incorrect to equate SGE delivery volumes
directly with demand from Chinese consumers.
From extensive field research in China is it abundantly clear
that Chinese demand for gold at the retail level, for bars, coins
and jewellery fell by more than 4% in 2014. Nor were these
numbers inflated by growth in pipeline stock that had helped
to boost demand in 2013, indeed, for most of 2014 China
was dealing with a stock overhang. The situation regarding
demand was further exacerbated by the government’s
increased focus on corruption and the scrutiny of the so-called
gifting segment. The softer economy and a fall in sentiment,
according to our sources, has seen jewellery fabrication for the
local industry decline further, by between 15% and 20% year-
on-year, for the first two months of 2015.
The higher levels of imports, and SGE deliveries, are boosted
by a number of factors, but most notably by gold’s use as an
FABRICATION DEMAND
asset class and the requirement for commercial banks to hold
physical gold to support investment products. China began
the 21st century with very low gold holdings in comparison to
countries with developed financial markets or a cultural affinity
toward gold, of which China now has both. An indication of
the size of Chinese commercial banks holdings can be seen by
the value of total precious metals holdings as reported by just
China’s four largest banks, which as of December 2014 totalled
Exports also played a role in the increase in fabrication
volumes in 2014, thanks to linking imports to export
volumes under the then 80:20 rule. Though, importantly,
a large part of the exports were sent on arrival for
re-melting in the destination country, while others
working in the true spirit of law, expanded their presence
in foreign markets like the UAE, Singapore, and Malaysia.
Pakistan’s jewellery fabrication is estimated to have
declined by 15% in 2014 to 21 tonnes. This was due
to a supply shortfall resulting from an import ban in
the first three months of the year followed by volume
restrictions placed on every importer. These stipulated
that a maximum amount of gold imported under any
78
RMB 358.6 bn ($57.8 bn). The majority of this material is
understood to be gold and if we assume 90% of precious
metals holdings and a gold price of $1,200/oz this would
equate to close to 1,350 tonnes of material.
Our sources indicate that smaller Chinese banks are
increasingly entering into this sector. The interest rate for
borrowing physical gold is usually around 4%-5% per annum,
which is much more than for monetary loans. As liquidity
tightened last year many corporations, particularly those in the
property development sector, scrambled for funds. As a result
several banks shifted some focus away from the traditional
cash loan transactions towards lending physical gold, as
this would not affect the quality of their loan books and the
borrowing rate is of course more attractive to the client.
Moreover, several gold fabricators are also increasingly acting
as credit providers, whereby they borrow gold from banks, and
then lend the metal to companies in other industries, to pocket
the difference in the interest rates. Field research findings
would suggest these funds are finding their way to higher
risk projects, such as property development, where access
to traditional funding is limited in the current climate. This
practice is common in India and the return on this could be
close to low double-digits and above.
Coupled with gold’s increased role in leasing, and although
weaker than in 2013, was the round tripping flows between
Hong Kong and the Chinese mainland, which also inflates the
SGE turnover and withdrawal figure. While the SGE data is a
very good sign of the health of China’s gold market, it blurs the
lines between demand for gold and the use of gold in financing
and the movement of above-ground stocks; as such we do not
believe that it is comparable to annual supply to a market.
transaction should not exceed 10kg. Also checks were
put in place that stopped unofficial exports of jewellery
to India as the new rule framed by the Economic
Coordination Committee indicated that it would cancel
the import authorisation if exporters failed to honour
export commitments. In addition, the processes of
exports were brought under more scrutiny, which led to
a reduction in fake exports. Finally, Pakistanis employed
in GCC regions are increasingly willing to purchase
gold in the country they are working in than at home,
which is also playing a role in driving down domestic
consumption.

EAST ASIAN TOTAL DEMAND*
700
East Asian GDP**
600
500
400
Tonnes
300
200
100
0 0
Q1-10 Q1-11 Q1-12
Q1-13
Source: GFMS, Thomson Reuters
*The sum of total fabrication (including scrap) and physical bar investment
**Weighted average: Indonesia, South Korea, Thailand
EAST ASIA
——Jewellery fabrication in East Asia last year gave up a
significant proportion of the 2013 gains, retreating
29% year-on-year to an estimated 821 tonnes, as
weaker consumer sentiment drove down investment
related purchases.
——Chinese jewellery fabrication saw a remarkable
reversal from the record levels of 2013, retreating
33% iast year to 641 tonnes. Despite the material
fall, 2014 represented the second highest level ever
recorded in China.
After the extraordinary demand in jewellery seen in 2013,
China’s jewellery fabrication fell back to 641 tonnes,
equivalent to a 33% year-on-year decline in 2014. It
is worth highlighting that our fabrication number in
2013 has undergone a major upward revision since the
previous GFMS Gold Survey was published. This is due to
new information gathered during extensive field research
this year, which has necessitated a thorough review of the
previous estimate. Specifically, feedback from the local
jewellery trade indicated that our estimates for domestic
consumption may have been overly conservative, as
many independent and small-scale jewellery fabricators
entered the market in 2013, making it more difficult to
gather an accurate estimate for the period.
Despite a weaker gold price in 2014, poorer demand was
widely expected throughout the industry, as no one in
the trade would expect 2014 to be a repeat of 2013. The
further slowdown of the Chinese economy, which saw
sentiment weaken, along with forward-consumption of
gold in 2013 that still needed more time for consumers
to digest, both contributed to weaker demand. Jewellery
fabrication, to give a sense of perspective, was still up by
7.1% against 2012.
GFMS GOLD SURVEY 2015
Looking at intra-year developments, following a robust
2013, the momentum was carried forward to the start of
300 2014, with jewellery fabrication seeing an 11.5% year-
on-year increase for the first quarter. The increase was
mostly stimulated by the Chinese New Year sales, but the
buying pattern changed as consumers favoured smaller
200
gold pieces. Consumers also stocked up jewellery pieces,
GDP (US$bn)
as in Chinese culture, the Year of the Horse was an
auspicious year in which to get married. The end of the
100
Chinese New Year holiday season saw a swift cooling in
demand, however, and this was represented by a decline
in fabrication fees. The softness extended into the
second quarter, and the first quarter actually marked the
Q1-14
best quarter for the year. The local gold price, quoted on
the Shanghai Gold Exchange (SGE), traded at an average
of a 0.5% premium compared to the international
benchmark, which also marked the highest quarterly
premium in 2014.
Traditionally, the second quarter is usually a weak period
of jewellery sales across China, and 2014 returned to
normal after a strong second quarter in 2013, when
the acute gold price drop stimulated bargain hunters
rushing into the market. Although there was some signs
of life in the market during the Labour Holiday in May,
the rest of the second quarter remained quiet and weak.
Compared to the already high base in 2013, the decline
in the second quarter of 2014 was dramatic, registering a
54% year-on-year drop. Fabrication fees continued their
FABRICATION DEMAND
downward movement during the second quarter, and
more than 100 small-scale fabricators in Shenzhen were
put out of business by the end of first half. The second
quarter was the weakest of 2014. The local SGE gold
price was trading at an average of 0.1% premium, and
was accordingly the lowest premium recorded out of the
four quarters.
The third quarter also remained lacklustre, and despite
a slight improvement compared to the second quarter,
total jewellery offtake still retreated by 51% year-on-
year, compared with exceptionally strong third-quarter
sales in 2013. Poor market sentiment sparked a price
war among fabricators, with markups slashed to levels
not seen since 2011. Unfortunately for them, production
costs, such as labour costs and rental costs, were still on
an uptrend. Based on this, industry insiders generally
believed that there should not be much further downside
for fabrication fees, even if demand continues to falter.
Jewellery fabrication in the last quarter of 2014 remained
weak and despite a better year-on-year performance
during the October National Day holiday, demand still
retreated by 23% on an annual basis. Market sentiment
79
 GFMS GOLD SURVEY 2015

CARAT JEWELLERY FABRICATION (EXCLUDING THE USE OF SCRAP)

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Europe
Turkey 197.9 117.4 164.7 100.2 24.8 18.5 29.0 30.8 51.4 88.5
Italy 232.3 170.9 158.2 111.6 90.3 70.0 49.8 46.2 58.6 66.2
Russia 36.0 38.8 49.0 43.2 21.2 27.4 34.6 38.2 43.9 41.3
Switzerland 32.2 35.8 36.0 35.0 20.1 21.1 29.4 31.1 30.1 28.7
Germany 16.3 13.9 14.2 13.3 9.8 10.0 10.4 9.7 11.6 12.7
United Kingdom 21.2 14.1 7.1 4.4 4.8 3.4 2.4 1.7 4.3 6.8
France 12.8 11.4 11.0 10.0 8.1 7.7 6.2 4.6 4.5 5.0
Greece 6.9 5.8 6.7 5.1 2.8 2.5 0.8 0.6 2.1 2.8
Spain 21.9 16.3 16.3 11.1 3.7 0.5 0.5 0.2 1.9 2.0
Poland 1.9 1.6 2.5 2.8 1.5 0.2 0.1 0.5 0.7 1.3
Portugal 6.6 4.4 3.7 2.5 1.5 0.6 0.3 0.4 0.8 0.9
Other Countries 11.3 7.3 7.6 7.0 4.1 2.4 1.3 0.7 4.2 6.0
Total Europe 597.3 437.7 476.9 346.0 192.7 164.3 164.7 164.6 214.0 262.1
North America
United States 106.6 84.0 72.0 57.0 41.0 39.5 34.4 27.3 33.4 35.3
Canada 12.2 7.8 8.3 7.6 5.3 4.6 4.2 4.6 5.3 6.3
Mexico 25.0 19.4 14.1 7.8 4.5 1.3 0.4 2.0 4.7 4.8
Total North America 143.8 111.2 94.4 72.4 50.8 45.4 39.0 33.9 43.4 46.4
South America
Brazil 17.4 12.2 13.0 12.6 8.1 9.3 6.7 6.5 6.4 16.2
Chile 3.8 3.3 2.8 2.3 2.1 2.1 1.3 1.3 1.6 1.7
Other Countries 15.6 16.6 17.6 18.6 19.6 20.6 21.6 22.6 23.6 24.6
Total South America 36.8 26.8 23.6 20.2 13.0 13.3 10.0 9.7 10.4 20.8
Asia
India 540.0 470.9 521.7 533.7 387.9 604.0 608.5 505.2 506.6 615.8
China 198.0 201.6 257.0 264.9 262.7 334.6 438.4 468.1 818.1 480.8
Malaysia 68.3 49.4 53.5 48.6 36.0 35.2 29.9 28.3 39.0 35.6
FABRICATION DEMAND

Indonesia 34.5 26.0 25.8 29.5 16.8 15.6 16.5 26.0 38.3 31.8
Saudi Arabia 47.6 30.0 55.2 38.8 22.4 21.1 14.5 12.5 27.6 24.6
UAE 39.3 33.0 36.8 32.0 19.3 9.4 11.2 13.0 24.6 24.0
Singapore 8.7 6.6 6.8 5.8 3.4 5.0 5.5 6.9 12.8 14.5
Iran 24.0 14.0 17.9 15.3 10.7 12.1 10.3 11.7 19.0 12.8
Thailand 54.5 36.7 28.8 21.0 6.1 6.1 3.5 4.0 14.6 11.6
Kazakhstan 7.8 8.7 9.4 8.3 5.9 7.6 8.7 8.1 8.5 8.8
Uzbekistan 7.8 8.7 9.4 8.3 5.9 7.6 8.7 8.1 8.5 8.8
Vietnam 20.5 14.3 12.6 11.1 3.3 3.3 5.5 4.8 6.4 7.5
South Korea 33.8 24.2 24.3 18.3 7.6 7.3 5.0 4.7 7.0 7.5
Pakistan 36.7 24.5 23.6 14.8 3.9 6.3 6.0 3.8 11.7 6.9
Japan 11.8 9.7 6.4 4.2 3.1 0.7 - 2.4 6.2 6.6
Jordan 5.4 2.6 2.9 3.0 4.7 4.5 3.8 3.2 4.5 6.2
Hong Kong 5.6 5.3 5.2 5.2 4.4 5.5 7.0 6.1 6.5 5.7
Kuwait 4.2 2.7 3.4 4.1 2.9 3.0 3.1 3.1 4.5 5.3
Bahrain 10.0 6.4 6.7 5.5 3.0 2.8 2.5 2.5 4.2 4.1
Israel 6.1 3.9 3.4 2.2 1.7 1.0 0.9 1.0 2.6 3.6
Taiwan 6.7 1.8 2.7 2.9 1.1 1.2 1.5 2.7 3.6 3.5
Iraq 0.9 0.3 0.7 0.2 - 0.2 0.7 1.3 3.2 3.2
Oman 6.2 3.8 4.6 2.8 1.8 1.6 1.5 1.4 2.4 2.4
Myanmar 3.1 2.8 2.9 2.4 1.8 1.6 1.4 1.5 2.1 1.9
Nepal 5.8 4.3 3.7 2.8 1.6 1.7 1.7 2.2 2.8 1.8
Bangladesh 4.6 3.5 3.9 3.1 1.6 1.5 1.2 1.0 2.0 0.9
Other Countries 29.4 21.2 27.5 22.8 14.1 13.1 9.4 8.6 11.2 11.4
Total Asia 1,221.2 1,016.6 1,156.6 1,111.3 833.4 1,113.3 1,206.8 1,141.9 1,598.1 1,347.3

80
 GFMS GOLD SURVEY 2015

CARAT JEWELLERY FABRICATION (EXCLUDING THE USE OF SCRAP)

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Africa
Egypt 12.1 7.8 18.0 28.4 6.5 15.1 3.9 5.1 17.2 19.6
South Africa 7.0 6.2 5.8 6.0 3.8 3.2 2.1 2.0 2.2 2.4
Other Countries 20.9 14.7 14.6 11.4 5.8 6.1 4.8 4.7 6.6 7.9
Total Africa 40.0 28.7 38.4 45.8 16.1 24.4 10.8 11.8 26.0 29.9
Oceania
Australia 4.3 3.8 3.7 3.3 2.2 1.7 0.6 0.4 1.2 1.1
Total Oceania 4.3 3.8 3.7 3.3 2.2 1.7 0.6 0.4 1.2 1.1
World Total 2,043.4 1,624.8 1,793.5 1,599.0 1,108.2 1,362.3 1,432.0 1,362.1 1,893.0 1,748.4
...of which:-
Indian Sub-Continent* 591.6 505.9 555.2 555.7 396.0 614.8 618.3 513.0 524.6 627.5
East Asia* 451.8 383.1 430.4 418.0 349.0 418.8 516.2 557.4 957.4 609.8
Middle East* 372.1 234.8 330.1 244.5 105.2 96.1 86.5 89.9 166.2 199.1
CIS* 51.8 56.8 72.5 64.9 35.7 44.6 53.3 55.7 62.4 60.4
Source: GFMS, Thomson Reuters *The key regional bullion markets

cooled off again after the National Day holiday, and
as industry participants were all cautious towards the
outlook for the market, the 2014 year-end restocking
ahead of the 2015 Spring Festival did not start until late
December, which reveals a lot about market sentiment as
normally year-end restocking takes place during mid-
December. The local gold price traded at an average
premium of 0.2% over the final quarter of the year.
Although the slide in fabrication fees halted during the
quarter, further industry consolidation is still expected in
2015 and beyond.
24-carat segment. This trend began to reverse in 2014,
as some fabricators saw the benefit in switching from
the tottering 24-carat sector to the more vibrant 18-carat
segment. However, this transaction takes time as it
needs investment in the appropriate machinery. Thus,
although the number of K-gold fabricators increased
in 2014, the number of players was still relatively low
in comparison with other major producing countries.
Unlike the downward trend experienced in the pure gold
fabricated pieces, fees for fabricating 18-carat material
were able to maintain high levels due to lax competition.

Turning to trends within the gold jewellery sector,
although the 24-carat (pure gold or “Chuk Kam”)
segment continued to dominate the market, 18-carat
(K-gold) was growing fast and sales certainly more than
doubled in 2014. In 2013 when bargain hunters were
rushing for pure gold pieces with simple designs, many
jewellery manufacturers chose to reallocate some of their
capacity from PGMs and 18-carat gold jewellery to the
FABRICATION DEMAND
Demand for 18-carat gold jewellery was so robust that
sales more than doubled in 2014, despite the huge
drop in demand for pure gold jewellery. However, the
impressive growth was compared to a low base in 2013,
when demand for pure gold jewellery sky-rocketed. We
estimate total tonnage involved in the K-gold sector
reached close to 50 tonnes or 8% of the whole gold
jewellery industry. The growth in demand for K-gold can

CHINESE AND INDIAN JEWELLERY CONSUMPTION CHINESE FABRICATION & HONG KONG BULLION IMPORTS

1000 2500 400

China Bullion Imports
India Fabrication
350
800 2000 Gold Price

300
600 1500
Tonnes

Tonnes

RMB/g

250

400 1000
200

200 500
150

0 0 100
2005 2007 2009 2011 2013 2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters Source: GFMS, Thomson Reuters

81
 GFMS GOLD SURVEY 2015
CONSUMPTION AND PER CAPITA DEMAND
(EXCLUDING BANK ACTIVITY)
The tables below outline demand by country and consumption
per capita GDP including the following: jewellery consumption;
electronics; medical and dental; other industrial; coin
fabrication and bar hoarding. The data does not include any
purchases, holdings or transfers by central or commercial
banks.
It should also be noted that opaque institutional investment
or disinvestment is not tracked in these figures and that
this particularly under-reports US and European tonnage
movements and their impact upon the gold price. Meanwhile,
China and India’s appetites for holding physical bullion, rather
than allocations in a London bank, help to inflate the figures.
It is also indicative of smaller scale investors looking to enter
the market; often individuals or families looking to store value
outside the financial system.
Looking at demand by country China tops the list for the
second year running; however, the gap to India has closed
considerably, falling from almost 450 tonnes in 2013 to just
43 tonnes in 2014. Chinese demand, as defined above,
totalled 895 tonnes compared to India at 852 tonnes and the
USA in a distant third at 242 tonnes. Chinese imports of gold,
and deliveries from the Shanghai Gold Exchange (SGE) were
also considerably higher than the consumption number owing
FABRICATION DEMAND
to growth in gold leasing, increased holdings by commercial
CONSUMPTION (EXCLUDING BANK ACTIVITY)
Country 2014 Demand % of Global Total
China 895 24.2%
India 852 23.1%
United States 242 6.5%
Germany 129 3.5%
Japan 119 3.2%
Turkey 119 3.2%
Thailand 93 2.5%
Russia 93 2.5%
Iran 79 2.1%
UAE 71 1.9%
Vietnam 69 1.9%
Saudi Arabia 67 1.8%
Indonesia 58 1.6%
Egypt 58 1.6%
Canada 58 1.6%
South Korea 55 1.5%
Hong Kong 44 1.2%
United Kingdom 41 1.1%
Brazil 35 1.0%
Pakistan 33 0.9%
Source: GFMS, Thomson Reuters
82
banks to back paper products (a legal requirement in China)
and some double counting of gold that was involved in round-
tripping to Hong Kong. Demand from India was also impacted
for much of the year by import restrictions that were gradually
reduced.
In terms of per-capita consumption, city states, entrepôts and
markets that serve a wider area naturally dominate the list.
The UAE, via Dubai, and Kuwait both serve not just domestic
markets but also the wider Gulf region and often see volumes
inflated due to hand-carry trade to India. This was especially
evident in the first half of 2014 when Indian premia were at
elevated levels.
Hong Kong and Singapore have both fallen down the list
this year, a reflection of the lower buying levels in the Asian
bar and jewellery markets. Indeed, average per capita
consumption saw a sharp fall globally over the course of 2014,
falling from 0.66 grammes per person to 0.51 grammes per
person.
Outside the city states the remainder of the top 20 are
bolstered by a number of factors including: volatile local
currencies; fear of inflation; cultural reasons such as wedding
gifting; coin fabrication; political instability and higher tax
rates in neighbouring countries. Many of these factors will
also help to underpin gold’s role as a safe-haven investment
even as the risk of systemic instability in financial markets
subsides.
CONSUMPTION PER CAPITA (SELECT COUNTRIES)
Country Rank Grammes/Capita 2014
UAE 1 8.54
Kuwait 2 8.09
Hong Kong 3 6.14
Singapore 4 4.94
Qatar 5 2.43
Saudi Arabia 6 2.25
Belgium 7 1.97
Canada 8 1.64
Germany 9 1.60
Turkey 10 1.55
Thailand 11 1.40
Taiwan 12 1.22
Australia 13 1.21
South Korea 14 1.10
Iran 15 1.02
Japan 16 0.94
Vietnam 17 0.77
United States 18 0.76
India 19 0.69
Egypt 20 0.68
Source: GFMS, Thomson Reuters

largely be attributed to the younger middle class; this
consumer segment, assisted by increasing income levels
and attracted by fashionable designs, is looking to buy
gold primarily for its adornment qualities rather than as a
simple investment option.
Another reason why 18-carat gold jewellery was so
popular in 2014, was because industry participants
amended their selling strategies. Margins were minimal
selling pure gold jewellery when demand was soft, so
sellers allocated more shelf display to 18-carat gold
pieces, which commanded better margins. This trend
was particularly noticeable in the second and third tier
cities. There are also an increasing number of fabricators
looking to introduce 9-carat gold pieces to the market
in 2015.
Looking at this year, our feedback from research contacts
points to a much softer demand picture in the first
two months of 2015. Local gold premia reflected this
position, as the average Chinese premium was at $11.13
per ounce for the first two months of 2014, compared to
just $4.72 per ounce covering the same period of 2015.
The softer demand could be attributed to the increasing
numbers of Chinese residents travelling overseas during
the Spring Festival holiday, a weaker local economy that
negatively impacted spending, and more importantly,
a lack of belief that gold prices could be sustained at
high levels when the gold price was testing the $1,300
level. On the other hand, with the Chinese government
introducing all sorts of stimulus boosting the local
economy, huge amounts of money flowed into the local
stock market, and the Chinese stock market was the best
global performer in 2014, with this momentum swinging
into 2015. Although in the long run, any decent return
from the local stock market should benefit gold demand,
in the short run they are competing against each other
for capital. Overall, barring any significant downfall in
the gold price, we expect another annual decline for total
gold jewellery demand in 2015, even though demand
for K-gold will continue to enjoy another year of robust
growth.
Looking at Hong Kong, jewellery consumption declined
by 28% to 39 tonnes in 2014. Although the number
of foreign visitors to Hong Kong increased by 12% last
year, average spending per visitor actually decreased,
especially spending on luxury goods and jewellery
items. Despite the several huge protests in Hong Kong
and rising politically instability, there was relatively
little impact on travellers or their spending last year.
Unfortunately, with further cultural clashes between the
GFMS GOLD SURVEY 2015
locals and the Mainland Chinese escalating, statistics
showed that Chinese visitors dropped dramatically in
February and March this year. As a large portion of the
local jewellery consumption depends on Chinese tourists,
we are not optimistic over Hong Kong’s consumption
figure in 2015.
South Korean jewellery fabrication remained flat in 2014,
at 13 tonnes, while the gold price in Korean won rose by
a mere 2.7% for the year. We consider this as a relative
success, as the state of the Korean economy was quite
fragile, especially after the sinking of the MV Sewol in
April 2014, which discouraged discretionary consumer
spending as sentiment weakened. Indeed, unlike
most of the other markets in the region, gold jewellery
demand in Korea is more sensitive to the local economic
environment than simply to movements in the gold price,
as shown in 2013 when gold purchasing shot higher
in China, India, the Middle East and other emerging
markets, jewellery fabrication in South Korean actually
decreased. The local jewellery sector continues to shrink,
even though the pace of that decline has fallen, with the
number of participants in the market, from fabricators to
wholesalers to retailers, down a total of 20% in the last
ten years.
Gold jewellery continued to be dominant in the local
jewellery industry, but unlike some emerging markets,
FABRICATION DEMAND
pure gold pieces only commanded a small market
share in South Korea, and sales might only constitute
around 5% of total gold jewellery sales last year. The
18-carat and 14-carat segments were the mainstream
in the country, and combined should have held roughly
90% of jewellery market share in 2014. In the case of
wedding rings, Koreans tend to use gold or white gold, as
platinum is still a relatively unpopular metal in the local
jewellery segment.
INDONESIAN JEWELLERY CONSUMPTION
80 12
Exchange Rate
Rupiah/US$ exchange rate (thousands)
10
60
8
Tonnes
40 6
4
20
2
0 0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
83
 GFMS GOLD SURVEY 2015
Net gold jewellery imports rose 14%, showing modest
growth in consumption demand. Jewellery shipments
to the United States, Switzerland and Singapore were
notably stronger, while jewellery imports from Italy more
than doubled.
Indonesia’s jewellery fabrication industry is believed to
have consumed an estimated 43.9 tonnes of fine gold
in 2014, a 14% year-on-year fall. Field research during
the year revealed several factors that pushed offtake
lower across the archipelago last year. The weakness in
the domestic currency saw gold in local terms increase
3% year-on-year, which limited bargain hunting
opportunities. Similarly, a range bound trading pattern
for much of the year kept investors on the sidelines, with
expectation of weaker prices causing many prepared
to wait before replenishing gold stocks. Indeed, with
gold viewed as having limited upside potential many
shifted their focus to higher yielding assets such as the
equities markets. Adding further pressure to retail sales
was the softer Indonesian economy, which expanded
at its slowest pace in five years in 2014, weighed by a
tight monetary stance, a weak global economy, and
a prolonged parliamentary and presidential election
campaign which contributed to further uncertainty. The
Indonesian economy grew by 5.0% in 2014, slowing from
5.6% in 2013.
A feature of the Indonesian gold market last year was
FABRICATION DEMAND
the lack of price response. Even when prices dipped
below 450,000 rupiah per gramme in the fourth quarter
(the lowest level since August 2013) there was only a
muted response from consumers compared to 2013
when any price retracement saw consumers rush in
to take advantage of the perceived discounted price.
Demand in the rural regions was marginally stronger
than in the major cities, with economic growth in the
commodities-focused provinces of Kalimantan and
THAI JEWELLERY FABRICATION
80
Fabrication for the Domestic Market
Exports to the United States
Other Exports
60
Tonnes
40
20
0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
84
Sumatra outperforming the urban centres where a soft
economy dampened consumer sentiment and delivered a
decline in discretionary spending. After the resurgence of
higher purity styles in 2013 (driven chiefly by investment
motives), the market returned to trend last year with
demand for low carat items (9- and 10-carat) returning to
dominate market share.
Aside from the domestic slow down, demand for
jewellery export orders also declined significantly last
year, following an encouraging start in the first quarter
when wholesale orders from the Middle East (chiefly
Dubai) and Hong Kong (for the Chinese market) was
robust. Demand slowed thereafter and was at best
spasmodic, as diminishing expectation of a return to
higher prices suppressed demand for the investment
grade plain jewellery that Indonesia typically produces
for exports.
Last year, jewellery fabrication in Thailand was unable
to repeat the extraordinary growth of 2013, falling by
18% to an estimated 17.2 tonnes. Despite the fall, offtake
last year was still 20% higher than in 2012, which,
given the exceptional growth in 2013 (46%), is perhaps
a better benchmark for the state of the industry. Like
many markets in the region last year there appeared
to be a notable shift in sentiment with consumer price
expectations shifting. The plain 965 purity gold market
(23-carat), which dominates offtake across the country, is
predominately investment driven and with prices largely
range bound, and weak price expectations, consumers
were reluctant to replenish gold assets. In contrast to
2013, a drop in price did not necessarily instigate a rush
on demand. On several occasions during the year there
was almost no consumer response to price movement.
This was no more evident than in the fourth quarter
when gold in domestic terms dipped below 19,000 baht
per baht bar (the lowest level since June 2013), with the
drop providing only a moderate lift in retail activity as
consumers waited for gold to fall further.
There were a number of factors last year that also
contributed to market weakness. The violent protests
that have plagued the country for a number of years
finally erupted in early 2014, with the army seizing power
in May in attempt to end the turmoil. The uncertainty,
impacting on consumer spending across the country,
also led to a devastating impact on tourist visitors to the
region. The military junta struggled to spur Southeast
Asia’s second-largest economy as exports remained
weak and domestic demand subdued. In 2014, the Thai
economy grew only 0.7%, its weakest pace since
flood-hit 2011.

Another underlying feature of the market last year
was the migration away from gold as an asset class.
Middle class consumers have been shifting their focus
to trading domestic equities and even US equities and
offshore banking products in search of higher yields. As
regards jewellery exports, these also faltered in 2014,
concentrated on the US, and to a lesser extent Europe
and Hong Kong, as Thai fabricators felt the impact
of weaker demand globally for gold jewellery and
underperforming economies. Gross exports declined
14% last year, with shipments to the US down 38% and
France weaker by almost a third, while deliveries to the
UK and Hong Kong both recorded double-digit gains.
Despite a healthy start to the year, Japanese jewellery
fabrication is understood to have declined by 8% in 2014
to an estimated 13.3 tonnes. The rise of 3 percentage
points in the consumption tax in April generated a
healthy rise in demand in the first quarter as consumers
rushed in ahead of the tax change to front load
purchases. However, demand thereafter faltered as
the economy slipped back into recession, impacting on
consumer sentiment and discretionary spending. In the
final quarter, as the economy was showing the first green
shoots of a recovery the industry was dealt another blow
with the weaker yen driving gold in domestic terms to
over 4,700 yen per gramme; a level not seen since May
2013. This again impacted retail sales as consumers,
no longer looking for significantly higher prices, were
prepared to wait for a retracement in price. While
the overall jewellery market was weaker last year the
branded and high-end segment did not lose as much
ground, with sales reportedly only marginally weaker.
Following the healthy recovery in 2013, Malaysian
jewellery fabrication returned to trend, declining by
9% to an estimated 41 tonnes. This marks the seventh
annual drop over the last decade and was despite a
JAPANESE JEWELLERY FABRICATION
15
Platinum
White Gold
Yellow Gold
10
Tonnes
5
0 0
2005 2007 2009 2011 2013
Source: Japan Chain Makers Association
GFMS GOLD SURVEY 2015
7% year-on-year fall in the ringgit gold price. Demand
was stable in the early months of 2014 as offtake was
boosted by healthy export demand (primarily plain
chain and destined for Dubai/India) while the domestic
market initially remained subdued due to the lack of
volatility in the gold price, which left many waiting for a
clearer indication of where gold may be tracking. A solid
economic footing (Malaysia’s GDP expanded 6% last
year) helped to boost retail spending though the drop in
price expectation impacted investment driven purchases,
mainly influencing demand for 22- and 24-carat items.
In the second quarter, demand from export markets
started to soften and this led to a sizeable drop in
fabrication demand; estimated to have slumped by 25%
year-on-year, though it should be noted that demand
during this period of 2013 reached a multi-year high.
Of particular note was the drop in demand from Dubai,
stimulated by the decline in the domestic Indian premium
which saw the levels of jewellery shipped (largely via
unofficial channels) drop away markedly. Aside from the
declining Indian flows, demand across the Asian region
generally remained subdued for much of the year as
consumer sentiment and price expectation were muted;
the lack of wholesale export demand largely affected the
Penang-based fabricators.
On the domestic front, demand in the final quarter
registered healthy gains, helping to offset what for
FABRICATION DEMAND
many was a difficult year. Reports from the retail trade
suggested domestic consumption jumped by as much as
a third as the period encompassed several important gift
giving occasions, which helped lift sales volumes. These
included the wedding season for Chinese consumers, the
Indian Diwali festival, and a leap month of September in
the lunar calendar (which falls mainly in October in the
Gregorian calendar), which is considered an auspicious
occasion by the Chinese and an important time to
MALAYSIAN JEWELLERY FABRICATION
80 Domestic
Exports
60
Tonnes
40
20
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
85
 GFMS GOLD SURVEY 2015
purchase gifts, especially for the elders. Despite the
strong finish to the year we believe Malaysia’s domestic
consumption volumes retreated by 9% last year.
Jewellery fabrication in Taiwan reversed 2013’s upward
trend and declined 8% to 4.5 tonnes in 2014. The drop,
however, was less pronounced than when compared
to most Asian countries, such as mainland China
which slipped 33% in 2014. The major reason for the
better than average performance in Taiwan was the
predominance of gold jewellery buying associated with
wedding demand. Here demand for gold jewellery is
price inelastic compared to other countries in the region
where large amounts of gold jewellery are purchased
for investment purposes. The number of marriages in
Taiwan actually increased by 1.1% in 2014, bringing with it
a positive impact on jewellery consumption, while overall
gold jewellery demand was offset by a gradual, but
continuous trend, to move away from 24-carat jewellery
to lower purity material.
Following a 7% rise in 2013, Vietnamese jewellery
fabrication recorded another increase last year, rising
8% year-on-year, to a three-year high of 12 tonnes.
The healthy gain at first glance may indicate a robust
retail market; however demand for most jewellery
segments was actually weaker in 2014. This outcome
was largely a function of softer demand for gemset
and low-carat designs being offset by plain 24-carat
FABRICATION DEMAND
jewellery (predominately rings), which is increasingly
being purchased as a simple investment tool. Access
to investment bars is still tightly controlled by the State
Bank so consumers wishing to invest in gold have shifted
their attention to the jewellery market. The major
retailers are now offering encapsulated rings, which have
the item weight and purity stamped on the packaging,
to cater to this expanding. Moreover, these items are
offered at a lower premium than official bars so many
investors have migrated to this uncomplicated method
of saving, effectively enhancing jewellery fabrication and
consumption demand last year.
While the Vietnamese economy grew at a stable pace
throughout 2014 (GDP rising 6% last year) the growth
rate remained well below the trend of between 7% and
8% in the pre-global financial crisis years. During field
research visits last year it was the weak “real” economy
that traders suggested was dragging down demand
and constraining retail spending. Demand for branded
items, which generally carry a hallmarked purity stamp,
continued to win market share over generic designs,
with consumers prepared to pay a premium for the
guaranteed purity and more intricate designs. Last year
86
the Vietnamese government stepped into to control
how jewellery is sold, stipulating that all items must be
accompanied by a purity certification, which, to some
degree, where the trade has adopted these measures
(mainly in urban areas), has reduced the sale of
under-carated jewellery, which had been increasingly
accepted as gold prices have risen.
EUROPE
——European jewellery fabrication continued to recover
in 2014, growing by 10% to an estimated 331 tonnes,
the highest since 2008. The recovery was thanks to
a strong rebound in Turkey and a return to growth in
Italy.
Following a decade or so of consecutive losses, Italy’s
export-focused gold jewellery market began to recover
towards the end of 2013. The recovery continued through
to last year, which saw jewellery fabrication offtake rise
by 4%, to an estimated 86 tonnes, a level similar to
2012. This was primarily down to buoyant export growth,
particularly in the first half of the year, when jewellery
demand posted a 7% year-on-year increase, hitting
45 tonnes, the best first-half result since 2011. It should
be emphasised, though, that despite a modest recovery,
last year’s figure remained well below pre-crisis levels.
To put this in perspective, the 2014 figure was as little as
17% of the volumes going through at the beginning of the
millennium.
Exports to Dubai, Italy’s largest regional market
accounting for approximately a quarter of total jewellery
exports in weight terms, posted a strong increase in the
first quarter; however, a lot of contacts (and this has
also been confirmed by the trade statistics) reported
a sales plunge in the following quarters on the back
of slowing demand from the Middle East. Another
EUROPEAN HALLMARKING AND FABRICATION
120
UK* Italy - Domestic
Swiss** Italy - Export
100
80
Index 2008 = 100
60
40
20
2008 2009 2010 2011 2012 2013 2014
Source: GFMS, Thomson Reuters; BAO; Swiss Confederation; ISTAT.
*Index based on number of gold items fabricated and imported into the UK.
**Index based on hallmarked unit of watches

sizeable increase was recorded in exports to the United
States, where improving economic conditions, along
with lower gold prices in US dollar terms, resulted in
higher jewellery demand. In addition, sustained euro
weakness, which made Italian jewellery a bit more price
competitive compared to other major partners, helped to
lift shipments to that destination.
It is also interesting to observe that Europe was another
region to enjoy gains, where the majority of key countries,
including Switzerland, France, United Kingdom, Germany
and Spain, saw a healthy increase in the volume of
shipments from Italy. While this could be attributable to
gradually improving economic sentiment and the euro
weakness, there were also some country-specific factors
that could help to explain last year’s growth in Italian
exports. For instance, jewellery consumption in Spain
appears to have improved last year, while stronger flows
to Germany and France could be due to restocking in
light of the lower price environment. And last, but not
least, a rebound in shipments to Switzerland, which
is deemed as a distribution centre for international
upmarket brands, tends to confirm that Italy continues to
maintain its strong position as a fine and luxury jewellery
producer. Meanwhile, domestic jewellery consumption
continued to slide last year, on the back of protracted
economic and financial difficulties. Field research also
continues to indicate that prolonged economic weakness
and a decade of rising gold prices have affected
consumption habits and tastes of the Italian society,
in the sense that more consumers, particularly among
the younger generation, give preference to branded
accessories and other consumer goods.
Jewellery fabrication in France continued to decline last
year, falling by approximately 3% over 2013 levels. The
major trend was the absence of further growth in 9-carat
jewellery sales, which had grown at the expense of other
ITALIAN JEWELLERY FABRICATION
300
250
200
Tonnes
150
100
50
0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
higher caratage segments in the previous years. This
trend was triggered by a continued rising gold price that
motivated retailers to switch to cheaper caratage pieces
in order to maintain sales. However, increased volatility
in the gold price has resulted in a shake out of retailers
who find themselves exposed to the gold price but on the
other hand too small to hedge against price risks. Plain
gold has seen increasing substitution towards diamond,
costume and silver jewellery.
German jewellery fabrication remained flat year-on-year
with some fabricators performing better than others.
Demand for gold jewellery from Eastern Europe remained
robust as was consumption in the domestic bridal sector,
particularly for 18-carat pieces. However, demand for
the more standardised rings and chains remained fairly
muted compared to 2011-2012 levels with many small
jewellery outlets not benefiting from the lower raw
material costs. In a similar vein, demand for
semi-finished products remained under pressure year-
on-year with no detectable trends towards more usage of
either yellow, red or white gold pieces.
Following a period of uninterrupted gains between 2009
and 2013, Russian jewellery fabrication is estimated to
have fallen by 4% last year, recording a year-on-year
decline for the first time since the 2008/09 economic
crisis. While the gold jewellery market performed as
‘normal’ in the first half of 2014, demand started to
FABRICATION DEMAND
wane in the latter part of the year, particularly in the
last few months. This was to a large extent attributable
to worsening economic conditions, battered by falling
oil prices, geopolitical tensions, Western sanctions and
massive capital flight from the country. The reality of
economic downturn and surging inflation saw consumer
confidence fall to record lows, hitting retail sales of gold
jewellery. In addition, a sharp depreciation of the local
currency fuelled panic buying in December ahead of the
ITALIAN OFFICIAL JEWELLERY EXPORTS BY REGION
Europe*
N. America
S. America
Middle East
East Asia
Others *incl Russia and Turkey
0 5 10 15 20 25 30 35 40
Tonnes
Source: GFMS, Thomson Reuters;
Calculations based on Italian export data.Shows only the direct flow of finished pieces.
87
 GFMS GOLD SURVEY 2015
New Year holidays. Consumers rushed to spend their
weakening roubles, purchasing everything from vehicles
to household appliances, before prices went up.
A markedly lower rouble saw the local currency gold price
soar to record levels towards the end of the year. While
this, without a doubt, impacted gold jewellery demand,
it is worth stressing that this was not considered as the
major driving force behind the decline, for there was
little time for an immediate adjustment of retail prices
and some retailers were still selling old inventories that
were acquired before at lower prices. In terms of various
segments, demand for luxury pieces fell sharply, while
that for the middle-class jewellery recorded a more
gradual decline. Another interesting observation is that
the December to January period saw an unusual spike in
wedding ring sales. This is related to heightened rouble
volatility and price uncertainty, which pushed consumers
to bring forward purchases of wedding rings well before
the wedding season.
Swiss watch hallmarking data show that the number of
gold watches hallmarked in 2014 rose by 5% year-on-
year. However, we believe that despite this, gold demand
from this sector, and hence Swiss jewellery fabrication,
as a whole had actually fallen last year, by approximately
5%. This is not due to a shift to lower caratage, with the
predominant sector for watch demand continuing to be
for 18-carat, but instead it is a continued shift to lighter
FABRICATION DEMAND
pieces. This is not a new phenomenon, as it was initially
encouraged some years back by the sharply higher price
of gold. However, it is interesting to note that rather
than reverse as the price has tumbled it continued and
indeed in our view accelerated in 2014. Underpinning
this change is a combination of fashion trends and, even
more importantly, the desire in China to appear less
ostentatious, following the government crackdown
on corruption.
The UK jewellery market was buoyant in 2014 with the
total number of gold items hallmarked up 23% year-
on-year to just over five million pieces. Indeed it is the
first year since 2001 that the number of gold pieces
hallmarked has actually increased; having said that, the
number hallmarked in that year was some 27 million. As
such, although these figures are not a return to the glory
days of British jewellery consumption and fabrication, it
is most definitely a halt of the more than a decade long
decline. The largest section of this is the 9-carat sector,
which scored even more impressive results, up 25%.
This reflects not only increased consumer confidence,
but a shift from sterling silver, which was up only 7%.
However it should be noted that many of the pieces,
88
especially 9-carat pieces, are under the one gramme
minimum weight for hallmarking so the total figures are
likely to be considerably higher. The 18-carat sector was
up, but by 13% year-on-year and 22-carat was up 25%.
Consequently, we estimate UK jewellery fabrication rose
by 23% to just shy of nine tonnes in 2014.
Demand for jewellery fabrication in Portugal was up
12% year-on-year to 1.5 tonnes as it formally exited
its eurozone bailout; indeed 2014 was the first year of
significant growth in that country this century. However
to put this in perspective, Portuguese fabricators used
over 20 tonnes in the last year of the 20th century. The
use of gold in jewellery manufacture in Poland was up
15% year-on-year to 2.1 tonnes, the highest figure since
2011, helped by lower gold prices in the local currency.
This pattern of increased fabrication in 2014 has been
seen in much of non-eurozone Europe; however, it is
unclear how the increase in gold price in many minor
European currencies will affect jewellery offtake in 2015.
NORTH AMERICA
——An improved economy, lower prices, better
manufacturer margins and favourable fashion trends
pushed US gold jewellery fabrication demand up 4%
in 2014.
North American gold jewellery fabrication amounted
to 79 tonnes in 2014, a 5.5% increase over the previous
year. Retail jewellery demand increased at a faster
rate of 8% to total 157 tonnes. The US, Mexican, and
Canadian economies expanded by 2.4%, 2.1%, and 2.4%,
respectively. These economic growth rates compare to
other advanced economies, which grew at a 1.8% rate,
and South American countries, which grew at a mere
1.2%. These relatively stronger rates of growth, combined
with declining gold jewellery sticker prices at retail stores,
boosted discretionary spending on jewellery last year.
The United States accounted for 80% of North American
gold jewellery fabrication last year. Gold jewellery
fabrication increased to 64 tonnes in 2014, up 4% from
the previous year. Domestically fabricated jewellery
accounted for 49% of retail sales, up from 43% in
2013 and a low of 35% in 2006. The lower gold price
improved domestic manufacturer margins. The average
manufacturer percentage markup over the price of gold
increased 12% last year. US manufacturers also have
been increasingly investing in 3D printing technology,
helping to generate consumer interest. Marketing of 3D
printing technology appeals to consumers interested

in custom made pieces. Greater interest in wearable
technology also has benefitted jewellery demand in
the US, although this emerging segment is more silver-
intensive.
US retail jewellery consumption increased 7% to
131 tonnes of fine gold. This faster rate of growth relative
to fabrication was driven by a 13% increase in imports
and a 40% decline in exports of fine gold jewellery.
Imports rose for the second year in succession in 2014,
after declining for eight years in a row. The 40% decline
in exports was mainly due to increased purchases of
manufacturer output from domestic retailers, which
diverted output away from export partners. Global
jewellery demand also was lower last year, which
weighed on exports and fabrication demand growth.
Yellow gold became increasingly popular last year and
the market continued to move back toward 14-carat and
away from 10-carat. The lower gold price pulled gold
back into lower sticker price brackets, commanding
market share from silver. Store space allocated to
fine jewellery increased last year as well, boosting
gold demand volumes. According to the US Census
Bureau, jewellery store sales fell 1.1% in 2014. However,
companies like JC Penney, Macy’s, and Tiffany’s, reported
healthy sales increases in the region. Additionally,
although jewellery store sales were down, the decline in
gold prices lowered jewellery retail prices. This decline in
sticker price resulted in the decline in sales, even though
the volume of fine gold purchases increased.
Gold jewellery fabrication in Mexico rose to six tonnes in
2014, a 22% increase over the previous year. This double-
digit increase was in part due to a shift from a door-to-
door sales model to distribution via jewellery centres
and chainstores. Dedicated store fronts tend to hold
larger inventories than single door-to-door sales people.
UNITED STATES FABRICATION
160
Jewellery Fabrication Dentistry
140 Other Industrial & decorative Official Coins
Electronics
120
100
Tonnes
80
60
40
20
0 0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
Jewellery retail consumption increased last year to
eight tonnes, up 21% from a year ago. The Mexican
economy has steadily improved over the past few years,
with GDP growth clocking in at 2.1% in 2014, a faster rate
than the 1.1% growth in 2013. Mexico accounted for 8%
of North American gold jewellery fabrication last year.
Jewellery fabrication demand for gold in Canada
increased by 6.5% to total nine tonnes in 2014, against
6% growth in 2013. An improved economy buoyed
fabrication last year. According to the Moneris Spending
Report, holiday spending on Black Friday increased
5% and spending on the days leading up to Christmas
increased 7%. This growth exceeds holiday spending in
the US, which rose an average 3%. In the first quarter
of the year, jewellery store sales increased 5% year-
on-year. Sales fell 3%, however, in the third quarter.
Consequently, jewellery retail consumption increased a
modest 6% last year.
SOUTH AMERICA
——We expect gold demand for jewellery fabrication in
South America to decline considerably in 2015 as
deteriorating economic conditions dampen demand.
Continuing the momentum from 2013, jewellery
fabrication in South America grew by 14% to reach
an estimated full year total of 36 tonnes. Brazil, the
FABRICATION DEMAND
largest gold fabricator in the region, saw demand reach
25 tonnes in 2014, a 16% increase from the previous
year. While economic growth has boosted consumers’
purchasing power, the meteoric rise in the gold price in
the past ten years has priced gold jewellery beyond the
affordability of the masses. As tastes and preferences
are still strongly rooted in the appearance of gold,
the inability to afford carat jewellery has prompted
a substitution trend towards gold plated designs,
UNITED STATES JEWELLERY IMPORTS
200
Others
East Asia
150 South America
Turkey
Italy
Tonnes
100
50
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
89
 GFMS GOLD SURVEY 2015

SOUTH AMERICAN JEWELLERY CONSUMPTION MIDDLE EAST

80
Other
——Jewellery fabrication in the Middle East increased by
Brazil almost 6% last year to a five-year high, boosted in
part by the high premia in India, which encouraged
60
increased exports of 22-carat jewellery.

Tonnes

40 Fabrication in the Turkish market saw its strongest year

20
0
2005 2007 2009 2011
Source: GFMS, Thomson Reuters
especially in Brazil, where plated jewellery industry has
expanded rapidly. For those that can afford it, 18-carat
jewellery is the purity of preference in South America.
Entering 2015, field research in the region earlier this
year indicated that gold sales to the jewellery fabrication
sector in Brazil have declined sharply, by almost 30% on
a year-on-year basis. This is largely a function of a weak
domestic economy and real depreciation. The real has
declined by 28% against the dollar since June last year,
resulting in the real-denominated gold price reaching a
record-high. As the government seeks to raise interest
rates to quell soaring inflation, consumers’ purchasing
power will be curtailed further. While fine gold jewellery
FABRICATION DEMAND
since 2008 as domestic production rose by 32% over
2013. This rapid increase in gold content was brought
about by a number of factors, most notably a rapid
expansion of exports in the 18- and 22-carat markets.
2013
In the domestic market the year was heavily influenced
by changes in credit restrictions. Soon after Valentine’s
Day purchases had died down in 2014 the government
banned the purchase of gold and jewellery on an
installment basis on credit cards. Previously consumers
had been able to divide purchases into as many as
12 monthly payments. This scheme had been widely
misused, however, with many effectively using the
purchases as a way of raising short-term capital. With
the government increasingly worried about levels of
personal debt the practice was banned, subject to review.
This had a large impact upon consumption in the second,
third and fourth quarters of the year with a partial repeal
from October allowing purchases to be split into four
payments. Total jewellery consumption in the Turkish

exports may benefit from the effect of a weaker real and
mitigate waning domestic consumption, we expect gold
demand for jewellery fabrication to contract this year,
aggravated by the shift towards plated jewellery.
market in 2014 is estimated at just 68 tonnes, down from
73 tonnes in 2013. The divergence between fabrication
and domestic consumption is not only down to the strong
export performance from Turkey but also a weakening
currency slowing domestic demand faster than in export
markets; a shift in sentiment away from gold amongst
some retail investors; growth in domestic demand for
18-carat versus 22-carat pieces; and also a substantial
increase in inventory in the marketplace.

MIDDLE EAST JEWELLERY CONSUMPTION MIDDLE EAST JEWELLERY FABRICATION

400 Others Turkey Gold Price 1800 700

Others
Egypt GCC*
600 Egypt
1500
Turkey
300
500 GCC*
1200
400
US$/oz
Tonnes

Tonnes

200 900
300
600
200
100
300 100

0 0 0
H1-06 H1-08 H1-10 H1-12 H1-14 2005 2007 2009 2011 2013
*GCC: Saudi Arabia, UAE, Oman, Bahrain, Kuwait, Qatar *GCC: Saudi Arabia, UAE, Oman, Bahrain, Kuwait, Qatar
Source: GFMS, Thomson Reuters Source: GFMS, Thomson Reuters

90

The domestic market is always price sensitive in Turkey
and to understand 2014’s demand side moves it is
important to consider the local price. While average
USD prices for gold fell by 10% in 2014, average prices
in Turkey actually increased 3.5% year-on-year due
to a weakening lira. Importantly the price also only
twice dipped briefly below the 85 lira/gramme level
that had prompted buying surges in 2013. All-in-all
sentiment towards the yellow metal as an investment
fell over the year and this has been further weakening in
the first quarter of 2015 with another bout of currency
weaknesses pushing prices above 100 lira/gramme on
two occasions - to put this in perspective gold prices
peaked at only 108 lira/gramme in September 2011.
Field research in Turkey suggests that consumers and
retail investors consider prices above 98 lira/gramme
a good opportunity to return gold to the market, and
indeed there has been a large increase in scrap supply
towards these levels. On the purchasing side it’s
expected a pick up will ensue below the
92-93 lira/gramme range.
Currency impacts and a degree of political instability
brought about by elections (both during 2014 and
upcoming in June 2015), slowing economic growth and
the conflict on Turkey’s southern border have also helped
to undermine sentiment in the market. Gold appears less
popular as an investment than in 2013 and consensus
appears to be that the US dollar is the best medium-term
bet to maintain wealth in Turkey.
Finally, many fabricators had chosen to increase
production in 2014 after experiencing growth in demand
in 2013. The beginning of 2014 had also seen healthy
exports to the UAE, the United States, Iraq, the ex-
Soviet Republics and North Africa. The prospects both
domestically and for many of these key export markets
have been eroded over the course of the year, however.
Lower energy prices, sanctions and a sharply weaker
currency have not just impacted Russia but have also
seen other central Asian export markets decline amid
currency devaluations. The key Iraqi market also saw a
hiatus in purchasing after the fall of Mosul to ISIS in June
2014 and its rapid advance elsewhere in the country. The
stock overhang that persists in the Turkish market is likely
to see fabrication levels begin to fall over the course of
2015 unless further export market share can be won in
increasingly competitive markets.
Recent field research would point to a 10% year-on-year
drop in Saudi Arabian jewellery fabrication volumes in
2014 to an estimated 37 tonnes, in turn giving up some of
GFMS GOLD SURVEY 2015
the impressive gains posted in 2013 which resulted from
the acute drop in the gold price. In contrast, last year
the double digit fall in the domestic gold price had little
impact at the retail level with consumer expectation of
higher prices diminishing, which dampened investment
driven purchases.
Despite the drop in offtake, the Saudi market remained
quite buoyant at times with retailers reporting moderate
sales activity across the year. However, during the
key gifting periods of Ramadan, the wedding season
(summer months), and Hajj, consumption was generally
weaker year-on-year, which dragged down annual
consumption volumes.
While the lack of investment interest in gold certainly
played a part in the drop in sales volumes, changing
consumer tastes have also played a role in reducing the
fine gold consumed in this segment. Indeed, most of
the major branded fabricators in the country have been
aggressively promoting lightweight gemset (chiefly cubic
zirconia, though diamond jewellery is also expanding)
21-carat items and increasingly 18-carat items for a
number of years as they attempted to generate higher
margins to offset dwindling sales volumes.
Moreover, item weights have fallen dramatically during
the elevated price environment and this has compounded
the decline in fine gold consumption. To this end,
FABRICATION DEMAND
domestic fabrication has fallen by more than two-thirds
in the last decade. For example, a wedding set which
typically includes a necklace, bracelet, earrings, and rings
has seen total weights drop by some 75% in just the last
decade. What was previously 250 grammes is now often
offered at 50-70 grammes, using more intricate stone
set designs (5-7% of the item weight is often stones in
the case of 18-carat), hollow tubing, and electro-casting
which can deliver large light weight items.
The Saudi fabrication industry continues to face
difficulties in obtaining skilled labour with several
contacts indicating they were struggling to import
foreign workers at the level they require for expansion.
The Saudisation Policy, which stipulates that 15% of all
staff should be Saudi nationals, is not always feasible
when applied to such a specialised field. A number of
the larger fabricators have started to introduce local
women into their workforce in attempt to alleviate the
labour issues (and to meet the government’s regulations)
and while they are making a difference, it is the skilled
goldsmiths (which typically originate from India,
Pakistan, and Bangladesh) that are required.
91
 GFMS GOLD SURVEY 2015
Following an impressive rise in 2013, jewellery fabrication
in the United Arab Emirates (UAE) experienced just a
4% decline last year. Looking back, the domestic market
initially benefitted from the elevated premium level
in India that stimulated UAE fabrication demand for
investment-grade jewellery (chiefly 22-carat), especially
in the first half of 2014. The modest decline may point to
a healthy market; however, this, in fact, was not the case,
with jewellery consumption in the UAE falling broadly in
line with the global average, sliding 13% to an estimated
60 tonnes as demand across the region retreated from
the heady levels of 2013, driving imports sharply lower.
Demand stalled in the second quarter and failed to
recover thereafter, driven lower, in part, by the closure of
trade routes into northern Iraq due to the rising control
of ISIS. This key market, one of the more robust in the
region in recent years, had been offsetting declines
elsewhere in the Middle East. A return in demand for
gemset and particularly diamond jewellery was a feature
of the market last year as investment motives, which
were the chief architect for the surge in 2013 offtake,
were largely absent from the market in 2014, impacting
predominately offtake for plain 21- and 22-carat items.
Branded jewellery continues to win market share as
consumers look to well known brands - this is especially
the case for the Indian Sub-Continent tourists who tend
to migrate to the well known brands from home. This
FABRICATION DEMAND
trend has borne a prolific expansion of largely Indian
retailers across the region, boosting jewellery demand as
they stock the new showrooms, but importantly, this has
not always translated to genuine retail sales.
In contrast to many markets in the region, jewellery
fabrication demand in Kuwait managed to build on the
healthy recovery seen in 2013, registering an 11% year-
on-year rise last year to an estimated seven tonnes.
Domestic consumption picked up sharply, by over a fifth,
buoyed by the expansion of several international brands
into the Kuwaiti market which offered consumers a
greater range of imported designs.
Turning to Iran, fabrication demand is estimated to have
declined by a hefty 23% in 2014 as the Islamic Republic
continues to be weighed down by the raft of economic
sanctions imposed by the west. Coupled with these
measures, which has driven down spending across all
retail segments, has been the further increases to the VAT
rate (now set as 8% with a further hike planned for 2015)
which has significantly impacted consumer demand for
the yellow metal. In contrast to most markets, where VAT
is applied only to the labour component of the selling
92
price, Iran has levied the tax on the total cost of the item,
which has inflated the purchase price substantially, and
has encouraged a parallel trade to emerge.
Egyptian jewellery fabrication appears to be benefiting
from weaker gold prices and a more optimistic outlook
after years of economic stagnation, with the market
stabilising in 2014 to an estimated 41 tonnes. Egypt
suffered a severe economic crisis after the 2011 uprising
that toppled Hosni Mubarak, ushering in a period of
turmoil, leading to the election of a Muslim Brotherhood-
led government that was subsequently toppled by the
military in July 2013. President al-Sisi, who led the
military takeover, was elected head of state last year.
While the increase was less than 1%, this represents the
third successive rise in a market that has been deeply
affected by the political turmoil impacting the country in
recent years. The increase last year has seen domestic
fabrication recover 42% from the 2011 crisis volumes,
though importantly, it remains 42% or 30 tonnes below
the level witnessed a decade earlier. While Egypt has
dealt with an anaemic growth rate over the past five
years that did not exceed 2% in any one year, GDP
growth is reported as reaching 3.5% last year (well below
the pre-2011 rate of about 6%), as Egypt’s leadership has
taken several steps to bring about some structural and
fiscal changes. These measures, coupled with improving
consumer sentiment, a slowly improving tourist market,
and a return of foreign jewellery fabricators should see
Egyptian offtake rebound strongly in 2015.
EGYPTIAN JEWELLERY FABRICATION
80 350
60 EGP Gold Price
280
Egyptian Pound/g
210
Tonnes
40
140
20
70
0 0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
 GFMS GOLD SURVEY 2015

ELECTRONICS GLOBAL BILLINGS

(semiconductor billings, millions US dollars)
——Gold used in electronics declined 4% in 2014, World Americas Europe Japan Asia
dragged down by softer economic conditions and 2013 303.3 60.5 34.5 35.1 173.2
ongoing substitution. 2014 333.6 68.3 37.4 35.0 192.9
Change 30.2 7.8 2.9 0.0 19.6
Global electronics demand fell for the fourth year in Change % 10% 13% 8% -0.1% 11%
succession in 2014, slipping a further 3.5% to Source: SIA

279 tonnes. The drop has left gold demand in this

segment 16% or 53 tonnes below the historical peak
recorded in 2010. While there has been a robust recovery with silver and aluminium also being used widely in
in consumer demand for electronics on the back of an commercial applications. In addition, fabricators are also
improving economic environment, globally it is far from looking to alternatives in the area of gold salts used in
uniform. Economies within the Eurozone, China, and the electronics field. With life expectancy of electronics
Japan, all major markets for the production of electronics, appliances just a few years these days compared to
have felt the impact of sluggish economic growth. longer life cycles just a decade ago, longevity and
performance is becoming less important as fabricators
The impact of the economic slowdown was widespread, look to lower the ticketed price.
with falls registered in almost all key markets. Japan,
the largest market in this group, declined 4% year-on- Global demand for semiconductors reached a record high
year, while South Korea and Taiwan retreated by 9% in 2014, rising by 10% according to the Semiconductor
and 3% respectively. The US market, benefiting from an Industry Association (SIA). As was the case in 2013,
improving economic environment, saw offtake largely the market was led by the Americas, which enjoyed an
unchanged compared to 2013 volumes. impressive 12.8% annual rise. Elsewhere, European sales
improved considerably, while Japan, falling back into
While underlying electronics demand is expanding, the recession last year, saw new sales stagnate. Turning to
use of the gold in this industry is retreating, largely as this year, we expect this broad trend to continue, with
a result of substitution losses. Gold used in bonding rising demand for finished goods, resulting from stronger
wire production, which is widely used in semiconductor economic growth, being more than offset by further

FABRICATION DEMAND
fabrication and consumes a significant portion of total substitution losses for the yellow metal across the sector.
offtake in this sector, has seen its market share fall from
above 90% in 2008 to an estimated 42% last year as Last year, gold used in Japanese electronics fabrication
fabricators looked to lower the cost of production in declined 4% from the previous year, slipping to an
a rising gold price environment. Copper wires (both estimated 83 tonnes. This represents the lowest level
bare and palladium-coated), which were initially only since 2002. Domestic demand was impacted by the
used in the most basic electronic appliances, is now fragile economy which fell back into recession during
commanding a combined 45% market share (and is the middle of the year following a robust start to the
being increasingly used in main stream applications), year. Coupled with the decline in local offtake, further

GLOBAL SEMI-CONDUCTOR BILLINGS WORLD FABRICATION OF GOLD BONDING WIRE

350 200 120

Other Asia/Pacific Europe Americas
Global Semiconductor Billings (millions of USD)

Japan
OECD Industrial Production
Industrial Production (2010 = 100)

280 160

100
210 120
Tonnes

140 80
80

70 40

0 0 60
2005 2007 2009 2011 2013 2005 2007 2009 2011 2013

Source: SIA Source: GFMS, Thomson Reuters; OECD

93
 GFMS GOLD SURVEY 2015

ELECTRONICS (INCLUDING THE USE OF SCRAP)

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Japan 112.4 123.6 128.4 116.0 94.5 115.0 108.0 88.0 85.7 82.5
China 22.9 28.7 32.6 37.5 47.1 52.5 60.7 58.4 59.0 56.2
United States 55.2 57.4 50.2 52.1 46.2 55.8 58.3 55.7 55.4 55.5
South Korea 28.0 32.9 35.6 33.3 28.8 33.4 31.6 27.0 23.5 21.4
Taiwan 14.6 17.1 18.1 17.1 16.1 19.4 18.1 16.7 16.2 15.6
Germany 12.2 14.3 15.3 14.5 9.8 12.6 12.0 11.2 12.5 12.1
Russia 12.0 12.1 12.6 13.1 12.3 12.4 12.5 12.6 12.7 12.0
Singapore 18.5 18.5 18.3 17.2 15.1 16.3 13.8 11.3 10.3 9.9
Switzerland 7.3 8.9 9.1 7.5 4.7 5.9 5.6 5.4 5.3 5.2
India 2.2 2.6 2.5 2.1 1.9 2.6 2.5 2.4 2.4 2.4
CIS (ex. Russia) 2.1 2.2 2.2 2.2 2.0 2.0 2.1 2.0 2.0 1.9
Hong Kong 1.7 1.9 2.0 1.9 1.7 1.9 2.0 1.8 1.8 1.7
Other Countries 5.1 4.8 4.4 3.6 2.7 2.8 2.8 2.7 2.8 3.0
World Total 294.3 324.9 331.2 317.9 282.9 332.5 330.0 295.1 289.5 279.3
Source: GFMS, Thomson Reuters

losses were experienced due to ongoing thrifting
and substitution, chiefly in the area of bonding wire
production where the migration to copper continues to
erode gold’s market share. According to Semiconductor
Industry Association statistics, Japanese semiconductor
sales fell only at the margin last year (the fourth
consecutive fall). It was not all bad news for the industry,
with a stronger auto sector delivering modest expansion
and the upturn in the U.S. economy, coupled with the
weaker yen, supporting export growth.
FABRICATION DEMAND
However, the demand for gold potassium cyanide (mostly
for electroplating) dropped at a much faster pace in 2014.
Korean electronics manufacturers are migrating some of
the local factories to other Southeast Asian countries for
cost reasons. For example, Samsung is spending billions
to build new factories in Vietnam. The reallocation of
producing facilities will continue and we expect that gold
demand from the South Korean electronics sector may
continue to decline in the coming years as production is
offshored.

Gold for Chinese electronics demand saw a setback in
2014, after experiencing modest growth in 2013. The
GFMS team at Thomson Reuters estimates that demand
for fine gold used in electronics decreased by almost 5%,
to total 56 tonnes last year. It is worth highlighting that
our fabrication series has undergone a upward revision
since the previous GFMS Gold Survey was published.
This revision is due to new information gathered during
extensive field research in the past year and, specifically,
feedback from industrial players indicating that our
estimates may have been over conservative. The 5%
drop in gold used in electronics last year was due to a
downward trend in demand for white goods and home
appliances in China due to the softer economy and
increased use of palladium-coated copper bonding wires
in the sector.
Demand from the South Korean electronics sector
declined for the fourth year in succession, retreating 9%
year-on-year to an estimated 21 tonnes. The migration
away from gold used in bonding wire continued, though
the pace slowed, and the drop was modest in 2014. We
expect the migration to continue, but at a steadier pace.
Gold used in electronics fabrication in the United
States was broadly flat at 55 tonnes in 2014. Thrifting
continued to stem growth in demand from this industry
last year, despite 7% growth in US vendor PC shipments,
12% growth in semiconductor sales in the Americas,
and 3% growth in US consumer electronics shipments.
According to Gartner, US PC shipments increased 7%
compared to a 2% decline globally. Semiconductor
sales also saw stronger growth in the Americas relative
to the global total, of 12% against 9%, according to
Semiconductor Industry Association statistics. The US
Consumer Electronics Association twice revised its 2014
forecast for shipments. The last revision in January 2015
suggested a 3% growth, up from its July 2014 forecast
of 2%. Retail electronics demand was driven higher by
improved economic conditions and a stronger domestic
employment environment.
Electronics demand in Europe fell by 4% in 2014, back
to levels seen in 2012. Last year’s fall was broadly in
line with global trends, and, despite the lower price
environment, was largely attributable to continued
thrifting and substitution away from gold to cheaper

94

DENTISTRY (INCLUDING THE USE OF SCRAP)
(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
World Total 62.4 60.7 57.6 55.7 52.7 48.4 42.9 38.6 36.3 33.9
Source: GFMS, Thomson Reuters
alternatives such as copper and silver. This was
particularly prevalent within the bonding wire production,
which accounts for a larger portion of the total offtake in
this sector.
In addition, prolonged economic weakness also helped
to explain last year’s decline. It should be emphasised,
though, that continued losses from substitution and
thrifting were somewhat mitigated by a slight recovery
in end-use demand in the automotive industry. After six
consecutive years of decline, European car sales returned
to growth in 2014, with all major markets contributing to
the overall expansion. However, a word of caution needs
to be added as the jump in car sales was primarily driven
by state-backed incentives and a shift to cheaper brands,
rather than a genuine recovery in consumer confidence.
Gold usage in electronics in Taiwan dropped 3% in
2014 to 16 tonnes. The slide may seem strange as the
domestic economy expanded a healthy 3.3% growth,
the most since 2011. Further, electronics exports
last year recorded a 13.5% increase, benefiting from
prosperous smartphone markets as well as expanding
demand for other electronic devices. However, it is not
incomprehensible considering the continuous erosion
of gold usage in bonding wire due to substitution for
cheaper alternatives such as platinum-plated copper
and silver, as well as reduced offtake in gold potassium
cyanide (GPC) primarily used in the plating sector.
DENTAL GOLD FABRICATION
80
United States Other
Japan Germany
60
Tonnes
40
20
0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters
GFMS GOLD SURVEY 2015
DENTISTRY
——Substitution-led losses continued last year, despite
the lower price environment, with global offtake
retreating a further 7%.
Demand for gold used in dental applications continued
its secular retreat in 2014, sliding 7% to a record low of
33.9 tonnes. The decline, which started a decade ago,
was initially driven by the price increase of the yellow
metal. Higher prices triggered a migration to cheaper
metal alternatives and porcelain-fused-metal (PFM)
before aesthetic concerns ushered the trend to ceramics.
The modest fall marked the eleventh consecutive annual
decline that has seen demand in this sector almost halve
over the last decade. Unlike the bonding wire industry
where gold enjoys an unparallel functional advantage
in certain fields, gold in dental applications is losing
favour to the improving quality of ceramics in terms of
biocompatibility, chemical stability, flexural strength,
and life span, especially after the invention of zirconia
ceramics.
FABRICATION DEMAND
In previous generations alloys used in dental applications
contained as much as 65% to 70% gold whereas today
gold’s share has fallen to 35% to 40% on average (and
as low as 12% in Japan) in a bid to lower the cost to
the consumer. According to US industry data, in 2005
over 80% of crown and bridge work was metals-based,
compared to a figure closer to 40% last year. While price
has indeed had a notable impact on the level of gold
consumed in dental applications, structural changes in
the developed world have also accelerated the decline of
the industry. Rising income levels and access to the more
cosmetically pleasing ceramic applications is expected to
drive the use of gold into a niche industry.
Looking more closely at regional demand trends,
there were falls across all the major markets last year.
Japanese demand declined 8% in 2014, after only a
modest fall in 2013. Offtake of Kinpala 12, the alloy used
in dentistry, is the key driver of gold (and palladium
and silver) demand across the industry. There were a
couple of additional factors last year that contributed to
the annual decline. First, the economic impact, as the
country slipped back into recession during 2014, may
have seen consumers delay dental work, and secondly,
95
 GFMS GOLD SURVEY 2015

OTHER INDUSTRIAL & DECORATIVE USES (INCLUDING THE USE OF SCRAP)

(tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
China 5.5 6.3 8.1 10.1 13.9 17.2 18.7 19.2 19.5 19.2
Switzerland 13.4 13.4 13.4 13.4 13.4 13.4 13.4 13.4 13.4 13.4
South Korea 7.6 9.8 11.3 11.1 10.0 11.8 11.4 10.8 10.6 10.3
Brazil 4.2 5.1 4.9 6.3 7.2 7.2 9.2 10.8 11.3 8.8
Italy 7.0 7.8 9.7 10.9 8.6 8.0 7.7 8.2 8.4 8.5
India 26.2 24.5 22.5 19.3 12.2 13.2 11.5 9.1 9.7 7.4
Japan 6.3 6.7 6.9 6.7 6.5 6.4 5.9 5.4 5.4 5.6
Germany 3.8 3.7 3.7 3.6 2.6 3.2 3.2 3.0 2.9 2.9
Thailand 2.4 2.5 2.6 2.7 2.4 2.6 2.5 2.6 2.6 2.6
United States 5.7 4.5 3.1 2.8 2.5 3.0 3.0 2.5 2.5 2.5
Hong Kong 1.4 1.5 1.6 1.6 1.5 1.7 1.7 1.6 1.6 1.3
Other Countries 8.6 9.6 10.6 11.6 12.6 13.6 14.6 15.6 16.6 17.6
World Total 92.0 94.5 98.0 97.4 86.4 94.8 95.0 92.3 92.8 87.1
Source: GFMS, Thomson Reuters

a change in the insurance rebate, which is set by the
Ministry of Health, Labour and Welfare that restricted
coverage to the front five teeth. This second factor,
according to industry contacts, was the more significant
of the two in gold’s demand decline last year. Elsewhere
in key markets, demand was mixed, although in all cases
weaker on a yearly comparison. Fabrication is North
America declined 9% year-on-year while demand in
Europe is estimated to have retreated 4% on 2013 levels.
OTHER INDUSTRIAL AND DECORATIVE USES
FABRICATION DEMAND
is focused on electronics, whereas decorative use is
generally less, and tends to be exported to Asia.
Turning to trade, last year Italian official imports of gold
compounds grew by around 25%. This was a result of
increased consumption of plating salts by luxury accessory
manufacturers. A reason for this niche’s continued strength
is that branding for the final product demands production
in artisan centres such as Paris and Florence. German
exports of gold compounds in 2014, in terms of mass, fell
by 2% year-on-year, with a marked drop off in exports to
Saudi Arabia and Hong Kong that tend to go for luxury

——Global demand slipped 6% last year to a five-year goods plating. However exports to other European countries
low, dragged lower by a material fall in Indian remained strong as demand held and switching from local to
offtake. German supply of GPC by electronics manufacturers.

Other industrial & decorative fabrication in Europe Gold consumed in the other industrial and decorative sector
remained broadly flat last year. European gold in India declined 24% to 7 tonnes last year, the lowest level
compounds, produced mainly in Germany, are primarily recorded in recent history. A comparison to 2004 numbers
gold potassium cyanide (GPC) and are used as plating reveal demand has dropped to just one-third of that level.
salts for decorative and industrial use. Industrial demand Such a steep decline is largely related to a shift from plated
items to high value products with greater intrinsic value, a
OTHER INDUSTRIAL & DECORATIVE USES shift which is natural as the population moves higher up in
the income pyramid. The trend was no different last year
120
India Other Europe Other when prices fell sharply with consumers from low income
East Asia Switzerland groups preferring to purchase 22-carat jewellery in the form
100
of chains or rings with most purchases in the range of five to
80 eight grammes.
Tonnes

60
The jari (thread made of gold, silver, and silk, as is used in
the weaving of saris) market suffered again last year. Its
40
consumption is primarily derived from making wedding
20 brocades and saris. However its usage has been limited
over the years to just immediate family members during
0
2005 2007 2009 2011 2013 weddings, and thrifting has played a key role due to a
Source: GFMS, Thomson Reuters higher gold price in rupee terms, and shifting fashions.

96
 GFMS GOLD SURVEY 2015

According to jari traders in the city of Kanchipuram the per
day consumption last year was in range of 1,800 marks to
2,000 marks per day as against more than 2,000 marks in
2013. To put this in perspective, 2000 marks translates to
500 kilogrammes of jari. Moreover, one kilogramme of jari
contains 240 grammes of silver and three grammes of gold.
There were a few exceptions to the wider trend, with modest
increases seen in Taiwan and Indonesia, with the former
benefitting from increased domestic production (at the
expense of imports), while a higher domestic gold price last
year helped support the plated fashion jewellery segment in
Indonesia.

One category which did see a turnaround last year was
the electroplating for industrial applications, driven higher
by improved demand from the automobile and electrical
industries. This was due to its direct relation to improvement
in economic activity in the latter part of the year with this
trend continuing in the early months of 2015.
Other industrial and decorative fabrication across East Asia
fell only at the margin last year, outperforming the majority
of global markets, slipping just over 1% to an estimated
41 tonnes. While the drop in demand was minimal in 2014
it nonetheless drove regional offtake to a five-year low after
several years of constrained output. During the 2003-
2011 period growth from China in this demand segment
expanded at an extraordinary rate, boosting regional
offtake, as the domestic industry developed, averaging 20%
growth over the period. However, in a sign that the market
has matured, fabrication demand has plateaued, averaging
just 1% growth over the last three years.
China’s demand for gold use in the other industrial and
decorative segments recorded a nearly 2% year-on-year
decline in 2014, to an estimated 19 tonnes. Demand in this
sector mainly consisted of demand for plating salts GPC
offtake, which is widely used for electroplating of a wide
range of luxury goods and accessories such as belt buckles,
watch cases and sunglasses. Looking back to last year,
demand from this segment was relatively quiet, in part
reflecting a weaker Chinese economy. It is worth noting
that should the domestic economy slow further in 2015, in
addition to the continuation of the anti-corruption gifting
policy, fine gold demand from this segment will likely slow
down further in 2015.

Elsewhere, a weaker economic environment last year drove

FABRICATION DEMAND
Japanese electronics demand lower. This in turn led to
a decline in the production of plating salts or GPC (gold
potassium cyanide) which is used predominantly in the
plating of various electronic components. In addition, a
decline in demand for plated jewellery last year, a function
of the weaker price environment, saw GPC fabrication
demand from Thailand and Hong Kong retreat. The latter
was the hardest hit, falling 15% year-on-year, having a
greater exposure to the weaker Chinese mainland market.

CHINESE IMPORTS OF GOLD COMPOUNDS

25
Other
Taiwan
20 Japan
Hong Kong
Europe
15
Tonnes

10

0
2005 2007 2009 2011 2013
Source: GFMS, Thomson Reuters

97
 GFMS GOLD SURVEY 2015

8. APPENDICES

Appendix 1 - Gold Futures and Options Turnover (COMEX, SHFE, and TOCOM) 99
Appendix 2 - Official Sector Holdings and Other Reserves 100
Appendix 3 - Nominal Gold Prices in Various Currencies 1979-2014 101
Appendix 4 - Real Gold Prices in Various Currencies 1979-2014 102
Appendix 5 - Gold Prices and Annotated Graph 2005 103
Appendix 6 - Gold Prices and Annotated Graph 2006 104
Appendix 7 - Gold Prices and Annotated Graph 2007 105
Appendix 8 - Gold Prices and Annotated Graph 2008 106
Appendix 9 - Gold Prices and Annotated Graph 2009 107
Appendix 10 - Gold Prices and Annotated Graph 2010 108
Appendix 11 - Gold Prices and Annotated Graph 2011 109
Appendix 12 - Gold Prices and Annotated Graph 2012 110
Appendix 13 - Gold Prices and Annotated Graph 2013 111
Appendix 14 - Gold Prices and Annotated Graph 2014 112
APPENDICES

98
 GFMS GOLD SURVEY 2015

APPENDIX 1 - GOLD FUTURES AND OPTIONS TURNOVER

Gold Contracts on COMEX Gold Contracts on SHFE Gold Contracts on TOCOM

Futures Options Futures Futures
Turnover1 Open Interest2 Turnover1 Turnover1 Open Interest2 Turnover1 Open Interest2
(100 oz) (100 oz) (100 oz) (1kg) (1kg) (1kg) (1kg)
2005 15,890,617 323,247
2,886,183
17,958,240 299,973
2006 15,917,524 344,915
3,708,573
22,228,198 242,743
2007 25,060,440 541,854
3,555,038
18,202,949 177,089
2008 38,373,367 306,651 4,392,637 3,890,447 46,212 14,960,381 72,439
2009 35,136,388 489,779 4,850,111 3,406,232 101,316 11,913,502 134,163
2010 44,730,345 585,114 7,673,165 3,272,646 78,768 12,198,340 117,657
2011 49,171,091 419,154 9,477,081 7,221,758 102,312 15,193,602 123,688
2012 43,893,380 427,991 9,106,807 5,916,745 111,424 11,895,357 145,738
2013 47,291,629 379,550 10,247,306 20,087,824 170,992 12,224,581 90,135
2014 40,517,778 371,646 7,900,688 23,858,066 194,812 8,744,990 73,137

2013
Jan 4,221,119 424,165 940,044 333,658 123,134 1,282,839 140,800
Feb 3,632,342 435,263 1,038,071 249,915 124,902 1,339,193 141,559
Mar 3,906,568 408,594 887,611 346,681 124,504 957,936 143,098
Apr 5,218,768 421,087 1,434,651 794,755 107,970 1,719,855 108,422
May 5,312,285 375,206 904,087 1,178,181 113,280 1,115,809 101,207
Jun 3,744,747 409,081 784,258 747,093 122,856 1,094,429 105,790
Jul 4,647,176 398,573 925,609 3,581,330 163,592 1,049,758 109,802
Aug 3,463,769 381,963 712,054 4,372,781 146,932 953,479 106,075
Sep 3,331,945 369,196 653,543 2,294,726 126,944 830,574 101,911
Oct 3,458,162 387,763 641,769 2,000,275 150,716 748,222 102,603
Nov 3,577,065 383,966 667,131 1,894,919 164,734 531,061 102,650
Dec 2,777,683 379,550 658,478 2,293,510 170,992 601,426 90,135

2014
Jan 3,754,843 373,806 630,017 1,841,336 155,174 541,515 92,038
Feb 2,607,548 386,303 659,603 1,659,041 203,574 680,718 78,739
Mar 4,199,295 367,561 617,552 2,782,670 211,928 702,569 81,700
Apr 2,692,897 380,212 673,526 2,000,586 202,452 590,702 85,695
May 3,631,134 377,338 626,964 1,585,457 233,646 553,903 98,669
Jun 2,508,081 401,090 646,377 1,494,263 199,788 562,274 85,901
Jul 3,848,342 368,538 565,498 1,590,619 199,448 606,190 91,847
Aug 2,381,778 365,115 448,134 1,407,683 202,926 577,285 94,153
Sep 3,205,752 379,874 694,968 1,545,915 196,216 792,410 99,730
Oct 3,703,708 416,728 885,905 1,535,052 259,266 1,000,120 94,140
Nov 4,676,740 372,859 853,699 3,274,720 248,892 1,220,210 78,747
Dec 3,307,660 371,646 598,445 3,140,724 194,812 917,094 73,137
1.
Turnover refers to period total. 2. Open Interest refers to end-period.
Source: Thomson Reuters and respective exchange websites
APPENDICES

99
 GFMS GOLD SURVEY 2015

APPENDIX 2 - OFFICIAL SECTOR GOLD HOLDINGS AND OTHER RESERVES

end-2005 end-2014
Gold Gold
Share of Share of
Reserve Reserve
million oz tonnes $ billion1 $ billion2 Assets3 million oz tonnes $ billion1 $ billion2 Assets3
United States 261.55 8,135 11.04 130.78 70.7% 261.50 8,134 11.04 315.37 72.6%
Germany 110.21 3,428 56.54 55.10 55.0% 108.81 3,384 130.48 131.22 67.8%
Italy 78.83 2,452 40.44 39.41 60.7% 78.83 2,452 94.54 95.07 66.6%
France 90.85 2,826 46.61 45.43 62.1% 78.30 2,435 93.90 94.43 65.6%
Russia 12.44 387 6.35 6.22 3.4% 38.84 1,208 46.09 46.85 12.1%
China, P.R.: Mainland 19.29 600 4.07 9.65 1.2% 33.89 1,054 9.82 40.87 1.0%
Switzerland 41.48 1,290 21.34 20.74 36.4% 33.44 1,040 39.44 40.32 7.4%
Japan 24.60 765 12.62 12.30 1.5% 24.60 765 29.50 29.67 2.4%
Netherlands 22.34 695 11.46 11.17 55.4% 19.69 612 23.61 23.75 55.2%
India 11.50 358 4.10 5.75 4.2% 17.93 558 19.38 21.63 6.7%
Turkey 3.73 116 1.91 1.87 3.6% 17.01 529 20.40 20.52 16.1%
Taiwan 13.61 423 4.66 6.81 2.6% 13.62 424 4.87 16.43 3.8%
Portugal 13.42 417 6.89 6.71 65.9% 12.30 383 14.75 14.83 75.3%
Venezuela 11.47 357 5.72 5.74 19.3% 11.82 368 15.31 14.25 69.3%
Saudi Arabia 4.60 143 0.23 2.30 1.5% 10.38 323 0.43 12.52 1.7%
United Kingdom 9.99 311 5.13 5.00 11.5% 9.98 310 12.03 12.03 11.2%
Lebanon 9.22 287 4.74 4.61 27.9% 9.22 287 10.95 11.12 21.9%
Spain 14.72 458 7.55 7.36 43.2% 9.05 282 10.86 10.92 21.7%
Austria 9.73 302 4.99 4.86 41.6% 9.00 280 10.80 10.86 43.4%
Belgium 7.32 228 3.76 3.66 30.8% 7.31 227 8.77 8.82 34.7%
Philippines 4.97 155 2.57 2.48 13.5% 6.28 195 7.48 7.57 9.5%
Kazakhstan 1.92 60 0.99 0.96 13.6% 6.17 192 7.39 7.44 25.7%
Algeria 5.58 174 0.28 2.79 4.7% 5.58 174 0.28 6.73 3.5%
Thailand 2.70 84 1.37 1.35 2.6% 4.90 152 5.85 5.91 3.8%
Singapore 4.10 127 0.21 2.05 1.7% 4.10 127 0.21 4.94 1.9%
Sweden 5.41 168 2.80 2.71 10.9% 4.04 126 4.80 4.87 7.8%
South Africa 3.99 124 2.05 1.99 9.7% 4.03 125 4.83 4.85 9.9%
Mexico 0.11 3 0.06 0.05 0.1% 3.95 123 4.76 4.76 2.4%
Libya 4.62 144 0.19 2.31 5.5% 3.75 117 0.16 4.52 4.6%
Greece 3.47 108 1.78 1.74 77.4% 3.62 112 4.34 4.36 69.9%
South Korea 0.46 14 0.07 0.23 0.1% 3.36 104 4.79 4.05 1.1%

ECB 23.15 720 16.18 503
IMF 103.44
3,217 90.45
2,814
BIS 5.97 186 8.57 267

World 991.30
30,833 1,029.90
32,034
1
National valuation. Market valuation based on end-2005 and end-2014 gold PM fix respectively. 3 Calculated using year-end gold PM fix.
2

Source: IMF and central bank websites

APPENDICES

100
 GFMS GOLD SURVEY 2015

APPENDIX 3 - NOMINAL GOLD PRICES IN VARIOUS CURRENCIES

Average, high and low US$ prices are based on the London PM fix.
Except for the Mumbai price, other prices are calculated using the PM fix and London exchange rates.

PM Fix Low High Mumbai

US$/oz US$/oz US$/oz euro/kg* CHF/kg yen/g A$/oz rand/kg yuan/g Rs/10 g
1979 304.69 216.85 512.00 9,187 16,324 2,189 274.76 8,279 15.23 1,043
1980 614.50 481.50 850.00 18,284 32,946 4,457 537.56 15,331 29.60 1,452
1981 459.24 391.25 599.25 17,000 28,997 3,247 399.71 12,863 25.17 1,705
1982 375.17 296.75 481.00 15,016 24,599 3,016 371.96 13,142 22.83 1,708
1983 423.61 374.25 509.25 17,752 28,564 3,238 470.00 15,162 26.91 1,821
1984 360.78 307.50 405.85 16,811 27,144 2,749 409.90 16,948 26.91 1,958
1985 317.26 284.25 340.90 15,314 24,982 2,429 453.70 22,855 29.95 2,106
1986 367.85 326.30 438.10 13,067 21,147 1,983 553.11 27,126 40.84 2,210
1987 446.22 390.00 499.75 13,181 21,383 2,073 636.24 29,217 53.40 2,891
1988 436.87 395.30 483.90 12,604 20,532 1,801 560.13 31,889 52.28 3,202
1989 380.79 355.75 415.80 11,770 20,021 1,688 481.25 32,063 46.10 3,185
1990 383.59 345.85 423.75 10,192 17,148 1,784 491.27 31,893 58.99 3,406
1991 362.26 344.25 403.00 9,885 16,707 1,567 465.03 32,154 62.00 4,033
1992 343.95 330.35 359.60 8,819 15,522 1,400 468.13 31,502 60.98 4,255
1993 359.82 326.10 405.60 9,793 17,103 1,282 530.13 37,880 66.66 4,384
1994 384.15 369.65 396.25 10,235 16,865 1,261 525.36 43,867 106.45 4,652
1995 384.05 372.40 395.55 9,042 14,589 1,160 518.50 44,787 103.12 4,799
1996 387.87 367.40 414.80 9,587 15,388 1,355 495.99 53,466 103.68 5,191
1997 331.29 283.00 366.55 9,429 15,457 1,286 445.02 48,993 88.30 4,556
1998 294.09 273.40 313.15 8,506 13,707 1,238 467.79 52,307 78.28 4,182
1999 278.57 252.80 325.50 8,405 13,450 1,018 431.84 54,764 74.14 4,327
2000 279.11 263.80 312.70 9,734 15,158 967 480.88 62,173 74.29 4,518
2001 271.04 255.95 293.25 9,737 14,714 1,058 524.53 74,842 72.13 4,462
2002 309.68 277.75 349.30 10,545 15,470 1,245 569.76 104,477 82.41 5,131
2003 363.32 319.90 416.25 10,328 15,704 1,352 558.35 88,008 96.68 5,620
2004 409.17 375.00 454.20 10,582 16,335 1,422 556.01 84,738 108.88 6,119
2005 444.45 411.10 536.50 11,521 17,839 1,577 583.36 91,114 117.09 6,454
2006 603.77 524.75 725.00 15,452 24,298 2,256 801.47 131,751 154.78 8,912
2007 695.39 608.40 841.10 16,294 26,775 2,628 828.48 157,352 169.85 9,345
2008 871.96 712.50 1,011.25 19,071 30,267 2,907 1,033.13 229,694 194.79 12,256
2009 972.35 810.00 1,212.50 22,402 33,834 2,919 1,235.22 261,600 213.98 15,310
2010 1,224.52 1,058.00 1,421.00 29,739 40,947 3,444 1,331.28 287,568 266.15 18,386
2011 1,571.52 1,319.00 1,895.00 36,328 44,615 4,017 1,524.33 368,623 326.59 24,003
2012 1,668.98 1,540.00 1,791.75 41,755 50,297 4,278 1,610.49 440,575 338.51 29,730
2013 1,411.23 1,192.00 1,693.75 34,196 42,073 4,412 1,454.85 433,964 279.18 29,310
2014 1,266.40 1,142.00 1,385.00 30,638 37,202 4,298 1,402.94 440,561 250.82 28,278
* Prior to 1999 Deutsche Mark prices have been converted into euros at the official conversion rate
APPENDICES

101
 GFMS GOLD SURVEY 2015

APPENDIX 4 - REAL GOLD PRICES IN VARIOUS CURRENCIES (CPI DEFLATED - CONSTANT 2014 MONEY TERMS)

Average, high and low US$ prices are based on the London PM fix.
Except for the Mumbai price, other prices are calculated using the PM fix and London exchange rates.
PM Fix Low High Mumbai
US$/oz US$/oz US$/oz euro/kg* CHF/kg yen/g A$/oz rand/kg yuan/g Rs/10 g
1979 993.78 707.27 1,669.93 20,925 31,096 3,144 1,218.19 191,372 94.12 16,793
1980 1,765.83 1,383.63 2,442.55 39,501 60,334 5,937 2,164.02 311,794 170.11 21,008
1981 1,195.58 1,018.58 1,560.09 34,543 49,865 4,123 1,469.66 226,981 140.99 21,813
1982 920.05 727.74 1,179.59 28,985 40,038 3,728 1,228.20 202,292 125.33 20,240
1983 1,007.04 889.69 1,210.62 33,179 45,160 3,929 1,410.32 207,807 144.85 19,322
1984 821.78 700.41 924.43 30,683 41,692 3,261 1,183.14 208,284 140.98 19,169
1985 698.02 625.39 750.03 27,353 37,097 2,823 1,226.92 241,527 140.29 19,504
1986 793.90 704.22 945.50 23,368 31,168 2,291 1,371.61 241,591 178.73 18,870
1987 929.76 812.62 1,041.30 23,515 31,069 2,392 1,453.73 224,016 217.96 22,649
1988 874.43 791.22 968.56 22,203 29,284 2,065 1,193.70 216,792 179.74 22,936
1989 727.34 679.50 794.20 20,175 27,682 1,892 953.74 189,986 133.36 21,306
1990 695.02 626.64 767.78 17,011 22,494 1,941 907.08 165,304 165.60 20,906
1991 629.81 598.50 700.65 15,842 20,702 1,650 832.19 144,500 168.07 21,741
1992 580.33 557.38 606.74 13,640 18,487 1,450 829.35 124,320 155.45 20,518
1993 589.59 534.35 664.61 14,666 19,721 1,310 922.99 136,253 148.32 19,876
1994 613.54 590.38 632.87 14,923 19,282 1,281 897.03 144,840 190.75 19,137
1995 596.65 578.54 614.51 12,868 16,386 1,180 846.16 136,066 157.85 17,910
1996 585.38 554.49 626.03 13,354 17,144 1,376 788.79 151,306 146.50 17,778
1997 488.58 417.36 540.57 12,935 17,131 1,284 706.14 127,671 121.35 14,560
1998 427.10 397.06 454.79 11,541 15,189 1,227 735.95 127,534 108.42 11,802
1999 395.88 359.26 462.58 11,280 14,785 1,012 669.45 126,945 104.15 11,668
2000 383.73 362.68 429.91 12,796 16,406 968 713.67 120,511 103.99 11,712
2001 362.43 342.25 392.13 12,507 15,770 1,067 745.58 155,810 100.24 11,146
2002 407.59 365.57 459.74 13,245 16,474 1,268 786.43 199,248 115.42 12,289
2003 467.45 411.59 535.55 12,709 16,618 1,380 750.19 158,550 133.85 12,967
2004 512.76 469.94 569.19 12,749 17,148 1,452 729.94 150,573 145.06 13,604
2005 538.84 498.41 650.44 13,584 18,509 1,615 745.76 156,580 153.21 13,766
2006 709.15 616.33 851.53 17,831 24,947 2,304 989.42 216,371 199.59 17,903
2007 793.96 694.64 960.33 18,409 27,291 2,682 999.50 241,287 209.06 17,647
2008 958.98 783.61 1,112.17 20,865 30,119 2,926 1,194.43 319,257 226.40 21,361
2009 1,072.82 893.70 1,337.79 24,437 33,831 2,980 1,403.23 339,381 250.41 24,072
2010 1,329.28 1,148.51 1,542.56 31,925 38,003 3,540 1,469.46 357,836 301.44 25,808
2011 1,653.99 1,388.22 1,994.45 37,969 56,897 4,142 1,628.75 436,852 350.89 30,953
2012 1,720.86 1,587.87 1,847.45 42,579 57,106 4,412 1,691.00 494,183 354.31 35,057
2013 1,434.10 1,211.32 1,721.20 34,409 48,945 4,534 1,486.56 460,293 284.74 31,172
2014 1,266.40 1,142.00 1,385.00 30,638 37,202 4,298 1,402.94 440,561 250.82 28,278
* Prior to 1999 Deutsche Mark prices have been converted into euros at the official conversion rate
APPENDICES

102
 GFMS GOLD SURVEY 2015

APPENDIX 5 - GOLD PRICES IN 2005

London London High Low

AM fix PM fix PM fix PM fix rupees/
US$/oz US$/oz US$/oz US$/oz euro/kg CHF/kg yen/g A$/oz rand/kg £/oz 10g
Annual Average
444.99
444.45
11,521
17,839 1,577
583.36
91,114
244.95
6,455
Maximum
537.50
536.50
14,431
22,422
2,070
710.76
109,323
310.39
8,100
Minimum
411.50
411.10
10,301
15,943 1,385
531.09
80,518
220.58
5,950
Range:Average
28.3%
28.2%
35.8%
36.3%
43.4%
30.8%
31.6%
36.7%
33.3%

Monthly Average
Jan 424.08 424.03 427.75 420.00 10,413 16,111 1,409 554.16 81,686 225.98 6,152
Feb 423.43 423.35 435.45 411.10 10,457 16,218 1,429 541.99 81,797 224.34 6,101
Mar 434.35 434.32 443.70 425.15 10,569 16,374 1,468 552.35 84,048 227.66 6,270
Apr 429.14 429.23 437.00 423.45 10,665 16,499 1,480 555.22 84,902 226.39 6,147
May 422.90 421.87 429.15 414.45 10,690 16,518 1,446 551.00 86,053 227.61 6,030
Jun 430.30 430.66 440.55 415.35 11,390 17,533 1,505 561.52 93,382 236.91 6,131
Jul 424.75 424.48 432.60 418.35 11,340 17,669 1,528 564.06 91,523 242.44 6,060
Aug 437.77 437.93 447.25 430.65 11,450 17,784 1,557 574.87 91,008 244.07 6,258
Sep 455.94 456.05 473.25 439.60 11,976 18,561 1,630 595.78 93,289 252.36 6,533
Oct 470.11 469.90 475.50 462.85 12,568 19,458 1,735 623.53 99,476 266.40 6,874
Nov 476.67 476.67 496.00 456.50 13,010 20,103 1,816 648.36 101,938 274.98 7,131
Dec 509.42 510.10 536.50 489.00 13,829 21,396 1,947 684.77 104,298 293.06 7,588

Quarterly Average
Q1 427.40
427.35
10,481
16,237 1,436
549.55
82,536
226.02 6,174
Q2 427.57
427.39
10,926
16,866 1,478
556.08
88,229
230.45 6,101
Q3 439.71
439.72
11,593
18,010 1,572
578.45
91,947
246.35
6,285
Q4
484.88
484.20
13,099
20,262 1,827
650.56
101,787
277.36
7,209

GOLD PRICES IN 2005, PM FIX DAILY

US$/oz; other currencies reindexed to 2nd January

Oil price
at record Gold at 24-year
650 Swedish National Bank Chinese yuan high high
APPENDICES

revalued by 2.1%
announces 15t and a further
45t of sales under new CBGA Paris riots Yen
600 Dutch vote “no”
begin
to EU constitution US first time jobless
Syria announces plans
claims at 2-year high
to withdraw from
550 the Lebanon
French vote
“no” to EU
First Palestenian Rand
US$/oz

500 constitution Euro

election since 1996
US$/oz

450 Swedish National Bank

announces plans to sell 10t
A$ under year two of CBGA 2
Katrina
400 Bank of Korea to Terrorist strikes Bank of Portugal
diversify reserves attacks the US reveals 10t of sales
Iraqi election on London Gulf coast over past month
350
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: GFMS, Thomson Reuters

103
 GFMS GOLD SURVEY 2015

APPENDIX 6 - GOLD PRICES IN 2006

London London High Low

AM fix PM fix PM fix PM fix rupees/
US$/oz US$/oz US$/oz US$/oz euro/kg CHF/kg yen/g A$/oz rand/kg £/oz 10g
Annual Average
604.34
603.77
15,452
24,298
2,256
801.40
131,719
327.68 8,913
Maximum
725.75
725.00
18,094
28,036
2,575
936.27
153,245
383.54
10,665
Minimum
520.75
524.75
13,952
21,568
1,955
702.64
103,939
298.90
7,620
Range:Average
33.9%
33.2%
26.8%
26.6%
27.5%
29.1%
37.4%
25.8%
34.2%

Monthly Average
Jan 549.43 549.86 568.75 524.75 14,588 22,599 2,041 733.38 107,510 311.21 7,918
Feb 555.52 555.00 572.15 538.75 14,949 23,298 2,102 748.55 109,141 317.66 8,029
Mar 557.22 557.09 584.00 535.00 14,895 23,384 2,101 767.30 111,928 319.53 8,059
Apr 611.85 610.65 644.00 586.50 15,985 25,174 2,296 828.35 119,414 345.23 8,957
May 676.77 675.39 725.00 642.25 16,996 26,450 2,424 883.77 137,326 361.14 9,969
Jun 597.90 596.15 641.80 567.00 15,140 23,617 2,196 805.91 133,553 323.44 8,943
Jul 633.09 633.71 663.25 605.70 16,060 25,203 2,357 842.14 144,470 343.54 9,568
Aug 631.56 632.59 654.40 613.40 15,873 25,040 2,356 828.74 141,141 333.90 9,546
Sep 600.15 598.19 637.75 573.60 15,113 23,889 2,252 791.84 143,017 317.15 8,975
Oct 586.65 585.78 608.50 560.75 14,931 23,741 2,235 777.19 143,957 312.32 8,704
Nov 626.83 627.83 646.70 614.10 15,662 24,938 2,367 812.79 146,267 328.37 9,141
Dec 629.51 629.79 648.75 614.00 15,319 24,423 2,368 801.36 142,593 320.77 9,132

Quarterly Average
Q1 554.13
554.07
14,811
23,099
2,082
750.31
109,607
316.22
8,002
Q2 629.17
627.71
16,028
25,052
2,304
839.34
130,680
342.85
9,294
Q3 621.76
621.67
15,685
24,716
2,322
821.03
142,849
331.57 9,361
Q4 613.61
613.21
15,302
24,363
2,320
796.77
144,410
320.46
9,015

GOLD PRICES IN 2006, PM FIX DAILY

US$/oz; other currencies reindexed to 3rd January

800 Euro rises to 1.32

Iran removes UN Gold at against US dollar
APPENDICES

Banco de Portugal
seals at the Natanz 26-year reveals 20 tonnes sale
750 uranium plant Rand
Silver ETF high
starts trading
700
ECB announce 57-
Hamas wins Oil price at
tonne gold sale
650 Palestinian 17-month low Yen
US$/oz

elections
US$/oz
600 A$

550 Israel-Hezbollah Euro

Israel attacks conflict
500 Lebanon Chinese central bank
BT pension fund to invest N. Korea N. Korea conducts comments on
3% in commodities missile test first nuclear test reserve allocation
450
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: GFMS, Thomson Reuters

104
 GFMS GOLD SURVEY 2015

APPENDIX 7 - GOLD PRICES IN 2007

London London High Low

AM fix PM fix PM fix PM fix rupees/
US$/oz US$/oz US$/oz US$/oz euro/kg CHF/kg yen/g A$/oz rand/kg £/oz 10g
Annual Average
696.43
695.39
16,294
26,775
2,628
828.48
157,352
346.98
9,345
Maximum
841.75
841.10
18,410
30,503
3,049
950.89
184,202
418.36
10,715
Minimum
608.30
608.40
15,063
24,242
2,324
756.38
141,802
314.34
8,520
Range:Average 33.5% 33.5% 20.5% 23.4% 27.6% 23.5% 26.9% 30.0% 23.5%

Monthly Average
Jan 630.35 631.17 651.75 608.40 15,622 25,235 2,444 806.34 145,906 322.24 9,078
Feb 665.10 664.75 685.75 645.70 16,337 26,486 2,575 849.24 153,416 339.42 9,585
Mar 655.89 654.90 670.40 636.75 15,899 25,647 2,470 825.87 154,830 336.27 9,368
Apr 680.01 679.37 691.40 658.25 16,141 26,442 2,597 820.08 155,142 341.37 9,329
May 668.31 666.86 688.80 652.65 15,863 26,185 2,590 807.95 150,515 336.31 8,884
Jun 655.71 655.49 671.50 642.10 15,707 25,990 2,585 778.16 150,842 329.87 8,713
Jul 665.27 665.30 684.30 648.75 15,587 25,828 2,598 767.08 149,158 327.08 8,755
Aug 664.53 665.41 675.50 657.50 15,704 25,728 2,497 803.62 154,562 330.97 8,824
Sep 710.65 712.65 743.00 672.00 16,471 27,158 2,636 841.85 162,798 352.92 9,322
Oct 754.48 754.60 789.50 725.50 17,049 28,490 2,811 839.32 164,058 368.93 9,696
Nov 808.31 806.25 841.10 778.85 17,663 29,119 2,875 900.72 174,059 389.36 10,341
Dec 803.62 803.20 833.75 784.25 17,729 29,422 2,900 920.81 176,124 397.28 10,291

Quarterly Average
Q1 649.99
649.82
15,941
25,767
2,494
826.46
151,320
332.43 9,314
Q2 667.62
666.84
15,896
26,198
2,590
801.47
152,069
335.67
8,975
Q3 679.19
680.13
15,903
26,209
2,575
803.00
155,278
336.49
8,950
Q4 787.57
786.25
17,453
28,969
2,858
883.45
170,915
383.95
10,107

GOLD PRICES IN 2007, PM FIX DAILY

US$/oz; other currencies reindexed to 2nd January

900 Bear Stearns provides

Newcrest reveals Turkish troops
Cut in Fed $3.2bn in loans to
APPENDICES

2.3 Moz hedge cross into

Funds rate, bail out hedge fund US$/oz
Slump in book cut Iraq
basis points
SNB announces bond markets
800 Dollar weakens plan to sell 250t
News emerges of 50 Yen
on lower than over CBGA year
expected US prospective Iranian
trade report and US talks Rand
US$/oz

700 Euro
Benazir Bhutto
A$
assassinated
Euro
Turkish forces 25
600 Iran detains occupy Iraqi
UK personnel Novartis pension village 25
fund reveals 4%
Global stock Lihir buyback move into ECB injects €95bn Gold price at
markets fall revealed commodities to reassure markets 27-year high
500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: GFMS, Thomson Reuters

105
 GFMS GOLD SURVEY 2015

APPENDIX 8 - GOLD PRICES IN 2008

London London High Low

AM fix PM fix PM fix PM fix rupees/
US$/oz US$/oz US$/oz US$/oz euro/kg CHF/kg yen/g A$/oz rand/kg £/oz 10g
Annual Average
872.37
871.96
19,071
30,267
2,907 1,033
229,694
471.62
12,256
Maximum 1,023.50 1,011.25 21,390 33,263 3,313 1,374 276,780 607.45 14,105
Minimum 692.50 712.50 17,015 26,398 2,134 908 185,415 418.08 10,650
Range: Average
37.9%
34.3%
22.9%
22.7%
40.6%
45.1%
39.8%
40.2%
28.2%

Monthly Average
Jan 887.78 889.60 924.50 846.75 19,432 31,471 3,080 1,009.10 200,499 451.79 11,284
Feb 924.28 922.30 971.50 887.50 20,103 32,320 3,176 1,010.01 227,169 469.63 11,886
Mar 971.06 968.43 1,011.25 925.75 20,048 31,514 3,140 1,047.54 248,320 483.51 12,618
Apr 911.60 909.70 946.00 871.00 18,565 29,649 3,002 977.78 227,189 459.16 11,829
May 889.13 888.66 927.50 853.00 18,374 29,851 2,981 936.24 217,581 452.26 12,165
Jun 889.54 889.49 930.25 862.25 18,381 29,665 3,057 935.20 227,087 452.14 12,356
Jul 941.17 939.77 986.00 897.50 19,171 31,049 3,228 976.57 230,081 472.39 13,026
Aug 840.39 839.03 912.50 786.50 18,009 29,190 2,948 950.22 206,526 444.29 11,858
Sep 824.92 829.93 905.00 740.75 18,581 29,588 2,845 1,014.19 214,901 461.11 12,211
Oct 812.82 806.62 903.50 712.50 19,498 29,610 2,600 1,176.83 251,530 476.78 12,768
Nov 757.85 760.86 822.50 713.50 19,204 29,138 2,369 1,157.99 247,689 497.72 12,157
Dec 819.94 816.09 880.25 749.00 19,531 30,131 2,395 1,218.67 261,862 547.45 12,884

Quarterly Average
Q1 925.67
924.83
19,848
31,772 3,131
1,021.19
224,187
467.55
11,912
Q2 897.11
896.29
18,443
29,718
3,014
950.40
224,105
454.63
12,114
Q3 870.81
871.60
18,613
29,983 3,012
981.19
217,695
459.93
12,389
Q4 797.98
794.76
19,413
29,618
2,463
1,183.57
253,457
505.19
12,611

GOLD PRICES IN 2008, PM FIX DAILY

US$/oz; other currencies reindexed to 2nd January

Israeli/Gaza
Collapse Collapse of conflict
1300 Washington 50 begins
of Bear
APPENDICES

Stearns Dollar at record Mutual

South
1200 low against euro
African Bailout
power Rand of AIG
1100 crisis A$
1000
US$/oz 75
Euro
US$/oz

900

800
75
50 Oil price at Yen
700 record high 50
75
25 Collapse
600 Cut in Fed BT Pension Fund of Lehman Brothers US interest
Funds rate, Gold at invests £350m rates at
basis points record high into commodities historic low
500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: GFMS, Thomson Reuters

106
 GFMS GOLD SURVEY 2015

APPENDIX 9 - GOLD PRICES IN 2009

London London High Low

AM fix PM fix PM fix PM fix rupees/
US$/oz US$/oz US$/oz US$/oz euro/kg CHF/kg yen/g A$/oz rand/kg £/oz 10g
Annual Average 973.66 972.35 22,409 33,834 2,919 1,235.22 261,600 621.07 15,233
Maximum 1,218.25 1,212.50 25,857 38,963 3,442 1,543.63 324,690 729.97 18,220
Minimum 813.00 810.00 19,910 29,318 2,337 1,126.74 232,031 552.67 12,905
Range: Average 41.6% 41.4% 26.5% 28.5% 37.9% 33.8% 35.4% 28.5% 34.9%

Monthly Average
Jan 857.73 858.69 919.50 810.00 20,873 31,146 2,491 1,274.87 274,207 593.75 13,490
Feb 939.76 943.16 989.00 895.00 23,711 35,327 2,817 1,452.13 302,852 654.60 14,777
Mar 925.99 924.27 956.50 893.25 22,786 34,341 2,907 1,388.33 295,769 651.12 15,241
Apr 892.66 890.20 924.50 870.25 21,701 32,871 2,826 1,246.27 256,786 604.96 14,481
May 926.86 928.64 975.50 884.50 21,858 33,029 2,882 1,212.81 250,402 600.96 14,606
Jun 947.81 945.67 981.75 920.60 21,699 32,879 2,940 1,178.77 244,502 577.62 14,639
Jul 934.27 934.23 955.00 908.50 21,329 32,417 2,837 1,160.93 238,850 570.28 14,722
Aug 949.50 949.38 964.00 932.75 21,402 32,626 2,900 1,136.98 242,761 573.97 14,968
Sep 996.44 996.59 1,018.50 955.00 21,997 33,322 2,929 1,156.35 240,750 611.05 15,730
Oct 1,043.51 1,043.16 1,061.75 1,003.50 22,625 34,257 3,029 1,150.68 250,902 644.18 15,859
Nov 1,126.12 1,127.04 1,182.75 1,061.00 24,287 36,683 3,229 1,225.26 271,867 678.62 17,057
Dec 1,135.01 1,134.72 1,212.50 1,084.00 24,938 37,506 3,267 1,253.58 273,289 696.85 17,150

Quarterly Average
Q1 907.61 908.41 22,442 33,589 2,739.87 1,370.76 290,830 633.10 14,467
Q2 923.20 922.18 21,749 32,923 2,884.56 1,211.50 250,367 593.86 14,577
Q3 960.00 960.00 21,577 32,788 2,887.37 1,152.01 240,696 585.21 15,125
Q4 1,100.64 1,099.63 23,897 36,075 3,169.69 1,208.06 264,864 672.38 16,712

GOLD PRICES IN 2009, PM FIX DAILY

US$/oz; other currencies reindexed to 2nd January Suspension of

IMF approves gold Dubai World
sales of 403.3 tonnes debt repayment
1300 ECB cuts China reveals a
454-tonne increase India buys
APPENDICES

interest US consumer Germany, Japan

in its gold reserves 200 tonnes of
1200 rate by 50 and France Barrick announces
prices fall most gold from IMF
basis points exit recession the closure of all US$/oz
since 1955
1100 gold hedges
Yen Euro
1000
US$/oz

900 Rand

Record inflows A$
800 into ETFs FOMC
begins ‘debt
700 monetisation’
US unemployment
at 26-year high
600 New CBGA
announced
500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: GFMS, Thomson Reuters

107
 GFMS GOLD SURVEY 2015

APPENDIX 10 - GOLD PRICES IN 2010

London London High Low

AM fix PM fix PM fix PM fix rupees/
US$/oz US$/oz US$/oz US$/oz euro/kg CHF/kg yen/g A$/oz rand/kg £/oz 10g
Annual Average 1,226.66 1,224.52 29,739 40,947 3,443.66 1,331.28 287,568 790.98 18,304
Maximum 1,426.00 1,421.00 34,573 46,133 3,792.49 1,523.73 315,461 911.35 20,780
Minimum 1,052.25 1,058.00 24,668 36,291 3,040.31 1,197.71 258,374 668.89 16,055
Range: Average 30.5% 29.6% 33.3% 24.0% 21.8% 24.5% 19.9% 30.7% 25.8%

Monthly Average
Jan 1,119.58 1,117.96 1,153.00 1,078.50 25,185 37,150 3,276 1,223.52 267,977 691.54 16,704
Feb 1,095.80 1,095.41 1,119.00 1,058.00 25,747 37,735 3,176 1,236.24 270,322 701.11 16,531
Mar 1,115.55 1,113.34 1,136.50 1,090.75 26,376 38,152 3,248 1,220.21 265,304 739.05 16,604
Apr 1,148.48 1,148.69 1,179.25 1,123.50 27,532 39,468 3,452 1,239.14 271,686 748.31 16,682
May 1,204.32 1,205.43 1,237.50 1,165.00 30,982 43,926 3,566 1,388.40 297,049 824.96 18,084
Jun 1,232.38 1,232.92 1,261.00 1,203.50 32,447 44,630 3,599 1,445.96 303,046 836.15 18,732
Jul 1,196.00 1,192.97 1,234.00 1,157.00 29,990 40,384 3,356 1,362.26 289,175 779.94 18,287
Aug 1,213.46 1,215.81 1,246.00 1,187.50 30,294 40,631 3,338 1,351.46 285,102 776.53 18,493
Sep 1,271.46 1,270.98 1,307.50 1,240.50 31,214 40,890 3,448 1,353.89 290,863 816.11 19,087
Oct 1,343.19 1,342.02 1,373.25 1,313.50 31,040 41,777 3,527 1,366.99 298,077 846.21 19,481
Nov 1,371.78 1,369.89 1,421.00 1,337.50 32,278 43,371 3,635 1,384.60 307,132 858.71 20,134
Dec 1,393.51 1,390.55 1,420.00 1,363.00 33,827 43,370 3,732 1,403.69 305,888 890.93 20,508

Quarterly Average
Q1 1,110.56 1,109.12 25,798 37,701 3,234.21 1,226.35 267,746 711.92 16,615
Q2 1,196.13 1,196.74 30,369 42,718 3,540.10 1,359.75 290,794 800.55 17,826
Q3 1,227.18 1,226.75 30,503 40,635 3,381.48 1,355.94 288,431 791.08 18,605
Q4 1,369.53 1,366.78 32,333 42,831 3,628.36 1,384.49 303,684 863.91 20,044

GOLD PRICES IN 2010, PM FIX DAILY

US$/oz; other currencies reindexed to 2nd January

IMF announces sale of 10 tonnes
North Korea shells
Eurozone sovereign to the Central Bank of Bangladesh
1600 South Korea
debt crisis
APPENDICES

North Korea torpedoes Euro

1500 South Korean ship Anglogold Ashanti completes 95 tonne
buyback
US$/oz
1400
Greece asks for EU-IMF
financial rescue package
1300 A$ Rand
Earthquake
US$/oz

in Chile
1200

1100 Yen EU-IMF endorse Irish bailout

1000 FOMC announces

BIS announces it received 346 tonnes $600 billion QE2 package
of gold in ‘swap’ operations
900
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: GFMS, Thomson Reuters

108
 GFMS GOLD SURVEY 2015

APPENDIX 11 - GOLD PRICES IN 2011

London London High Low

AM fix PM fix PM fix PM fix rupees/
US$/oz US$/oz US$/oz US$/oz euro/kg CHF/kg yen/g A$/oz rand/kg £/oz 10g
Annual Average 1,573.16 1,571.52 36,355 44,634 4,017.36 1,524.33 368,623 981.23 23,899
Maximum 1,896.50 1,895.00 43,403 52,578 4,697.99 1,801.96 468,817 1,188.73 29,140
Minimum 1,316.00 1,319.00 31,041 39,930 3,488.92 1,313.79 296,075 822.83 19,660
Range:Average
36.9%
36.7%
34.0%
28.3%
30.1%
32.0%
46.9%
37.3%
39.7%

Monthly Average
Jan 1,360.48 1,356.40 1,388.50 1,319.00 32,639 41,769 3,606.50 1,363.50 302,589 858.51 20,218
Feb 1,371.31 1,372.73 1,411.50 1,328.00 32,328 41,892 3,645.73 1,361.18 316,975 850.73 20,333
Mar 1,422.85 1,424.01 1,447.00 1,400.50 32,676 42,041 3,740.14 1,408.63 315,893 881.20 20,811
Apr 1,474.43 1,473.81 1,535.50 1,418.00 32,845 42,603 3,952.21 1,396.16 319,014 902.39 21,484
May 1,512.19 1,510.44 1,541.00 1,478.50 33,947 42,468 3,940.13 1,417.05 333,859 925.50 22,148
Jun 1,528.38 1,528.66 1,552.50 1,498.00 34,160 41,279 3,954.84 1,441.56 333,895 943.63 22,330
Jul 1,568.53 1,572.81 1,628.50 1,483.00 35,422 41,527 4,009.88 1,459.74 343,419 972.55 22,634
Aug 1,759.50 1,755.81 1,877.50 1,623.00 39,434 44,009 4,344.52 1,673.33 400,230 1,070.91 25,980
Sep 1,780.65 1,771.85 1,895.00 1,598.00 41,384 49,680 4,375.60 1,730.72 429,747 1,122.95 27,481
Oct 1,667.89 1,665.21 1,741.00 1,617.00 39,022 47,972 4,103.12 1,641.11 425,959 1,055.86 26,617
Nov 1,735.98 1,738.98 1,795.00 1,681.00 41,245 50,773 4,333.29 1,721.75 455,619 1,100.54 28,526
Dec 1,652.73 1,652.31 1,752.00 1,531.00 40,292 49,536 4,134.39 1,633.17 435,424 1,060.24 28,096

Quarterly Average
Q1 1,386.69 1,386.27 32,552 41,907 3,666.58 1,378.77 311,950 864.32 19,660
Q2 1,506.80 1,506.13 33,687 42,073 3,949.05 1,419.40 329,343 924.27 20,745
Q3 1,704.96 1,702.12 38,798 45,126 4,246.92 1,623.75 391,866 1,057.86 21,585
Q4 1,686.85 1,688.01 40,199 49,444 4,195.36 1,667.85 439,449 1,073.26 25,915

GOLD PRICES IN 2011, PM FIX DAILY

US$/oz; other currencies reindexed to 4th January

2500
APPENDICES

IEA releases 600 million

Bond sales by Fed announces Italian P.M Berlusconi
barrels of stockpiled oil
Italy and Spain ‘Operation Twist’ resigns
2200
Rand
Political tension in
1900 MENA Greek government
passes austerity cuts US$/oz
US$/oz

A$
Portugal seeks EU bailout
Euro
1600
Yen

1300 Standard & Poor’s Libyan leader Gadaffi killed

downgrades US debt to ‘AA+’
Osama bin Laden killed North Korean leader
Earthquake strikes
north-east Japan Kim Jong-il dies
SNB announces a ceiling for CHF against the Euro
1000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: GFMS, Thomson Reuters

109
 GFMS GOLD SURVEY 2015

APPENDIX 12 - GOLD PRICES IN 2012

London London High Low

AM fix PM fix PM fix PM fix rupees/
US$/oz US$/oz US$/oz US$/oz euro/kg CHF/kg yen/g A$/oz rand/kg £/oz 10g
Annual Average 1,668.86 1,668.98 41,746 50,297 4,278.76 1,610.84 439,661 1,052.95 29,730
Maximum
1,790.00
1,791.75
44,579
53,903
4,796.72
1,752.28
506,902
1,129.33
32,640
Minimum
1,537.50
1,540.00
39,070
46,910
3,915.92
1,515.75
402,726
968.55
27,385
Range:Average 15.1% 15.1% 13.2% 13.9% 20.6% 14.7% 23.7% 15.3% 17.7%

Monthly Average
Jan 1,656.10 1,656.12 1,744.00 1,598.00 41,248 49,900 4,095.16 1,589.43 424,960 1,066.94 27,713
Feb 1,743.10 1,742.62 1,781.00 1,711.50 42,328 51,075 4,402.90 1,624.74 427,362 1,102.70 28,247
Mar 1,675.06 1,673.77 1,714.00 1,635.50 40,731 49,114 4,439.99 1,589.72 408,376 1,057.45 27,979
Apr 1,648.54 1,650.07 1,677.50 1,621.00 40,285 48,410 4,309.32 1,593.70 415,184 1,030.25 28,750
May 1,585.11 1,585.50 1,664.00 1,540.00 39,905 47,915 4,060.86 1,592.88 416,200 997.59 28,909
Jun 1,595.63 1,596.70 1,635.00 1,558.50 40,892 49,092 4,076.66 1,594.54 429,451 1,025.09 29,951
Jul 1,592.78 1,593.91 1,622.00 1,556.25 41,694 50,061 4,046.08 1,547.10 421,624 1,021.97 29,588
Aug 1,625.68 1,626.03 1,668.00 1,597.00 42,165 50,625 4,112.08 1,553.29 431,751 1,034.77 30,298
Sep 1,741.93 1,744.45 1,784.50 1,690.00 43,569 52,663 4,382.48 1,678.17 462,742 1,082.66 31,779
Oct 1,746.35 1,747.01 1,791.75 1,706.50 43,313 52,377 4,436.01 1,698.01 485,553 1,087.08 31,156
Nov 1,724.35 1,721.14 1,750.50 1,683.50 43,109 51,935 4,484.45 1,654.56 486,317 1,078.30 31,728
Dec 1,687.34 1,688.53 1,720.00 1,650.50 41,419 50,053 4,533.16 1,611.37 466,590 1,046.20 31,026

Quarterly Average
Q1
1,691.16
1,690.57
41,425
50,015
4,314.67
1,601.12
420,047
1,075.41
27,979
Q2 1,608.53 1,609.49 40,338 48,445 4,144.54 1,593.66 420,074 1,016.64 29,234
Q3 1,650.70 1,652.00 42,442 51,068 4,173.89 1,590.19 437,955 1,045.34 30,460
Q4
1,721.27
1,721.79
42,721
51,583
4,479.84
1,658.84
480,625
1,072.76
31,308

GOLD PRICES IN 2012, PM FIX DAILY

US$/oz; other currencies reindexed to 3rd January

2200
APPENDICES

Fed minutes lower Fed launches QE3 and anticipates low Greece bailout
Fed says interest hopes of QE3 interest rates through mid-2015 funds approved
rates to stay low Greek default S&P cuts Spain’s
until at least 2014 avoided FOMC minutes credit rating
Mario Draghi pledges Rand
1900 released, no sign of QE3 to do “whatever it takes”
Yen
Spain seeks to save euro
banking rescue
Euro
German court ratifies
US$/oz

1600 Eurozone permanent

US$/oz A$ rescue fund Fed announces
Standard & Poor’s Fed Chairman Bernanke QE4 package
downgrades 9 Eurozone fails to mention QE3 Moody’s changes Fed minutes prompt
nations, 14 put on Germany’s outlook increased hopes of QE3
1300 Francois Hollande to negative Barack Obama re-elected
negative outlook
elected as Fed extends as US President
ECB launches French President “Operation Twist” ECB announces “unlimited”
second round of LTRO until year-end bond-buying scheme
1000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: GFMS, Thomson Reuters

110
 GFMS GOLD SURVEY 2015

APPENDIX 13 - GOLD PRICES IN 2013

London London High Low

AM fix PM fix PM fix PM fix rupees/
US$/oz US$/oz US$/oz US$/oz euro/kg CHF/kg yen/g A$/oz rand/kg £/oz 10g
Annual Average 1,409.51
1,411.23
34,195
42,073
4,411.51
1,454.85
433,957
903.74
29,314
Maximum 1,692.50 1,693.75 40,810 50,752 5,052.10 1,623.04 489,792 1,069.66 33,590
Minimum 1,192.75 1,192.00 28,056 34,381 3,798.64 1,304.73 376,722 730.00 25,270
Range:Average 35.5% 35.6% 37.3% 38.9% 28.4% 21.9% 26.1% 37.6% 28.4%

Monthly Average
Jan 1,671.89 1,670.95 1,693.75 1,645.25 40,383 49,645 4,791.78 1,590.90 471,490 1,047.05 30,691
Feb 1,630.69 1,627.59 1,674.25 1,576.50 39,230 48,203 4,872.23 1,579.14 463,478 1,052.42 30,091
Mar 1,591.01 1,592.86 1,613.75 1,574.00 39,513 48,450 4,859.41 1,539.98 468,771 1,056.66 29,658
Apr 1,485.90 1,485.08 1,583.50 1,380.00 36,643 44,689 4,675.82 1,431.18 433,109 970.01 27,823
May 1,416.14 1,413.50 1,469.25 1,354.75 35,024 43,469 4,590.97 1,428.98 424,447 924.77 26,883
Jun 1,342.70 1,342.36 1,404.00 1,192.00 32,690 40,250 4,196.95 1,423.44 430,454 866.11 27,359
Jul 1,284.35 1,286.72 1,335.00 1,212.75 31,590 39,045 4,120.81 1,404.32 408,562 847.23 27,040
Aug 1,345.05 1,347.10 1,419.50 1,280.50 32,526 40,082 4,233.99 1,491.95 435,363 869.02 30,339
Sep 1,348.46 1,348.80 1,399.50 1,301.00 32,467 40,034 4,301.21 1,452.72 430,847 850.14 30,566
Oct 1,314.40 1,316.18 1,361.00 1,265.50 31,027 38,204 4,138.85 1,383.45 417,523 818.05 30,755
Nov 1,277.42 1,275.82 1,320.50 1,240.00 30,394 37,429 4,104.94 1,369.56 417,534 791.95 30,864
Dec 1,221.59 1,225.40 1,266.25 1,195.25 28,752 35,191 4,071.12 1,363.12 407,174 748.53 30,172

Quarterly Average
Q1 1,632.51 1,631.77 39,731 48,794 4,839.55 1,570.68 468,028 1,051.88 30,173
Q2 1,416.08 1,414.80 34,820 42,844 4,492.61 1,427.94 429,319 921.17 27,355
Q3 1,324.67 1,326.28 32,176 39,700 4,215.66 1,448.27 424,420 855.21 29,166
Q4 1,273.26 1,276.16 30,152 37,067 4,107.70 1,372.84 414,522 789.03 30,617

GOLD PRICES IN 2013, PM FIX DAILY

Indian government Q3 U.S. GDP climbed
US$/oz; other currencies reindexed to 2nd January Import duty in
Indian goverment raises raises import duty India raised to 10% 2.8% annualised
import tax on gold and to 8% vs. expected 2.0%
2000 EC suggests Imports to India get
platinum from 4% to 6%
APPENDICES

Cyprus sells linked to volume of exports US government shuts

Sequester triggers €400mn worth down temporarily US Fed reduces
US spending cuts US economy shows bond buying
of gold better-than-expected on budget impasse
1800 by $10 bn a month
housing data and
unemployment rate falls

1600
Rand
US$/oz

Yen
1400 Fed will keep interest rate
A$
near zero until unemployment
falls below 6.5% ECB cuts interest US$/oz
1200 President Obama signs rate to new low of
bill to avoid “fiscal cliff” 0.5% amid region’s
Fed announces it could
ongoing worries
start slowing asset US: added 203,000 new jobs,
purchases by end-2013 jobless rate fall to 7% Euro
1000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: GFMS, Thomson Reuters

111
 GFMS GOLD SURVEY 2015

APPENDIX 14 - GOLD PRICES IN 2014

London London High Low

AM fix PM fix PM fix PM fix rupees/
US$/oz US$/oz US$/oz US$/oz euro/kg CHF/kg yen/g A$/oz rand/kg £/oz 10g
Annual Average
1,266.06
1,266.40
30,638
37,202
4,298.13
1,402.94
440,562
768.22
28,283
Maximum
1,379.00
1,385.00
32,003
38,829
4,721.64
1,534.80
475,374
832.18
30,965
Minimum
1,144.50
1,142.00
28,811
35,391
4,085.57
1,323.91
409,113
714.91
25,585
Range:Average 18.5% 19.2% 10.4% 9.2% 14.8% 15.0% 15.0% 15.3% 19.0%

Monthly Average
Jan 1,243.07 1,244.80 1,267.00 1,221.00 29,396 36,163 4,153.75 1,406.38 434,373 755.95 29,732
Feb 1,298.71 1,300.98 1,339.00 1,250.25 30,599 37,358 4,270.87 1,450.07 456,714 785.32 30,411
Mar 1,336.56 1,336.08 1,385.00 1,291.75 31,070 37,820 4,396.04 1,471.67 460,280 804.17 30,034
Apr 1,299.18 1,299.00 1,325.75 1,283.75 30,242 36,864 4,280.31 1,394.47 438,937 775.90 29,356
May 1,288.91 1,287.53 1,306.25 1,250.50 30,152 36,797 4,214.08 1,383.49 429,199 764.67 28,914
Jun 1,277.86 1,279.10 1,318.50 1,242.75 30,239 36,820 4,196.54 1,365.19 438,950 756.12 27,552
Jul 1,312.99 1,310.97 1,340.25 1,285.25 31,135 37,828 4,288.21 1,396.58 449,197 767.83 28,167
Aug 1,297.01 1,295.99 1,313.75 1,275.25 31,283 37,898 4,287.68 1,392.57 443,821 775.91 28,302
Sep 1,241.33 1,238.82 1,286.50 1,213.50 30,888 37,296 4,275.35 1,369.60 437,270 759.82 27,097
Oct 1,223.57 1,222.49 1,250.25 1,164.25 30,993 37,432 4,244.32 1,392.98 434,539 760.55 27,082
Nov 1,176.41 1,176.30 1,203.75 1,142.00 30,320 36,449 4,402.47 1,362.10 419,382 745.92 26,192
Dec 1,200.44 1,202.29 1,229.00 1,175.75 31,342 37,676 4,610.03 1,456.71 443,896 768.58 26,767

Quarterly Average
Mar
1,291.90
1,293.06
30,336
37,095
4,271.69
1,442.01
450,101
731.34
30,042
Jun
1,288.47
1,288.39
30,211
36,827
4,229.76
1,380.79
435,749
765.41
28,587
Sep
1,283.82
1,281.94
31,097
37,670
4,283.70
1,386.21
443,506
767.61
27,830
Dec
1,201.24
1,201.40
30,883
37,190
4,407.41
1,402.55
432,517
758.29
26,680

GOLD PRICES IN 2014, PM FIX DAILY

US$/oz; other currencies reindexed to 2nd January

ECB cuts refinancing US November NFP
Additional taper rates to 0.05% rose by 321,000
1500 takes stimulus down CME cuts and overnight Indian festival
APPENDICES

to $55bn per month Gold short-covering rally gold futures deposits to -0.20% demand reaches
A further $10bn meets profit taking followed margins by 10% peak for the year
1400 taper is announced by heavy technical sales
Yen
US April NFP rose 304,000
Euro
1300
Rand
US$/oz

1200 President Yanukovych

A$
leaves Ukraine
US debt ceiling rises through to US$/oz
Argentina
March 2015, technical default averted
1100 India eases gold defaults on India’s gold import
ISIS occupies Fallujah; Russia threatens import rules Malaysian its debt Russian rouble weakens rule 80:20
Ukraine crisis adds military exercise commercial airliner 13% in a week to scheme abolished
to geopolitical risk. along Ukraine border crashes in Ukraine lowest on record
1000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: GFMS, Thomson Reuters

112
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