GFMS Gold Survey 2015

GFMS GOLD SURVEY 2015
2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content,
including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters.
Thomson Reuters and the Kinesis logo are trademarks of Thomson Reuters. S020029 03/15.
THOMSON REUTERS
www.valcambi.com
www.tanaka.co.jp
The cover of the GFMS Gold Survey 2015 is sponsored by the following companies:
TANAKA PRECIOUS METALS

Tanaka Precious Metals is Japans leading precious metals refiner and manufacturer. Although best known
internationally for its high specification industrial products, used in various applications ranging from semiconductors
to communications, the company is also a producer and trader of a wide range of gold bullion bars and coins. Tanaka
bars are acceptable good delivery on the London gold market.
Valcambi is a leader in precious metals refining and operates one of the worlds largest and most efficient integrated
precious metals plants situated on a 33 hectare site, at Balerna, Switzerland.
We are one of the worlds largest manufacturers of minted ingots. Reacting to the demands of investors in
different markets around the globe we are continuously carefully developing within the size range from 0.5 g to
1000 g, gold, silver, platinum and palladium minted bars in different forms and new designs. For our clients, according
to their wishes we customize individually obverse and reverse of the bars, certificates and tailored packaging solutions.
All products produced in our foundry and minting facilities are certified by our laboratory, carefully inspected by our
operators, individually packed and controlled before shipment. The Hallmark is not only a guarantee for quality of
Swiss workmanship, it guarantees also the fineness of the most sought after bars in the world, desired by precious
metals connoisseurs and investors alike.
A Valcambi manufactured bar is not only sold at an outstanding price but is synonymous with unique craftsmanship,
guaranteed fineness, transparency and reliability.
GFMS Gold
Gold Market
Market Research
Research
GFMS
and Forecasts
Forecasts
and
SEEK MORE
SEEK MORE
Dig deeper into the gold market with GFMS research

Dig
deeper
into on
theThomson
gold market
withEikon.
GFMSUse
research
and
forecasts
Reuters
the
and
forecasts
on Thomson
Eikon. Use the
the key
new
GFMS gold
pages to Reuters
quickly understand
new
GFMS
gold market
pages to
quickly understand
key
drivers
behind
movements.
See whichthe
factors
drivers
market movements.
See
which
drovebehind
price performance
in the past,
what
willfactors
drive
drove
price performance
in the past,
willand
drive
the evolution
of these markets
in thewhat
future,
what is
the
evolutioninside
of these
markets
in the
future,
and today.
what is
happening
various
sectors
of the
industry
happening inside various sectors of the industry today.
The cover of GFMS Gold Survey 2015 features the wide range of Tanaka and Valcambi minted and cast bars.
Differentpictures on a celluloid symbolise reasons why gold should be looked at as an investment.
Cover designed by Valcambi and executed by BtoB Creativity, Coldrerio, Switzerland.
GFMS gold pages include:

Historical supply and demand statistics
Historical
supply and demand statistics
Forecasts of supply, demand and price
Forecasts
of supply,
and price
Field research
reportsdemand
on key markets
Field
research
reports
on key markets
Exclusive
analyst
commentaries
giving expert
Exclusive
commentaries
giving expert
insight onanalyst
news and
market developments
insight on news and market developments
To find out more contact us on commoditiesenergy@thomsonreuters.com

ToFor
findmore
out more
contactvisit
us thomsonreuterseikon.com
on commoditiesenergy@thomsonreuters.com
information
For more information visit thomsonreuterseikon.com
2015 Thomson Reuters. S019825 03/15.

BY:
Rhona OConnell, 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
PUBLISHED APRIL 2015 BY THOMSON REUTERS

The Thomson Reuters Building, 30 South Colonnade
London, E14 5EP, UK
E-mail: gfms@thomsonreuters.com
Web: https://thomsonreuterseikon.com/markets/metal-trading/
THEGFMS
GFMSTEAM
TEAMAT
ATTHOMSON
THOMSONREUTERS
REUTERS GRATEFULLY
THE
THE
FOLLOWINGCOMPANIES
COMPANIESFOR
FORTHIS
THISYEARS
YEARS GFMS
THE
FOLLOWING
www.pamp.com
www.heraeus-precious-metals.com
Italpreziosi SPA
ACKNOWLEDGES
THEGENEROUS
GENEROUSSUPPORT
SUPPORTFROM
FROM
ACKNOWLEDGES THE
GOLD SURVEY
SURVEYAND
ANDITS
ITSQUARTERLY
QUARTERLYUPDATES
UPDATES
www.perthmint.com.au
www.valcambi.com
www.igr.com.tr
TABLE OF CONTENTS
1. Summary and Price Outlook

2. Investment

64
Indian Sub-Continent 64 East Asia & Oceania 65 Middle East 67

Europe 68 North America 70
7. Fabrication Demand

60
Overview 60 Sales 61 Purchases 62
6. Gold Bullion Trade

52
Overview 52 Scrap Supply 54
5. Official Sector

32
Mine Production 32 Production Costs 45 Producer Hedging 50
4. Supply from Above-Ground Stocks

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

Supply 10 Demand 11 Price and Market Outlook 14
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

Investment in Commodities
Gold Price Correlations
Production and Consumption-Weighted Gold Prices
Corporate Activity in 2014
E-Scrap Supply
Russia vs Ukraine
Swiss Gold Bullion Trade
Gold Leasing in China Inflates Imports and SGE Turnover
Consumption and per Capita Demand (Excluding Bank Activity)
9
18
19
24
44
59
63
69
78
82
THOMSON REUTERS 2015.

All content provided in this publication is owned by Thomson Reuters and/or its affiliates (the Thomson Reuters
Content) and protected by United States and international copyright laws. Thomson Reuters retains all proprietary
rights to the Thomson Reuters Content. The Thomson Reuters Content may not be reproduced, copied, manipulated,
transmitted, distributed or otherwise exploited for any commercial purpose without the express written consent of
Thomson Reuters. All rights are expressly reserved.
TRADEMARKS
Thomson Reuters and the Thomson Reuters logo are trademarks of Thomson Reuters and its affiliated companies.
The third party trademarks, service marks, trade names and logos featured in this publication are owned by the
relevant third parties or their affiliates. No use of such mark, names or logos is permitted without the express written
consent of the owner.
DISCLAIMER OF WARRANTIES AND NO RELIANCE
This publication is provided by Thomson Reuters on an as is and as available basis. Thomson Reuters makes no
representations or warranties of any kind, express or implied, as to the accuracy or completeness of the Thomson
Reuters Content. Thomson Reuters is an aggregator and provider of information for general information purposes
only and does not provide financial or other professional advice. Thomson Reuters is not responsible for any loss or
damage resulting from any decisions made in reliance on the Thomson Reuters Content, including decisions relating
to the sale and purchase of instruments, or risk management decisions.
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
October 2015
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.
SUMMARY AND PRICE OUTLOOK
1. SUMMARY AND PRICE OUTLOOK

After a turbulent 2013, last year saw the gold market
stabilise with most aspects of supply and demand
adjusting to lower prices. The end of the US Federal
Reserves quantitative easing programme and a change
in market focus to potential rate hikes and a stronger US
dollar remained the driving force behind gold prices.
Excluding impairment charges costs fell 2.3% to

$1,208/oz due to favourable exchange rate movements
and the ramping up of new lower cost mines. The
industry also saw the average head grade of processed
ore increase for the first time since our records began in
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
resourcebased economies undermining many currencies
against the dollar.
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.
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 1,125tonnes
in 2014, while output from the mining industry increased
2.3% in 2014 to 3,133 tonnes, as AllinCosts fell 25% to
$1,314/oz, owing primarily to lower impairment charges.
WORLD GOLD SUPPLY AND DEMAND
(tonnes)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Supply
Mine production
Scrap
2,561
2,496
2,499
2,429
2,612
2,742
2,846
2,875
3,061
3,133
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

Total Supply
3,372
3,195
3,072
3,424
4,106
4,349
18 -40 -39
4,539
4,513
4,310
103
4,362

Demand
Jewellery
2,722
2,302
2,426
2,308
1,819
2,033
2,034
2,008
Industrial Fabrication
449
480
...of which Electronics
294
325
...of which Dental & Medical
62
...of which Other Industrial
92
2,439
2,213
487
471
422
476
468
331
318
283
333
330
426
419
400
295
289
61
58
56
53
48
279
43
39
36
94
98
97
86
34
95
95
92
93
Net Official Sector -663 -365 -484 -235 -34
87
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
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
Physical Demand
Exchange Inventory Build
34
39
212
58
-35
-391
406
Gold Price (London PM, US$/oz) 444.45
603.77
695.39
871.96
Net Balance
29
32 -10
279 -880 -160
54 -6 -10 -98
106
-154
-78
246
1
363
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.
GOLD SURVEY 2015: SUPPLY-DEMAND

METHODOLOGY
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.
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
188times mine production. This ample liquidity (most of
the time) is why, like most currencies, gold usually trades
at full carry.
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.
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.
The existence of large volumes of OTC trade and

neartomarket 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.
ABOVE GROUND STOCKS (END 2014)

100000
90000
80000
70000
Tonnes
60000
50000
40000
30000
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
20000
10000
0
Jewellery
Central Bank
Holdings
Bars and Coins Other Fabrication

and Unaccounted
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-theCounter (OTC) market.
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.
SUPPLY IN 2014
Mine production increased for a sixth successive
year in 2014, rising by 2% to a record volume of

3,133tonnes.
All-in Costs fell by 25% to $1,314/oz last year, as
impairment charges fell back from heightened
levels in 2013. All-in Costs, excluding writedowns,
averaged $1,208/oz.
Producer hedging generated 103 tonnes of
accelerated supply in 2014, only the second year of
net producer hedging since 1999.
Global scrap supply retreated 13% in 2014 to a
seven-year low of 1,125 tonnes, chiefly as a result of a
weaker dollar gold price and an improved economic
environment.
Global mine production increased by 2% last year to

reach an all-time high of 3,133 tonnes. This marked the
sixth consecutive year of production growth, prolonged
by the legacy of investments made during years of
higher prices. Aside from China, where strong output
growth was broad-based, many of the headline increases
in many of the worlds largest producing countries
came from large projects that had either been recently
commissioned properties ramping up production, such as
at Detour Lake, Kibali, Oyu Tolgoi and Tropicana, or due
to significant expansions, such as at Kupol. In contrast,
some of the largest mine site losses came at more mature
operations, such as Barricks Cortez and Newmonts
Nevada Complex, both in the United States.
to greenfield exploration expenditure. Furthermore,

producers are focused on optimising portfolios and
implementing operational improvements at existing
mines in order to better cope with a gold price that lies
beneath the average All-in Cost of production, and far
below estimates of an incentive price required for the
exploration and development engine to restart in earnest.
As such, in terms of both volumes and profitability, the
mining industry remains in a precarious position.
Producer hedging activity switched to the supply side
of the market last year, with net hedging of 103 tonnes.
This was only the second such outcome since the 1990s.
The impetus behind this development was a move by two
producers, Polyus Gold International and Fresnillo plc,
both of which entered into new hedge positions to more
proactively manage cash flows associated with planned
investments. In addition to these two companies,
several producers responded to the US dollar rally by
opportunistically entering into modest domestic currency
denominated gold hedges (most notably A$ based). One
of the factors that has helped magnify the impact of this
moderate swing to net hedging has been the fact that the
producer hedge book has in recent years been run down
to exceptionally low levels. In the event that the hedge
book is expanded further in future years, an enlarged
delivery profile would necessitate progressively higher
volumes of gross hedging to bring about, for example,
100 additional tonnes of net hedging.
Despite these additions, global production growth

slowed in 2014 and we expect that 2015 will see
production growth halt. Behind this expectation, capital
investment in new project development remained
constrained during 2014, while there were also cuts
Global scrap supply declined by almost 13% last year to

an estimated 1,125 tonnes, broadly in line with the 10.3%
drop in the dollar gold price. The fall sent scrap supply
to a seven-year low; contributing just 26% of world
supply, compared to 42% during the peak in 2009. The
industrialised world recorded some of the greatest falls,
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
Scrap
1000
3000
2000
500
1500
1500
1000
1000
500
500
1000
0
0
2005
2007
10
2009
2011
2013
0
2005
2007
2009
2011
2013
Constant 2014 US$/oz
4000
1500
Tonnes
2000
Scrap
Mine Production
Tonnes
5000
Real Gold Price
Net Producer Hedging
Net Official Sector Sales
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
yearon-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 466tonnes,
which was the second highest annual total since
1964.
WORLD GOLD DEMAND
New Producer De-Hedging
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 worlds largest jewellery
manufacturer. Last years 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
Real Gold Price

2000
3000
Retail Investment*
2000
800
1000
Real Gold Price
2000
Identifiable Investment*
1600
2000
1200
1500
1000
800
1200
3000
1600
Jewellery
4000
Jewellery Fabrication
2500
Industrial Fabrication
Tonnes
5000
Tonnes
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.
JEWELLERY FABRICATION AND IDENTIFIABLE INVESTMENT
Net Official Sector Purchases
6000
Total physical demand slumped by 18% last year, to

the lowest level since 2010. The chief driver of last
years fall was the 9% decline in jewellery fabrication to
2,213tonnes. This was largely down to a hefty decline in
jewellery fabrication demand in China, which suffered a
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 years figure represented the
second highest level ever recorded in China.
500
400
2005
2007
2009
2011
* Retail Investment refers to physical bar and coin investment.
2013
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.
11
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.
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.
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
years 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
1,079tonnes. This was largely attributable to waning
investor appetite from key Asian markets, particularly
PHYSICAL SURPLUS / DEFICIT OF GOLD
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 years 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 Russias 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 WORLDS LARGEST GOLD CONSUMER
1200
Real Gold Price
1000
1500
2000
1250
800
200
1200
0
-200
800
-400
India
750
500
250
-600
-800
2005
2007
12
China
1000
Tonnes
400
1600
600
Tonnes
2009
2011
2013
400
2005
2007
2009
2011
2013
*Demand consists of jewellery fabrication, industrial fabrication
and retail investment
Trade Weighted Dollar
95
90
85
80
(11/02/14): US debt ceiling

raised through to March 2015,
technical default averted
(22/02/14): President
Yanukovych leaves Ukraine
(29/01/14): A further $10bn

taper is announced
Mar
(03/01/14): ISIS occupies

Fallujah, city near Baghdad.
Tension escalates in the region.
Ukraine crisis adds to geopolitical risk premium
Feb
Gold
DXY
105
Jan 14
100
(Inverted, 1 January 2014 =100)
75
Apr
May
Jun
Jul
13
Aug
14
9 (21/05/14): India eases gold

(19/03/14): Additional taper
takes stimulus down to $55bn
import rules
per month
(15/04/14): Gold short-covering 10 (18/06/14): Fed reduces further
bond purchases to $15bn of
rally meets profit taking
MBS and $20bn per month of
followed by heavy technical
long dated Treasuries
sales amid improving US
economic sentiment
11 (02/07/14): British MPs urge
watchdog to probe allega(25/04/14): Russia threatens
tions of price-rigging in gold
military exercise along Ukraine
border
12 (11/07/14): CME cuts gold
futures margins by 10%
(01/05/14): U.S April NFP rose
304,000
13 (17/07/14): Malaysian commercial airliner crashes in Ukraine.
Geopolitical tensions increase
10
11
12
Sep
Oct
17
18
(07/11/14): Russian rouble

weakens 13% in a week to
lowest on record
(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 refinancing rates to 0.05% and
overnight deposit to -0.20%
17 3rd and 4th week October:
Indian festival demand reaches
peak for the year
14
15
16
23
(05/12/14): November US NFP

registered at 321,000
(23/12/14): US Q3 GDP
grows at 5%
(02/01/2015): Weaker-thanexpected US manufacturing
data. Speculation on a delay of
a rate hike begins to build
21
22
23
(30/11/14): Swiss referendum

gets negative vote
20
Feb
26
Mar 15
27
(26/01/2015): Leftist leader

Alexis Tsipras wins Greek
parliamentary election
(15/01/2015): SNB abandons

cap on the franc
24
25
(06/02/2015): Stronger-thanexpected 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
26
25
24
Jan 15
(28/11/14): Indias gold import

rule 80:20 scheme abolished
Dec
19
21
22
19
Nov
18
20
1100
1150
1200
1250
1300
1350
1400
GOLD PRICE & TRADE-WEIGHTED DOLLAR (INVERTED) - DAILY
Gold London p.m. Fix, US$/oz
13
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
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
$600700/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 golds
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.
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.
Sustained falls below $1,000/oz are not our base

case scenario, however. The continued prevalence
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.
REAL AND NOMINAL GOLD PRICES
INDEX OF GOLD PRICE IN MAJOR CURRENCIES
2000
400
Real Price (Constant 2014)

Nominal Price
350
Index, 2nd January 2007= 100
1500
US$/oz
PRICE AND MARKET OUTLOOK
1000
500
Rupee
Euro
Dollar
300
Yen
250
200
150
100
0
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
14
50
Jan-07
Jan-09
Jan-11
Jan-13
Jan-15
2. INVESTMENT
Total Identifiable Investment, which includes physical bar
in the June-July period. Investor interest was fuelled by

golds appeal as a safe haven, in the wake of renewed
concerns about slowing global economic recovery and the
escalation of geopolitical tensions.
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
OVERVIEW
investment dropped by 8% to approximately $37 billion.
The muted year-on-year increase in the tonnage figure
Retail purchases of bars and coins posted a major slump

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.
The OTC market on balance saw modest net buying in
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 years 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 years result was achieved in spite of
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
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

Total Identifiable Investment
Indicative Value***
382
185
279
-880
-160
1,603
1,741
1,622
895
919
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.
15
INVESTMENT
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 worlds 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
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.
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 160tonnes last
year. This was due to a broad stabilisation in the first
quarter and less marked liquidation in the following
quarters.
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,
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 341tonnes 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 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.
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
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-
IDENTIFIABLE INVESTMENT
US DOLLAR INDEX
Coins*
2000
Real Gold Price
2000
Bars
120
500
0
1000
-500
110
Index
1500
1000
100
90
80
70
-1000
500
2005
2007
2009
2011
*Official coins and medals & imitation coins.
16
130
ETF Inventory Build
1500
Tonnes
INVESTMENT
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% yearon-year drop. Nonetheless it was the second year of ETF
redemptions, after ten years of increases.
2013
60
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14
Source: Thomson Reuters
S&P 500: GOLD RATIO
GOLD & US NONFARM PAYROLLS CORRELATION
Ratio
4
3
2
1
0
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14
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 midOctober, 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
0.6
0.4
0.2
0.0
-0.2
-0.4
-0.6
-0.8
Jan-05
Jan-07
Jan-09
Jan-11
Jan-13
Jan-15
the asset-purchase plan, before the markets attention

switched back to Feds 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
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
INVESTMENT
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 Feds 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.
24-Month Rolling Correlation
1.0
0.8
INVESTMENT IN COMMODITIES
(8%). Energy was the worst performing subsector, registering

a loss of 45% over the year. Within the precious metals
Last year was generally a dismal year where commodities price
complex, rhodium and palladium were the only commodities
performance was concerned. With the exception of rhodium
that registered gains in 2014, at 37% and 12% respectively. The
and palladium, many commodities, whether from the precious
remaining precious metals all posted losses, with silver posting
metals complex, base metals complex, energy or agriculture
the biggest loss at 21%. The gains in rhodium and palladium
ended the year with lower price levels. Of particular significance
were largely down to recovery in the global automobile sector,
were the double digit percentage declines in iron ore and crude
with the former gaining extra momentum from labour strikes
oil, both of which saw their asset prices halved over the course
in South Africa, further broadening the deficit in the rhodium
of the year.
market balance. Conversely, the losses in gold and silver

prices were primarily driven by expectations of monetary policy
The key drivers that shaped the commodities markets in
normalisation in the U.S., which resulted in the strengthening of
2014 can be largely summarised into three factors (1) U.S.
US dollar and decreased demand for safe haven assets.
risk. The dollar index gained 12% over 2014 on the back of
Using CFTC monthly Index Investment Data as a gauge of
a strengthening U.S. economy and the end of the tapering
investment activity in the commodities sector, notional values
programme by the Fed. This shifted the markets attention
in the U.S. commodities futures market have been trending
towards an expected interest rate hike in 2015. The dollar
downwards since 2012, with the decline gathering pace in 2014.
strength was made even more pronounced by weaker economies
From a record high of $242.6 bn in 2011, the notional value in
elsewhere, notably the Eurozone, Japan and emerging markets,
commodities futures had declined by 41% to $143.2 bn by the
resulting in further appreciation of the dollar against these
end of January 2015, the lowest level since 2009. This decline,
currencies.
however, is mainly explained by falling commodity prices as

open interest has largely held up against that in 2011.
Meanwhile, the market also saw further expansion of supply

in some commodities, notably in iron ore output and increased
That said, many hedge funds that were set up to ride the
oil and gas production in North America. Without concomitant
commodities super-cycle have also closed their doors as supply
growth in demand, this contributed to a supply glut in these
has caught up with the China-led demand shock that had
markets and subsequent price declines. The impact of the rise
characterised many markets since the mid-2000s. A closer
in the dollar, however, was mitigated somewhat in precious
look at CFTC Managed Money positions for each sector within
metals markets by a series of events last year that led to
commodities showed that the decline in net positions in energy
heightened geopolitical risks, namely the Ukrainian crisis and
and the agriculture sector were the main drivers behind the
the Northern Iraq offensive, which helped catalyse demand for
overall reduction in net positions last year. The positioning of
safe haven assets.
energy futures, which saw a sharp decline in the net position

much earlier than the oil price descent later in the year suggests
In terms of price performance, the precious metals complex was
that the oil price decline may have been partially driven by
right in the middle of the pack relative to other commodities
speculative shorting of the market in addition to its already
and asset classes, registering a gain of 3% in 2014. The dollar
unfavourable fundamentals.
index was the best performing asset (12%), followed by equities

CFTC INDEX INVESTMENT DATA (US$BN)
NET POSITIONS IN KEY COMMODITY FUTURES
CFTC Index Investment Data (US$bn)

300
120
3-month moving average
100
Livestock
Agriculture
Energy
80
US$
S bn
200
US$ bn
INVESTMENT
dollar strength (2) market surpluses and (3) geopolitical
100
60
Copper
Precious Metals
40
20
0
0
2011
Source: CTFC
18
2012
2013
2014
2015
-20
Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15
Source: CTFC
Looking ahead, our macroeconomic view

supports a stronger dollar on the back of
INDEXED PERFORMANCE ACROSS ASSETS IN 2014

Note: 2nd January 2014 = 100
the strengthening U.S. economy. This may
70
80
90
100 110
120 130 140 150
50
60
70
80
90
100 110
120 130 140 150
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

some support to producers margins by
60
Rhodium
be detrimental to the price performance of
crisis. A weaker oil price may provide
50
Nickel
MSCI International World Price Index (USD)
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
Platinum
With Chinas proclaimed new normal
Tin
of slower economic growth, demand for

commodities may wane, albeit a sharp
Thomson Reuters/Core Commodity CRB Index

Lead
spur some physical demand uptake. With
Soybean
the exception of India, other emerging
Silver
markets are mired in recession or slow

growth, as evident in Russia and Brazil.
INVESTMENT
correction in precious metals prices may
Copper
US 10 Year Benchmark
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.
GOLD PRICE CORRELATIONS
first half, the correlation was low when high oil prices were a
proxy for the USs economy strength due to its shale industry,
The table illustrates daily-log return correlations between gold
but the relationship increased when both fell in the second half.
and a number of asset classes. The correlation between gold

and silver during 2014 remained the strongest among other
The correlation between gold and the S&P 500 went into the
assets under scrutiny, which should not be too surprising, given
negative territory in 2014. The improving economic outlook for
the historical link between the two metals. The gold:silver
the US economy prompted investors to flee from safe-haven
relationship was particularly strong throughout the year.
assets towards more conventional, higher-yielding assets like
However, this relationship weakened somewhat in the third
equities, sending the S&P 500 to record high levels at year-end.
quarter, as concerns that Chinas slowing GDP growth could

hamper demand for industrial metals triggered massive selling
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.
2013
2013
2014
2014
2014
2014
Q3
Q4
Q1
Q2
Q3
Q4
Euro/US$ Rate 0.50
0.45
0.28
0.14
0.17
0.38
Quarterly
Silver
0.88 0.85 0.79 0.82 0.67 0.80
The dollar index rose over 12% in 2014, but gold only lost 1.8%,
Oil (WTI)
0.23
0.07
-0.17
0.20
0.31
0.34
suggesting that dollar strength was far from fully reflected in
S&P 500
0.10
0.03
-0.25
-0.17
-0.18
-0.11
lower dollar gold prices. That said, the dollar:euro correlation
rose notably in the fourth quarter. At that time, dollar strength
Annual
2009
2010
2011
2012
2013
2014
was clearly a contributory factor in dragging the dollar
Euro/US$ Rate 0.32
0.16
0.10
0.50
0.34
0.33
denominated gold price sharply lower.
Silver
The correlation between gold and oil prices continued to be

loose in 2014, and has reached the lowest since 2010. In the
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
S&P 500
0.03
0.21
-0.03
0.26
0.17
-0.16
19
INVESTMENT
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
1,079tonnes, 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 years 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.
It is worth emphasising, though, that last years 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.
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 dollars 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 160tonnes,

or 9% over the year, from 1,811 tonnes to 1,652tonnes.
Total ETF holdings in value terms at the end of the
year, at $64 bn, were $6 bn or 9% lower year-onyear, 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

(tonnes)
end-2013
end-2014
change
% share
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
Total
177.4 165.1 -12.3

1,811.2
1,651.6
-159.6
8%
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
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
2000
iShares Gold
2500
SPDR Gold Shares

Gold Price
ZKB
GBS (LSE listed)
1200
US$/oz
Tonnes
2000
1600
1500
800
1000
400
500
0
Jan-07
0
Jan-09
Jan-11
Jan-13
Jan-15
Source: GFMS, Thomson Reuters, collated from respective ETF issuers data
Gold Trust in May on the New York Stock Exchange,

while Chinas Bosera Asset Management Co. Limited
introduced Chinas 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 1.5tonnes, 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
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
the announcement by the ECB to initiate a $60 bn
QE program, to curb deflation and increasing market
volatility, bringing total ETF holdings to 1,717tonnes
by month end. Over February, ETF inflows continued,
albeit at a reduced level increasing by 22 tonnes, to
reach an end-month total of 1,739 tonnes. Firm global
equity markets and an ever increasing US dollar were
the core factors behind the reduction, where gold
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
March, to reach 1,708 tonnes, representing a 3% rise in
combined gold ETF levels since the end of 2014.
21
INVESTMENT
April with equity markets at all time highs, weakerthan-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.
NET INVESTOR LONG POSITIONS ON COMEX

(end-period)
2009
Futures contracts
2010
2011
2012
2013
2014
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
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

Trading volumes on major commodity exchanges,
with the exception of Chinese markets, posted
sizeable declines last year.
Following a rise in 2013, total volumes of gold futures

traded on COMEX decreased by 14% last year, to
41million contracts. This is equivalent to a nominal
126,024tonnes and to an average daily turnover of
502tonnes. Open interest, at 371,646 contracts by
end-December, was down by a modest 2%. The fall
in turnover in 2014 can, in part, be attributed to a
continuation of the weak investor interest that began
in the second half of 2013. Indeed the total volume fell
by 26% year on year to 19.4million contracts or just
over 60,321 tonnes. The first ten months were relatively
stable, with daily trading volume averaging 154,187
contracts. The signalling by the Fed of the closure of
stimulus led to a stronger dollar and a corresponding
fall in the gold price led interest to grow substantially
in November and December, with daily trade volumes
averaging 197,702 contracts and a total of 8.0 million
contracts, up 24% year on year. Investor activity in
COMEX options followed suit, with an 8% year-on-year
COMEX VOLUME & OPEN INTEREST
400
200
375
350
Mar
May
Jul
Sept
Nov
Jan-15
Mar
Net Positions (contracts, thousands)
400
200
1400
150
1300
100
1200
50
1100
0
Jan-14 Mar
Source: CFTC
1000
May
Jul
Sept
Nov
Jan-15 Mar
Comex Settlement Price (US$/oz)
425
Daily Open Interest (contracts, thousands)
450
600
22
By early October, a surge in the US dollar saw investors

rapidly liquidate long positions, by 74 tonnes, in turn
restoring their short positions to a level last seen in
December 2013. However, this did not last long, as
475
open Interest
0
Jan-14
CFTC reports on managed money can be used as a proxy

for investor activity on the exchange. The first half of
2014 was characterised by a significant contraction in
short positions of 139 tonnes, with the first quarter of the
year responsible for over two-thirds of the drop. Investors
instead were seen to favour long positions; by late June
an increase of 128 tonnes had been recorded, resulting
in a near 300% rise in net investor positions to reach
356tonnes. The renewed investor interest in the first half
of the year was triggered by fresh concerns over global
economic recovery, amid a series of disappointing US
economic data, financial turmoil in emerging markets
and an escalation of geopolitical tensions in Ukraine,
which saw gold prices rise to multi-month highs by
March. However, with more upbeat economic data in
the following months, together with growing speculation
that the ECB would announce policy easing at the June
meeting, safe haven assets were put under pressure.
MANAGED MONEY NET POSITIONS IN COMEX FUTURES
800
Daily Volume (contracts, thousands)
INVESTMENT
COMEX
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
the end-2013 level.
rallying prices fuelled short covering. Indeed, by the

time gold had risen above $1,200 in December, shorts
had liquidated to such an extent that the net long had
risen to its highest level since August. The first quarter
of 2015 saw an advance on the managed money net long
position, up to 522 tonnes in the last week of January,
back to levels last seen at the all time when gold was
over $1,750 oz in October 2012. Since then longs fell
back heavily, while shorts almost tripled from the end of
January to the middle of March. At end-January 2015 the
CME launched a new gold contract on COMEX, a Gold
Kilo futures, which is physically delivered in Hong Kong.
It is linked to the 9999 gold price in Hong Kong and
trades around the clock.
GOLD TRADED ON COMMODITY EXCHANGES

(total volume in nominal tonne equivalents)

2012
2013
2014
COMEX
Change
y-o-y
136,522
147,093
126,024
-14%
5,917
20,088
23,858
19%
11,895
12,225
8,745
-28%
2,113
3,347
4,724
41%
10,324
8,945
3,972
-56%
SGE Spot
950
2,003
2,560
28%
ICE Futures US
1,177
1,116
508
-54%
DGCX
497
426
426
-0.1%
Borsa Istanbul
312
438
239
-45%
na
na
78
na
SHFE
TOCOM
SGE Au(T+D)
MCX
SGE International Board*
*Trading commenced in mid-September 2014.

Source: Thomson Reuters, relevant exchanges
CHINESE EXCHANGES
SGE GOLD SPOT VOLUME & PRICE PREMIA
800
20
2
1
10
0
-1
-2
Jul
Jan-13
Jul
Jan-14
Jul
Jan-15
Note: Reported trading volume is bilateral. Data above is divided by two.
Daily Trading Volume (contracts, 000s)
700
300
Open Interest
250
600
500
200
400
150
300
200
100
Open interest (contracts, 000s)
4
Daily Price Premia (%)
Daily Trading Volume (contracts, 000s)
The premium/discount of the SGE price against the

London am fix, which can be seen as a proxy for supply
tightness in the Chinese market, fell sharply, starting
the year at $25/oz and dropping to a first quarter low of
5
Price Premia
Source: SGE
Chinas only legal source of VAT free gold and platinum,

the Shanghai Gold Exchange (SGE), saw trading
volumes of Au(T+D) futures post a 41% gain year-on-year
to 4,724tonnes in yet another year of significant growth
for the exchange first founded in 2005. Turning to the
physical spot contracts (AU9999 and Au9995); total
volume for the year recorded 2,560 tonnes, up by 28%
year on year or 10.5 tonnes per day. In terms of the total
volume traded on the exchange, the first nine months
of 2014 saw fairly stable volumes with a daily average of
9.3tonnes. Activity gradually picked up in the rest of the
year, with a daily average of 13.8 tonnes as a strong dollar
attracted investment demand in emerging markets.
SHFE VOLUME & OPEN INTEREST
30
0
Jan-12
emerging markets currencies. This encouraged investors

in those countries to invest in gold as a hedge against
falling currencies.
100
0
Jan-12
50
Jul
Jan-13
Jul
Jan-14
Jul
Jan-15
Source: SHFE
23
INVESTMENT
In recent years there has been greater investor

participation in gold futures trading outside the
traditional commodity exchanges, none more so than in
China. As illustrated in the earlier table, the Shanghai
Futures Exchange saw a significant 19% year-on-year
rise in trading volumes in 2014, to a nominal equivalent
of 23,858 tonnes. This, however, is largely a function of
the extended trading hours, rather than an indication
of strong investment activity. The introduction of the
after-hours trading session in July 2013 saw a dramatic
increase in trading volumes on the exchange. However,
a comparative analysis between the second half of 2014
and the second half of 2013 reveals that those volumes
have contracted by more than 20%. As can be seen in
the SHFE chart, activity surged at the very end of October,
much like the COMEX. Average daily trading volumes
were the equivalent of 149 tonnes in November and
December compared to 86 tonnes for the rest of the year
and up 53% year on year. This was the result of an FOMC
meeting that signalled the closure of quantitative easing,
causing the dollar index to spike and putting pressure on
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
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.
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
42,679contracts. Like other exchanges, turnover surged
at the start of November with the strengthening dollar,
with the daily average turnover reaching 67,789contracts
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.
TOCOM
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
10,885contracts 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.
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
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
PRODUCTION AND CONSUMPTION-WEIGHTED GOLD PRICES
The production and consumption-weighted gold price indices
200
Index, 2nd January 2009 = 100
INVESTMENT
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.
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
150
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
100
gold prices declined 0.6% in 2014. Consumption-weighted

Real Gold Price
Consumption Price
Production Price
50
Jan-09
12%. Production-intensive countries like Russia and China saw

higher local gold prices (adjusted for inflation) last year, mainly
Jan-10
Jan-11
24
prices fell 2.4% and production-weighted prices increased by
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.
In September 2014 NYSE Liffe contracts were migrated

to ICE Futures US. These contracts continued the long
decline of their predecessor, at a nominal 508tonnes,
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 minigold fell by a slightly lower rate, i.e. 54% year-on-year,
to 0.5 million contracts or a nominal 507 tonnes. Endyear open interest stood at 1,800 contracts, down sharply
by 57% on the end-year figure of 2012.
LBM
Number of
Transfers
LBM
Transfers**
Tonnes
Comex
Turnover
Tonnes
LBM/
Comex
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
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
239tonnes, 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
25kilobar 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
Daily Average Turnover (Tonnes)
600
300
400
200
200
100
Daily Average Value (Bln USD)
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
400
Daily Average Value of Transfers
0
2000 2002 2004 2006 2008
2010
2012
2014
Source: LBMA
25
INVESTMENT
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.
LONDON BULLION MARKET (LBM) AND COMEX TURNOVER*
OTC MARKET
Following the frenzy of 2013, overall activity in the
INVESTMENT
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).
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-onyear 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% yearon-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 years 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 210tonnes in 2014.
It is worth stressing that, despite the 15% drop, last years
figure was nevertheless high by historical standards.
NORTH AMERICA
Physical bar demand in North America fell to 28tonnes
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
Tonnes
400
India
300
200
100
0
Q1-10
Q1-11
Q1-12
Q1-13
Q1-14
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 110tonnes last
year, the lowest since 2005. Indias 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
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 secondhalf investment was down by 36% from the first half.
27
INVESTMENT
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 years
decline were golds 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% yearon-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.
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
1.5
3.2
4.4
4.0
0.9
4.9
14.0
8.5
11.6
10.0
Turkey

Other Countries
Total Europe
-30.6 -32.9 -40.3 5.6 -7.3 -10.2 28.4 35.3 37.5 36.5
-11.9
-1.2
4.8
207.4
231.5
227.5
336.5
247.4
247.6
209.8
North America

United States

Canada

Mexico

Total North America
12.4
4.9
-2.5
51.4
63.5
62.0
47.5
25.9
33.4
24.8
1.4 4.0 1.4 5.2 7.4 3.4 5.1 2.6 5.0 3.0
0.7 0.8 1.8 5.3 3.3 2.8 2.9 2.8 0.1 0.1
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
INVESTMENT
China
India
9.0
10.1
21.0
60.8
102.3
178.6
237.8
249.3
362.1
171.1
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
7.3
8.0
9.0
13.5
10.9
14.5
Saudi Arabia
22.1
43.1
18.1
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
1.6
1.3
1.4
0.6
3.0
2.7
7.0
7.9
South Korea
Other Countries
Total Asia
-0.3
-8.0
52.2 -34.4 -39.2 -23.1 -31.4 -27.3 -7.5 12.1 49.2 34.8
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

Egypt
0.9 0.6 0.7 0.4 0.7 1.2 0.7 0.8 15.2 9.9
Total Oceania & Other
World Total
0.8
1.0
2.9
4.4
10.2
15.5
14.8
17.6
16.2
1.6
1.4
1.7
3.3
5.1
11.3
16.2
15.6
32.8
26.1
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
CIS*
Indian Sub-Continent* 108.1 143.0 152.3 156.6
37.1 171.7 100.9 290.5 435.3 456.7 688.7 357.8
3.3 3.6 4.2 4.4 4.9 3.1 2.8 2.7 2.7 2.8
98.5 273.6 304.4 220.8 293.0 126.0
Source: GFMS, Thomson Reuters; *The key regional bullion markets
EAST ASIA
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
28
significantly weakened, since those found guilty of

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
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 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
70
Value of Bar Investment
60
50
Tonnes
40
30
500
20
10
0
2005
2007
2009
2011
2013
Value (US$, bn)
1000
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
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-onyear in 2014, as the market recovers from frenzied
physical buying that had largely characterised
demand in the previous year.
Total coin fabrication was visibly lower in 2014 compared

to 2013, totalling 173 tonnes a 37% year-on-year
decline. The decline in official coin fabrication was
especially pronounced in North America (-36%) and
Europe (-44%), two of the largest bullion coin fabricating
regions globally. While the steep decline in 2014 could
be partly explained by an anomalous year in 2013,
which was characterised by fervent bargain hunting on
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
INVESTMENT
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
19,000baht 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.
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.
OFFICIAL COINS (INCLUDING THE USE OF SCRAP)

(tonnes)
Turkey
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
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
reflected the general recovery from the global financial

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-onyear 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 yearon-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 worlds largest market for
bullion coins, declined by 36%, symptomatic of waning
interest for gold in light of higher yielding investment
alternatives elsewhere.
hedge for investors in these countries who experienced

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-byquarter 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 $1,694/oz in the previous year, there was
OFFICIAL BULLION COIN SALES
120
2000
Gold Price
30
100
80
1500
US$/oz
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%)
and decline by a mere 3% in Japan. While Europe saw
declines in demand in the same order of magnitude
in the first three quarters, demand surged towards
the final quarter. This is largely explained by foreign
exchange movements. While the dollar denominated
gold price had been trending downwards throughout the
year, euro and yen denominated gold prices held firm
over the same period. Gold served as a good inflation
Tonnes
INVESTMENT
60
40
1000
20
0
Q1-09
500
Q1-10
Q1-11
Q1-12
Q1-13
Q1-14
Source: GFMS Quarterly Bullion Coin Survey, Thomson Reuters
MEDALS AND IMITATION COINS (INCLUDING THE USE OF SCRAP)

(tonnes)
India
Other Countries
World Total
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
32.8 55.8 64.7 63.5 53.5 82.6 80.0 106.3 96.3 70.8
4.2
3.6
3.7
6.2
5.4
5.7
7.8
7.1
7.5
6.6
37.0
59.4
68.4
69.7
58.9
88.3
87.8
113.4
103.8
77.4
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.
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
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 916coin. The governments proposal to launch
Indias first official coin, Ashoka Chakra, should elicit a
consumer response; though it largely depends on the
denomination and the distribution network employed.
31
INVESTMENT
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 12tonnes 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.
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
Tritya and Dhanteras.
TOP 20 GOLD MINING COUNTRIES
3. MINE SUPPLY
Rank
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.
2014
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,

Peru and South Africa.
Production (t)

1 1 China
2013
2014
438.2 461.8
2 2 Australia
268.1 272.9
3 3 Russia
248.8 262.2
229.5
United States
5 5 Peru
6
Canada, the DRC and Mongolia saw the greatest
2013
South Africa
205.0
187.7 172.6
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
12 12 Uzbekistan
77.4 80.4
13 14 Argentina
50.1 59.8
Average Total Cash Costs fell by 3% in 2014 to $749/oz.
14 13 PNG
60.5 58.2
15 18 Kazakhstan
42.6 49.2
The main factor behind the drop in costs was favourable
16 16 Mali
48.2
17 17 Tanzania
46.6 45.8
18 15 Chile
48.6 44.2
exchange rate movements for many producers as a result

of the rally in the US dollar.
All-in Costs dropped by almost one-quarter, as the

frequency and magnitude of asset impairments both
reduced when compared with 2013. The drop in All-in
Costs, excluding impairments, was a less dramatic 3%, at
an average of $1,208/oz in 2014.
47.4
19 19 Colombia
41.2
43.1
20 20 Philippines
40.5
42.6
Rest of World
World Total
506.4
546.9
3,061.5
3,133.1
MINE PRODUCTION
hedge book last year, with two companies, Polyus and

Fresnillo, behind much of the activity.
At the margin, the strong dollar phenomenon also elicited

hedging activity as producers sought to hedge small
volumes in domestic currency terms to lock in improved
local gold prices.
INTRODUCTION
Last year reflected a period of strategy consolidation
for many producers, after the year of turmoil in 2013
which in many cases necessitated lifting reserve cut-off
grades, consequent heavy and widespread impairments,
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.
GLOBAL GOLD PRODUCTION
4000
3500
Australia
Russia
South America
Other
Other Africa
South Africa
North America
China
Other Asia
3000
2500
Tonnes
MINE SUPPLY
Producers collectively added 103 tonnes to the global
2000
1500
1000
500
0
2005
2007
2009
32
2011
2013
Mine production delivered a sixth consecutive year of

growth, increasing by just over 2% last year, to reach a
record volume of 3,133 tonnes. Much of 2014s growth
came from new operations that have been brought
online following investments made during the boom
years. Geographically these were diverse, with the key
beneficiaries of project-related growth having been
Canada, the Democratic Republic of the Congo (DRC),
and Mongolia. Russia saw a strong gain with production
up by 5%, with the majority of growth having come from
expansion of existing operations, as did China, which was
also up by 5% year-on-year, to represent the strongest
absolute growth in 2014. Heavy losses were few in
number, but included the United States, Peru and South
Africa.
MINE PRODUCTION WINNERS AND LOSERS, 2014 VERSUS 2013
-15 t
-10 t
-5 t
-0.5 t
+0.5 t
+5 t
+10 t
+15 t
GLOBAL PROCESSED GOLD GRADE VS PRICE

Ch5 Scrap Share of Total Supply
Gold Price
Processed Ore Grade
2000
1.8
1500
1.6
1000
1.4
500
1.2
2005
2009
2013
Annual Average US$/oz
Processed Ore Grade (g/t)
2.0
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.
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
producers to process higher grades ore, where feasible,
as reflected by the inflection point in 2013, charted below
left.
Looking at All-in Costs, a proprietary GFMS metric
developed to reflect the long term cost of mining, costs
were reined in more dramatically, as asset impairments,
although still a relatively common occurrence in 2014,
came in substantially lower year-on-year. To this end,
All-in Costs for 2014 totalled $1,314/oz, a 25% year-onyear reduction. Stripping out the effects of impairments,
33
MINE SUPPLY
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-onyear, were all projects that had seen substantial capital
investment before the gold price receded. Specifically,
these were the Kibali, Oyu Tolgoi, Tropicana, and Akyem
MINE SUPPLY
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
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
3,237tonnes; 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 regions
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
Tonnes
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.
200
150
100
50
0
2005
2007
2009
2011
2013
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
Africas 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.
OTHER AFRICAN MINE PRODUCTION

450
400
Tanzania
Other
Mali
Congo (DRC)
Ghana
Burkina Faso
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 Cte dIvoire
respectively, contributed an additional 15 tonnes.
Production in Cte dIvoire 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-onyear 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.
After a decade of strong growth, Ghanaian output was
relatively flat, rising by just one percent to 108tonnes.
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 14tonnes. 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.
350
Tonnes
300
250
200
150
100
50
0
2005
2007
2009
2011
2013
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
MINE SUPPLY
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
11thDecember. 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 countrys
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.
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-onyear. 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.
WORLD GOLD MINE PRODUCTION

(tonnes)
Europe

Russia
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
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
North America

United States
195.5
197.6
193.4
213.6
235.9
237.5
258.3
282.3
307.5
262.3
251.8
238.0
233.6
221.4
229.7
233.3
232.3
229.5
318.7
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
Total North America
South America

39.0
43.7
50.8
62.4
79.4
88.6
102.8
119.8
412.5
394.3
383.9
379.4
379.9
412.5
429.7
443.1
482.6
118.2
477.0
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
MINE SUPPLY

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

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

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
16.9
5.2
16.1
7.7
17.9
8.0
20.8
9.0
22.9
9.4
24.6
12.1
26.5
6.6
27.0
6.5
26.6
6.3

Panama
0.1 0.1 0.1 0.1 0.9 1.8 2.1 2.3 1.3 1.9

Other
6.8 8.0 8.1 6.4 6.0 5.6 5.7 5.9 6.0 5.7
Total South America
Asia

China
Indonesia
439.6
468.1
446.9
454.2
483.0
496.6
515.2
508.4
546.6
549.8
229.8 247.2 280.5 292.0 324.0 350.9 371.0 413.1 438.2 461.8
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

Other

Total Asia
36
1.5
1.2
1.1
0.8
3.6
3.2
3.5
2.0
2.5
4.8 4.3 4.3 4.3 5.0 6.7 6.4 6.2 6.2 7.5
615.3
573.2
638.9
593.7
693.5
719.5
721.4
739.2
801.0
855.8
WORLD GOLD MINE PRODUCTION

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

177.3
177.0
163.8
Ghana
South Africa
315.1
62.8
295.7
69.9
269.9
77.3
233.8
80.4
219.8
90.3
202.9
92.4
202.0
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
40.1
35.6
45.8
49.3
44.8
40.9
44.6
49.6
49.1
46.6
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
5.6
3.6
10.1
22.5
27.9
20.1
20.5
Sudan
3.1
2.7
4.0

Zimbabwe
19.5 17.2 13.5 8.9 9.8 16.3 19.0 19.5 19.6 19.9
Guinea
14.3

Ivory Coast
16.6
18.0
23.9
22.5
20.4
19.7
18.4
19.0
21.0
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

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

Other

Total Africa
0.6
1.9
6.8
8.4
9.1
8.7
8.2
10.0
10.1
0.5 0.5 0.5 0.5 0.5 0.5 12.8 10.2 3.4 1.3
20.6 18.3 19.8 21.4 18.6 20.7 20.3 20.4 19.4 18.3
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

Total Oceania & Other
World Total
2.5 2.7 1.8 1.7 0.9 0.0 0.1 0.1 0.0 0.0
349.1
323.4
321.8
301.8
309.7
346.4
337.1
322.8
344.3
343.8
2561.5
2496.4
2498.5
2428.9
2611.8
2742.4
2845.9
2875.4
3061.5
3133.1
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
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, Barricks Cortez and Newmonts 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
MINE SUPPLY
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.
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.
change at the mine level came from Peasquito, 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 Phase4 mine
plan.
Providing a meaningful offset to the losses in the United
States and Mexico, Canadian output grew by 15%, or
21tonnes, to total 154tonnes. 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.
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
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 Concheo which combined
contributed an extra four tonnes. The most significant
NORTH AMERICAN MINE PRODUCTION
300
United States
Canada
Mexico
250
200
Tonnes
MINE SUPPLY
SOUTH AMERICA
150
100
50
0
2005
2007
2009
38
2011
2013
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
where output fell by under half a tonne.
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.
Elsewhere in the region, production fell significantly.

The largest decline came from Peru, the regions 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.
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 Venezuelas latest currency reforms,
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 life, La Coipa was responsible for a four tonne drop
in output. Lower grades at two of the largest operations
in the country, El Pen 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.
MAJOR SOUTH AMERICAN PRODUCTION
REST OF SOUTH AMERICAN PRODUCTION
500
400
Argentina
Colombia
Brazil
Chile
Dominican Republic
140
120
Peru
Ecuador
Guatemala
Suriname
Guyana
Other
Venezuela
100
Tonnes
Tonnes
300
200
80
60
40
100
2005
2007
2009
20
2011
2013
2005
2007
2009
2011
2013
39
MINE SUPPLY
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.
President Maduros 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.
ASIA
With an increase of almost 24 tonnes or 5%, Chinas 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 countrys 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% yearon-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.
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
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
MINE SUPPLY
Zhaojin Mining Industry Co Ltd., one of Chinas 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.
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 companys 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 Internationals
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, Zijins 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 by9%, or
31tonnes. 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
13tonne 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 regions 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 countys 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.
Kazakhstan also saw an increase of seven tonnes, or

16%, leaving output at 49tonnes in total. Much of the
increase we ascribe to the activities of stateheld miner
TauKen 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
coppergold 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 yearon-year, due to a 30% reduction in grade at Artemyevsky
as mining transitioned to lower grade areas. Glencores
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.
INDONESIAN MINE PRODUCTION
OTHER ASIAN MINE PRODUCTION
50
Grasberg's Share of
Total Production (%)
64
350
300
58
54
42
150
38
100
Uzbekistan
Other
Mongolia
Kazakhstan
Philippines
Kyrgystan
250
38
50
Tonnes
Other
Grasberg
32
30
Tonnes
200
29
200
150
100
50
50
0
2005
2007
2009
2011
Source: GFMS, Thomson Reuters, Freeport McMoran
2013
2005
2007
2009
2011
2013
41
MINE SUPPLY
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.
Uzbek output is estimated to have risen once again, by

three tonnes, or4%, as a result of continuing investment
in improving operational efficiencies and prolonging the
lifeofmine at the large, staterun Muruntau complex,
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 Uzbekistans ore processing
capacity. One such processing circuit for refractory ores
at Mardjanbulak was commissioned late in 2013.
Production in the Philippines grew by two tonnes, due to

gains of one tonne at both Didipio and CoO. 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 Maaden;
its As Suq mine achieved commercial production in July.
Only six of the regions 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.
European output grew for a seventh consecutive year,

albeit slower than in 2013, rising by 11tonnes, or4%.
Whilst this was the second largest increase globally,
it was nevertheless only one fifth as strong as the rise
seen in Asia. The regions largest producer, Russia, was
responsible for nearly all of this growth. Output in Russia
rose by 13tonnes, or 5% year-on-year, cementing the
countrys place as the worlds third largest producer.
Some losses were seen, with output at Petropavlovsks

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 Russias 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.
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
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.
RUSSIAN, TURKISH AND OTHER EUROPEAN MINE PRODUCTION
OTHER EUROPEAN MINE PRODUCTION
350
300
30
Other
Turkey
25
Russia
250
150
42
Bulgaria
Other
15
50
2005
2007
2009
Spain
Finland
10
100
Sweden
20
200
Tonnes
Tonnes
MINE SUPPLY
EUROPE
increase of three tonnes in its first full year of output.

AtAlbyn 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 Russias base metal
mining industry also rose year-on-year, by two tonnes.
2011
2013
2005
2007
2009
2011
2013
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 pler, 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.
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 onetonne.
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.
OCEANIA & OTHER
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
300
250
Tonnes
200
150
100
50
2005
2007
2009
Source: GFMS, Thomson Reuters; BREE
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
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
AUSTRALIAN MINE PRODUCTION
Production in Papua New Guinea fell by 4% to a total

of 58 tonnes. At Lihir, the countrys 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.
(tonnes)

Mine name
Production Change
Country
2013 2014
yoy
1 Kibali
DRC
2.8 16.4 13.6
Mongolia
4.9
3 Tropicana
Australia
2.9 15.9 13.0
4 Akyem
Ghana
Pueblo Viejo
Dominican Rep.
Detour Lake
Canada
Oyu Tolgoi
7 Peasquito
Mexico
Mount Milligan
Canada
Cerro Negro
Argentina
10 Agbaou
2011
2013
Cte d'Ivoire
18.3
13.4
4.0 14.7 10.7

25.3
34.2
8.9
7.2
14.2
7.0
10.6 16.8 6.2

0.6
5.5
4.7
4.9
4.7
0.2
4.6
4.4
Source: Company Reports
43
MINE SUPPLY
Output in Oceania was steady at 344 tonnes. Gains in

Australia were offset by losses in the smaller producing
countries. In Australia, the regions largest gold
producer, output increased by five tonnes to 273tonnes.
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 17tonnes. Of this,
the majority can be attributed singularly to Tropicana,
which saw an increase of 13tonnes year-on-year, having
achieved first production during September 2013.
CORPORATE ACTIVITY IN 2014
2014 TOP 10 GOLD PRODUCERS
Over the last year, corporate activity in the gold mining sector
Rank
2014 2013
Output (t)

2013
2014
continued along a downward trajectory. The aggregate value
Barrick Gold
of completed deals reported during 2014 was US$7.3billion,
Newmont Mining
157.5
150.7
approximately 9% lower than in 2013 according to data from
AngloGold Ashanti
127.7
138.0
ThomsonOne Investment Banking.
4 4 Goldcorp
222.9
194.4
82.9 89.3
Kinross Gold
77.7 82.2
On the M&A front, major gold miners generally refrained
Newcrest Mining
73.5
from engaging in aggressive takeovers. Priorities tended
Navoi MMC 1
70.5 73.0
towards rationalising existing portfolios and strengthening
Gold Fields 1
58.1 63.6
balance sheets by reducing debt levels. As the sentiment in
Polyus Gold
51.3
52.8
10
10
Sibanye Gold
44.5
49.4
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
72.4
Estimate
Source: Company Reports; GFMS, Thomson Reuters
producer, jointly by Yamana Gold and Agnico-Eagle Mines

for US$3.7billion. The duo out-bid Goldcorps US$3.6billion
Coeur Mining, the largest US silver producer, announced plans
hostile offer through a white knight takeover. Yamana Gold
to acquire Paramount Gold and Silver Corp in an all-stock
and Agnico-Eagle Mines now jointly operate Canadian Malartic,
agreement valued at US$146million. The merger would expand
one of Canadas largest gold mines. In April 2014, talks of
Coeurs mining presence in Mexico, and potentially create
a potential merger between Barrick and Newmont, the two
opportunities for synergies between its Palmarejo silver-gold
largest gold producers in the world, fell through for the third
mine complex and Paramounts adjacent San Miguel project.
time in seven years. Some commentators suggested this deal
The transaction remains pending at the time of writing.
could have provided both companies with operational synergies

to reduce costs, most notably in Nevada where Barrick and
As the appetite for M&A among shareholders remained in the
Newmont both manage a substantial portfolio of operations.
doldrums, divestment continued to be a strategic move for many

Goldcorp and Kinross Gold, which took the opportunity to divest
stance in expanding their portfolios in different regions across
either mature or non-core operations over 2014. Barricks
the globe. B2Gold and Papillon Resources merged in a deal
Plutonic and Kanowna mines were acquired by Northern
valued at US$570million; a merger focused on the development
Star Resources in an all-cash transaction for A$100million.
of the high grade Fekola project in Mali and the optimisation of
Newmonts Jundee operation was also acquired by Northern
B2Golds four operating mines. Agnico-Eagle also expanded
Star for US$91million. In early 2014, Goldcorp and Barrick
its operations in Mexico, acquiring Cayden Resources and its
sold the Marigold joint venture in Nevada to Silver Standard
exploration-stage El Barqueo property for C$205million.
Resources for US$275million in cash. Newmont disposed of its
According to Agnico-Eagle, El Barqueo bears several technical
44% stake in the Penmont Joint Venture, which was acquired by
similarities to its Pinos Altos during the early stages.
the majority owner, Fresnillo plc, for $450million in cash.
GOLD M&A PLUS INITIAL PUBLIC OFFERINGS
GOLD EQUITY INDICES AND PRICE
50
30
40
20
20
10
2005
2007
2009
44
60
2011
2013
Index (2nd January 2013 = 100)
40
150
80
Number of deals
Aggregate deal value ($Bn)
MINE SUPPLY
Tier 1 gold producers. Among them were Barrick, Newmont,

This year saw smaller mining companies take a more ambitious
S&P 500
100
Philadelphia
Gold & Silver
Exchange Index
50
0
Jan-13
Jul-13
Jan-14
Gold
Jul-14
Jan-15
PRODUCTION COSTS
PRODUCTION COST REPORTING
Average Global Total Cash Costs decreased by 3% in
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 coproduct 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.
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
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 mines 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.
3%, in 2014.
MINE SUPPLY
3000
3000
2500
2500
2000
2000
1500
2013 Average Gold Price ($1,411.23/oz)
1500
US$/oz
US$/oz
WORLD TOTAL CASH AND ALL IN COST CURVES
2014 Average Gold Price ($1,266.40/oz)

1000
1000
2014 All-in Cost
2013 All-in Cost
500
500
2014 Total Cash Cost

2013 Total Cash Cost
0
0
10
0
20
30
40
50
60
Cumulative Production %
70
80
90
100
45
GOLD PRODUCERS CURRENCIES AGAINST THE US$

240
130
220
200
RUB
180
160
140
ZAR
120
BRL
100
80
Jan-13
Jul-13
Jan-13
Jul-14
110
CAD
100
MXN
90
80
Jan-13
Jul-13
Jan-15
YEAR-ON-YEAR COST CHANGES

In 2014, the global average Total Cash Cost, which
includes mine site cash costs and realisation costs, net
of by-product credits, plus royalties, decreased by 3%,
to $749/oz. In order to better understand this yearon-year change, the main drivers of changes in$/oz
mine production costs can be isolated and estimates
quantified, in the form of a year-on-year variance
analysis. This is undertaken by utilising the detailed
mine-by-mine analysis in Thomson Reuters Gold Mine
Economics database.
The outcome of this exercise suggests that the reduction
in annual production costs observed in 2014 cannot
be considered an unqualified success story. Although
producers have undertaken a range of initiatives aimed
at reducing costs, with some evidence of success, our
analysis indicates that many gold miners have favourable
foreign exchange movements to thank for their improved
production costs expressed on a US$/oz basis. The effect
of weakening local currencies in many of the major gold
mining countries sharply moderated upward pressure
from other cost drivers, particularly labour and power
costs.
Jan-14
Jul-14
In GFMS Gold Survey 2014, we reported that the average

grade of ore processed had stabilised in 2013, following
a multi-year decreasing trend. In 2014, this downward
trend reversed, with the average grade of ore processed
increasing by 2%. Although modest in magnitude, this
move to processing higher grade ore meant that the
combined change in processed grade and volume lent
downward pressure to Total Cash Costs in 2014, by an
860
770
700
2013
46
-8
-17
-70
FX
Fuel
-7
Recovery
Royalties
-2
Grade & Volume
740
Miscellaneous
+66
+1
Power
Labour
780
By-Product Credits
+3
+12
820
Jan-15
The first step in the variance analysis process is to

quantify these effects of the changes in exchange rates,
by calculating the extent to which mine site production
costs would have changed from one year to the next in
dollar terms, were exchange rates the only driving factor.
Given the weakening of local currencies experienced in
a number of the major gold mining jurisdictions, it is
perhaps unsurprising that the exchange rate effect on
global Total Cash Costs was significant, reducing costs
by an estimated $70/oz in 2014. South Africa, Russia,
Australia, Canada, Peru, Ghana and Mexico, all major
gold producers, saw their currencies depreciate against
the dollar in 2014. The Australian dollar fell by 7% during
the period, while in Russia, political events contributed
towards a particularly marked fall in the rouble during
the second half of 2014.
TOTAL CASH COST VARIANCE, 2014 VERSUS 2013
US$/oz
MINE SUPPLY
AUD
120
749
2014
estimated $17/oz. This outcome is the consequence of

some producers amending mine plans to bring highergrade 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.
In general, royalty payments are linked to the gold

price, which saw a year-on-year decrease of $145/oz, or
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-onyear, 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
Peasquito 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
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.
2014 GLOBAL AVERAGE ALL IN COST BREAKDOWN

$/oz Au
Mining
Mining
Ore Processing
Ore Processing
General & Administration
258
123
General & Admin
Mine Site Cash Cost
712
Smelting and Refining

By-Product Credits
Royalties
15
-20
41
Total Cash Cost
749
Depreciation/Amortisation, Inventory Change
234
Total Production Cost
983
Corporate Administration, Interest

Extraordinary Costs
107
106
Smelting & Refining

Royalties
Depreciation/Amortisation
& Inventory Changes
Corporate Admin
& Interest
Extraordinary Costs
Sustaining Capex
By-Product
Credits
(-$20/oz)
Sustaining Capital Expenditure

All in Cost
331
118
1,314
47
MINE SUPPLY
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 dollardenominated 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.
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 Peasquito.
2014 ALL-IN COST CURVE

3000
3000
Sustaining Capex, Indirect costs, Corporate Overheads & Extraordinary Costs

Depreciation & Amortisation
2500
Total Cash Costs
2000
2000
1500
1500
1000
1000
500
500
US$/oz
US$/oz
2500
0
0
10
20
30
40
50
60
Cumulative Production (%)
70
80
90
100

*The top 5% of mines in the cost curve have All-in Costs greater than $3,000/oz; the chart has been truncated accordingly.
MINE SUPPLY
GOLD MINE PROFITABILITY: KEY ISSUES

The All-in Cost parameter developed by the GFMS team
at Thomson Reuters is intended to represent the stayin-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 writedowns), plus sustaining/on-going capital expenditure.
As such, the All-in Cost may be viewed as a measure of
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% yearonyear decrease.
48
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 yearonyear by approximately $17/oz,
due to higher production and/or a smaller reserve base
(when depreciation is charged according to the unitsof-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
($925/oz), all of which had All-in Costs below the
average gold price during both 2013 and 2014.
GOLD PRODUCTION COSTS
REGIONAL TRENDS
(US$/oz)
2013
2014
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 countrys 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.
Total Cash Costs
686
711
Total Production Costs
906
968
All-in Costs
1,438
1,234
Total Cash Costs
668
668

South America

930
925
All-in Costs
1,512
1,288
Australia
Total Cash Costs
885
809
1,163
1,086
All-in Costs
2,015
1,325
South Africa

Total Cash Costs
970
931
1,154
1,107
All-in Costs
1,576
1,361
Total Cash Costs
775
743

Other

978
954
All-in Costs
1,964
1,358
World
Total Cash Costs
770
749
995
983
All-in Costs
1,741
1,314
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 Sibanyes core mines, comprising Beatrix, Kloof and
Driefontein, costs increased in rand terms, but posted a
year-on-year decrease when expressed in dollars.
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 Americas largest producer in 2014 was Pueblo
Viejo, where cash costs decreased by 20% as the mine
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 QUARTERLY TOTAL CASH COSTS
COMPANY REPORTED ANNUAL TOTAL CASH COSTS
1800
South Africa
Australia
World
1600
1800
South America
North America
Gold Price
1600
1200
1000
1000
US$/oz
US$/oz
1200
800
600
600
400
400
200
200
Q1.10
Q1.11
Q1.12
Q1.13
Source: GFMS, Thomson Reuters; Company Reports
Q1.14
Total Cash Costs
1400
1400
800
Gold Price
2004
2006
2008
2010
2012
Source: GFMS, Thomson Reuters; Company Reports
2014
49
MINE SUPPLY
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 countrys
largest producer in 2014, as well as cost reductions at
more established mines such as Meadowbank.
North America
WEIGHTED AVERAGE STRIKE PRICES OF CONTRACTS
GLOBAL HEDGE BOOK HOLDERS*, END-DECEMBER 2014
(weighted by number of contracts, end-December 2014)

Contract Type
Trigger
USD
AUD
Polyus Gold International
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
$1,680
$1,519
2%
B2Gold Corp
$925
$1,195
2%
Industrias Peoles
2%
Regis Resources
2%
Carpathian Gold
2%
Torex Gold
Knock-in Barrier Sold Calls

Knock-out Barrier Bought Puts
PRODUCER HEDGING
18%
The volume of delta-hedging grew by 103 tonnes in 2014,
Others
*Numbers on a nominal (number of contracts) basis
COMPOSITION OF THE DELTA-ADJUSTED HEDGE BOOK
the largest volume of net hedging since 1999.
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 Fresnilloplc 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 derisk cash
flow through to 2018 while the company invested in the
Natalka project. Including the maturity of the companys
2014 contracts, this resulted in a net 55tonne increase
to the deltahedge book. In the fourth quarter Fresnillo
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
endDecember was 30 tonnes.
(tonnes, end-period)
2014

13.Q4 14.Q1 14.Q2 14.Q3 14.Q4
yoy
Forward Sales
77
83
91
86
100
Options
14
16
119
117
143 928%
Total
91
99
157
150
195
29%
113%
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 deltahedge positions of a further 25companies. Notably a
majority (16) of these companies were Australian, taking
advantage of the weakening local currency, and included
Northern Star Resources (+6t), OceanaGold(+6t),
Evolution Mining(+4t), Norton Gold Fields(+4t),
Troy Resources(+2t), Regis Resources(+2t) and
Independence Group(+2t). Together the Australians
represented an additional 32tonnes of deltahedging.
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
300300
1999 Peak
3000
3000
Global Hedge Book (tonnes)
2700
2700
Global Hedge Book (tonnes)
delta-adjusted
MINE SUPPLY
38%
2400
2400
2100
2100
1800
1800
1500
1500
1200
1200
900
900
600
600
300
300
00
94
96
98
50
00
02
04
06
08
10
12
14
Non-Vanilla Options
270
250
240
Vanilla Options
Forward Sales
210
200
180
150150
120
100
90
60
50
30
00
Q1-10
Q4-11
Q4-12
Q4-13
Q4-14
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
end2014 stood at just 195 tonnes. While this is a
morethandoubling 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 end1999, when producer hedging
was in its heyday. The level of outstanding hedging does,
therefore, remain limited by comparison to historical
standards.
TOP HEDGING ACTIVITY IN 2014

(delta-hedging)
Company
% of Gross
Hedging
Change
(tonnes)
Polyus Gold International
41%
55
Fresnillo plc.
22%
30
Torex Gold
5%
Northern Star Resources
5%
% of Gross
De-hedging
(tonnes)
Petropavlovsk plc.
17%
-5
Veris Gold Corp.
16%
-5
Beadell Resources
13%
-4
St. Barbara Limited
9%
-3

Company
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.
CHANGING COMPOSITION OF THE GLOBAL HEDGE BOOK.
DELTA-ADJUSTED DELIVERY PROFILE AT END-DECEMBER 2014
Forwards
Vanilla Puts
End-2013 Nominal Volume:

4.20 Moz (131 t)
Vanilla Calls
Barrier Puts
Barrier Calls
30
Non-Vanilla options
End-2014 Nominal Volume:

12.53 Moz (390 t)
25
Tonnes
20
Vanilla Options
Forwards
15
10
5
0
Q4-15
Q4-16
Q4-17
Q4-18
Q4-19
51
MINE SUPPLY
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.
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,
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 supplydemand balance this year in comparison to
other market drivers, such as physical demand and scrap
recycling.
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
1,800tonnes. This was equivalent to 61% of totalaboveground 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

67,700tonnes, 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
1,300tonnes 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
is carried as unaccounted in the chart below.
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, aboveground 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
became the embodiment of the strong correction in the
gold price that followed.
SUPPLY FROM ABOVE-GROUND

STOCKS
GOLD TRANSFERS (NET) TO AND FROM GLOBAL ABOVE-GROUND STOCKS, 2014

Above-ground Stocks, end-2014 = 183,600t
Jewellery (87,000t)
Official Holdings*
(30,900t)
Private Investment**
(36,800t)
Other Fabrication &
Unaccounted
(28,900t)
Jewellery (2,213t)
Official Sector
Purchases (466t)
Industrial Fabrication (400t)
Private Investment* (1,283t)
Total Stocks
(4,362t)
Transformed/Transferred (4,362t)
Old Scrap (mostly jewellery)

(1,125t)
Mine Production (3,133t)
Changes in lending***
(103t)
* Excluding gold lent or supplied
** Includes bar investment, coin investment and physical deficit
*** Includes changes in lending from both the official and private sectors
52
Mine supply increased by 2% to

3,133tonnes, a record high, in world mine
production, despite lower prices. Much of
the increase was due to various producers
mining higher grades in order to contain
costs and as well as the ramp up of mines
which started in prior years.
VISIBLE SUPPLY OF GOLD TO THE MARKET

2012 2013
2014
tonnes share tonnes share tonnes share
Mine Production
2,875
63%
3,061
78%
3,133
69%
Above-Ground Stocks
1,677
37%
2,167
22%
1,388
31%

- Scrap
1,677 -
1,287 -
1,125 -

- Hedging Supply
- - - -
103 -
- ETF Inventory Drawdown
880
160
4,552
5,228
4,521
Total
1-month
1.5
1.0
AVERAGE GOLD LEASING RATES
0.5
0.0
-0.5
2002
2004
2006 2008
2010
2012
2014
1-mth
3-mth
6-mth
12-mth
2012
-0.15% -0.02% 0.17% 0.45%
2013
0.10% 0.15% 0.24% 0.44%
2014
0.15% 0.19% 0.25% 0.41%
53

STOCKS
Supply from above ground stocks, on the

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
the year before. The diversity, liquidity, easy access
retreated in all regions but China in 2014, pushing the
and therefore robust uptake by retail and institutional
global total by 13%, or 162 tonnes, down to 1,125 tonnes.
Despite the drop last year, the contraction in scrap supply investors of the various gold ETFs in the market was
been a strong supporter of the price during the twelve
was significantly lower compared to 2013, which can be
year bull run; the massive liquidation in 2013, however
explained by a variety of reasons. First, due to the slight
meant that ETFs were as much price makers as they were
improvement in the global economic sentiment, distress
price takers and they continue to command attention.
selling fell. Second, the continued low prices deterred
ETF net-sales slowed to 160 tonnes, or $6bn, last year
consumers from selling their old jewellery or coins back
from 880 tonnes in 2013. In summary, visible supply of
to the market. Some regional differences did occur,
gold (other than from mine production) in 2014 fell by
however, mainly due to currency fluctuations. Third, we
707 tonnes (-14%) year-on-year to 1,388 tonnes.
estimate that near market stocks in many countries have
fallen substantially following golds price boom over the
The absence of official sector supply on the above table
past 12 years.
is a function of the shift to net purchases earlier this
decade. The tiny level of sales remains dwarfed by
Net hedging turned positive again in 2014 and to the
purchases from emerging markets, as discussed in detail
tune of 103 tonnes; the highest level of annual hedging
in the next chapter.
since 1999. A few producers increased hedge cover last
year, predominantly through the use of options, led by
Finally, another aspect that involves strong focus on
Polyus Gold. This specific example used exotic options,
central banks in the gold market is the lending market,
something which typically still engenders substantial
although this has materially declined over the last
shareholder aversion, as complicated structures are still
decade. The gold lending market spent much of 2014
viewed as non-transparent.
in a relatively becalmed fashion with exceptionally low
lending rates particularly for the 1- and the 3-month
As already briefly outlined, the final component of the
timeframes. However, the end of last year saw a
above ground stocks component is ETF sales, which
spectacular escalation in short term lending rates which
continued in 2014, at a far less pronounced level than
was fuelled by an upturn in physical demand from the
Middle East and Asia, driven by another dip in the gold
LEASING RATES
price. Although the spike was short lived, leasing activity
2.5
in China has significantly increased in 2014 due to tighter
12-month
liquidity (see focus box in Chapter 7).
3-month
2.0
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

STOCKS
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 continents share of the
global total remained elevated by historical standards.
To put this in perspective, Europes 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.
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 aboveground 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.
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
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 2004
ABOVE-GROUND SCRAP STOCKS BY REGION 2014
Asia
Asia
3% 1%
Europe
Europe
8%
North America
Africa
7%
2% 1%
North America
Africa
10%
South America
South America
Oceania
Oceania
10%
54%
59%
19%
26%
54
this boost in disposable income helped push jewellery

purchases higher, it was negative for scrap supply. US
households fared better financially last year, resulting in
fewer people liquidating gold assets for cash.
In addition to lower scrap from jewellery sources,
gold recovered from electronic scrap declined last
year. Although electronic scrap feedstock increased,
the volume of gold recovered declined due to lower
gold content. Material turned in to recyclers last year
contained around 15% less gold than the previous year.
Electronic waste returned last year, given the average life
cycles of the most common gold-bearing electronics, was
likely to be material from years in which more aggressive
thrifting was occurring within the electronics industry due
to rapidly rising gold prices.
Scrap collected in Mexico fell to 27 tonnes in 2014, down
27% from the previous year. Mexico accounted for 23%
of North American scrap last year, up from 10% a decade
earlier. Mexicos scrap supply has increased significantly
over the past decade due to weak economic conditions
and limited access to credit driving households toward
golds liquidation value. Last year, the Mexican economy
expanded 2.1%, up from 1.1% growth in 2013. With a
slight improvement in economic conditions, households
liquidated less gold assets.
Canadian scrap supply fell 15% to 5.7 tonnes in 2014,
which is a significant improvement from the 32%
decline in 2013. Similar to the US and Mexico, improved
economic conditions slowed the volume of old jewellery
sales from households last year. The decline in scrap,
however, was more muted than in Mexico and the US
because of the Canadian dollars depreciation against the
US dollar. Gold prices in Canadian dollars, as a result,
only declined 3.7% in 2014, compared to the 10% decline
in US dollar terms.
Gold Price
Scrap Share of Total Supply
100
1000
20
500
10
2001
2006
2011
2.5
Jewellery Stocks
Scrap
90
2.0
80
1.5
70
1.0
60
0.5
50
2004
2006
2008
2010
2012
2014
Scrap return rate (%)
30
Above-ground Jewellery Stocks (000 tonnes)
1500
1996
Going forward, industry participants expect that the

scrap market in Turkey has reached its nadir with volumes
well below the peaks seen in the financial crisis. Turkish
scrap volumes peaked in 2008 and 2009 at 199 and
217tonnes respectively before quickly falling back below
80 tonnes in 2011. To some degree the past two-years
have seen stocks of available scrap in the market increase
and the beginning of 2015 demonstrated how dynamic
and price sensitive the Turkish market really is. Indeed,
due to the local market discount and excess gold in the
2000
40
0
1991
Scrap volumes have also been undermined by two

additional trends in the Turkish market. First, it is
increasingly common in Turkey to use old jewellery
scrap directly in the fabrication of new designs. As
such, no additional scrap is generated and no new gold
consumed. Volumes, therefore, net off, and the activity in
both instances will not be captured in our data. Likewise,
the increase in bar demand in Turkey over the past years
has also seen more of this material coming back to the
market. The bar market (minted and cast) is tracked on
a net-consumption basis so this material moving around
the system also doesnt show in the scrap figures. Fees
for exchanging bars, however, are lower compared
to exchanging 22-carat jewellery (due to the design
and labour cost) which encourages bars to be the first
material to come back to market when sales are made.
ABOVE-GROUND JEWELLERY STOCKS & % RETURN OF SCRAP
Gold Price US$/oz
Scrap Share of Total Supply (%)
50
Scrap volumes continued to suffer in Turkey in 2014, with

prices stuck in a 85-90 lira/gramme range for most of
the year. We estimate that volumes fell by a quarter to 41
tonnes in 2014. However, towards the end of the year, the
trend turned with volumes significantly increasing in the
early part of 2015 on the back of the local gold price rise
towards 100 lira/gramme. As a result, for a short period,
the Turkish market even traded at a $4-5/oz discount to
the London price.
0.0
55

STOCKS
Ch5 Scrap
Share of
Total
Supply
SCRAP
SHARE
OF
TOTAL
SUPPLY
MIDDLE EAST
system in January saw gold become Turkeys 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.
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 NPAs 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 NPAs 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
In Saudi Arabia, scrap volumes declined broadly in
line with the global average, slipping 12% to around
21tonnes. 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.

STOCKS
For the second consecutive year in a row, Indian scrap
supply declined by 26% to 74 tonnes, the lowest level
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,
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
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
500,000rupiah 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.
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
41.0
4.5
10.7
Germany
7.6
11.4

France
12.1 18.6 16.8 21.2 24.9 29.2 40.3 33.5 26.7 21.5
Spain
3.7
United Kingdom
Russian Federation
18.9
6.1
19.3
11.7
18.8
5.8
20.7
38.7
59.4
69.8
76.0
69.0
24.4
32.7
44.1
45.5
40.3
31.1
31.2
23.8
10.6
20.1
31.9
32.7
35.9
23.5
21.1
21.4
28.7
26.4
19.2
23.5
24.2
18.6
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

Other Countries
11.7 15.3 14.5 16.0 23.6 28.7 32.9 32.1 22.4 18.3
Total Europe
2.2
1.8
2.1
2.6
6.0
6.1
5.8
3.6
3.2
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

Colombia
3.8 4.1 4.3 5.1 6.6 8.1 8.7 9.5 1.4 1.4
6.8
Venezuela
3.7
4.3
6.4
5.7
7.5
6.0
11.4
7.1
16.1
8.3
22.2
8.7
24.6
8.1
16.0
6.2
9.8
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
South America
6.1
7.9
9.2
16.1
21.9
20.7
20.4
7.0
7.1
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
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
69.4
57.3
44.1
33.5
23.6
Saudi Arabia

Syria
92.5
133.7
56.4
37.1
20.8
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
Taiwan
13.0
18.4
18.5
33.6
34.9
27.5
19.5
15.4
12.0
11.1
4.3
6.5
5.4
7.4
20.3
19.1
17.1
15.3
10.8
10.4
Iraq
12.4

Lebanon
6.6 9.9 4.9 6.2 15.1 19.7 14.9 12.7 9.6 8.5
17.5
S Korea
30.7
10.2
9.2
18.1
17.4
12.7
10.8
13.9
10.4
8.5
7.7
9.7
9.5
9.4
7.2
7.4
6.5 7.1 7.5 8.0 8.4 8.0 7.3 6.8 6.0 6.4
9.8
5.6
21.3

Hong Kong
21.8
7.0
20.5
4.6
12.4
8.7
13.7
Jordan
Kuwait

STOCKS
Vietnam
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

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
11.4
5.0
6.1
6.6
8.3
7.0
5.6
4.4
4.5
57
SUPPLY OF GOLD FROM FABRICATED OLD GOLD SCRAP

(tonnes)
2005

Bangladesh
2006
2007
2008
2009
2010
2011
2012
2013
2014
2.1 2.5 2.5 2.7 3.0 2.7 2.6 2.7 2.3 1.8
Qatar
0.9

Philippines
1.5 1.5 1.5 1.9 2.7 2.3 2.1 1.9 1.5 1.4

Other

Total Asia
2.3
2.6
2.5
2.8
2.4
2.0
1.8
1.5
1.4
9.5 11.0 11.4 12.4 13.7 13.8 13.6 13.0 11.4 10.4
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

Algeria
2.7 2.8 3.4 3.6 5.8 6.1 7.9 7.6 6.8 6.6

Other

9.7
9.5
10.4
13.4
15.8
16.6
14.4
8.8
8.2
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
1.9 1.5 1.5 2.0 3.1 6.8

12.0
10.2 7.3 6.6
Total Oceania
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
23.5 24.0 25.4 26.7 35.3 32.8 30.1 31.2 25.0 25.2
CIS*

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. Chinas 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
LARGEST SUPPLIERS OF GOLD SCRAP
2000
Gold Price
Oceania
2000
200
1500
150
Africa
South America
North America
Tonnes
Asia
1000
800
500
400
Source: Thod
2004
2006
2008
son Reuters GFMShomson Reuters GFMS
58
2010
2012
2014
Gold Price US$/oz
1200
Europe
Tonnes
1600
Gold price
Italian Scrap
Chinese Scrap
Indian Scrap
US Scrap
2000
1500
100
1000
50
500
0
2004
2006
2008
0
2010
2012
2014
US$/oz

STOCKS
WORLD 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.
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

150
140

STOCKS
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.
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.
Index, 1st January 1996 = 100
E-SCRAP SUPPLY
Computers
Cell Phones
130
120
110
100
90
80
70
60
1996
1999
2002
2005
2008
2011
2014
59
5. OFFICIAL SECTOR
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
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,
central bank buying actually recovered with net official

sector purchases at 466 tonnes, up by 14% year-onyear. 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)
WORLD OFFICIAL SECTOR SALES AND PURCHASES
600
Net Purchases
400
200
Tonnes
OFFICIAL SECTOR
For the fifth successive year, central banks were a
0
-200
-400
-600
Net Sales
-800
2004
2006
2008
60
2010
2012
2014
Gold
Reserves
(tonnes)
Total
Reserves
(US$ bn)*
%
Held in
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
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
Tonnes
150
Kazakhstan
Azerbaijan
100
50
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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
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
OFFICIAL SECTOR
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.
quarter. (This technically shows up as a sale, because a

swap is a simultaneous sale and repurchase transaction,
with title passing for the duration of the exercise).
ANNUAL NET OFFICIAL SECTOR PURCHASES (TONNES)

2010
2011
2012
2013
2014
77
457
544
409
466
Consistent with the previous couple of years the difference

with the prior period is the absence of large scale selling
from countries within the CBGA. Germany continued
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 countrys 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 Turkeys 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
geopolitical events in Ukraine and accompanying

sanctions. As a result of this, there was a further
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 countrys 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
Net Purchases
500
300
100
-100
Tonnes
OFFICIAL SECTOR
-300
-500
-700
Net Sales
-900
-1100
-1300
-1500
1948
1953
1958
1963
Source: BIS; IMF; GFMS, Thomson Reuters
62
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
CUMULATIVE 2014 TRANSACTIONS
RUSSIA VS UKRAINE
200
Many of the themes of central bank activity continued tried
Ukraine
Tonnes
150
100
OFFICIAL SECTOR
and tested patterns in 2014, with substantial net buying

from emerging markets and virtually no sales from the
traditional holders such as CBGA signatories. However,
events in Ukraine and the geopolitical fall out from them
were arguably behind the key changes in central bank
activity in 2014. We will not dwell here on the political and
social implications of events in Ukraine but instead focus
on what happened and why from the perspective of the
economy in general and the central banks in particular.
Russia
50
-50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Political instability and economic problems existed in

Ukraine before 2014 but events escalated in the first quarter
of last year. As can be seen in the charts at the bottom
of this page this started to have a major impact on the
exchange rate of the hryvnia and total central bank reserves
(particularly European and US government bonds).
That said, from a purely gold perspective the first quarter
saw very little activity from either of these countries;
indeed Russia purchased less than usual, possibly due to
higher gold prices, arguably sparked in part by the same
geopolitical events. However, March was also the first
month in which sanctions towards Russia were introduced
by many western governments. This was then tightened
in late April and a third round of sanctions was introduced
from July onwards (the exact timing depended on different
countries decisions).
The impact of this can be seen in the charts on this page,
although we would readily acknowledge that the slump
in the oil price also had a significant role. Focussing on
Ukraine first, the depth of the recession due to the fighting
has led to central bank reserves plunging and by January
2015 they were barely one fifth of the level just two years
previously. Given this backdrop and the inadequacy of an
Finally we would note that in addition to this move by Russia

the same period has seen Kazakhstan buying its record
annual total of 48 tonnes.
$US Bn
40
20
Jul 14
80
Jan 15
Total Central Bank Reserves

US$ / Hryvnia Spot Rate (Inverted)
10
15
15
10
Exchange Rate
25
Exchange Rate
30
70
Source: IMF; GFMS, Thomson Reuters
Underpinning this upturn in the regularity and scale of

acquisitions was clearly the geopolitical events. This was
fuelled by two factors. First, a desire to try and support
the ailing rouble - a policy which has proved unsuccessful.
Second, a growing belief that the Russia does not want to
buy US dollars (or other western currencies and assets).
30
60
400
Jan 14
central bank which every month from May onwards made

purchases of at least seven tonnes and every quarter
they acquired at least 54 tonnes. As a result, Russia
was the largest official sector purchaser of gold in 2014
at 173tonnes. Even though Russia had been a regular
purchaser of gold for many years this was the highest since
the inception of the Russian Federation.
20
50
Jul 13
This was dwarfed however by the actions of the Russian
US$ Bn
Total Central Bank Reserves

US$ / Russian Rouble Spot Rate (Inverted)
500
300
Jan 13
IMF bailout it is unsurprising that the authorities sold a total

of 19tonnes in 2014, with almost 90% of this taking place in
the final quarter of the year.
UKRAINIAN CENTRAL BANK RESERVES
RUSSIAN CENTRAL BANK RESERVES
600
5
0
Jan 13
Jul 13
Jan 14
Jul 14
20
Jan 15
63
6. GOLD BULLION TRADE

Indias gross bullion imports increased by 5% to 822
tonnes, a result of the 80:20 rule leading to forced
exports. Thepermission 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
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
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 dor 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 dor 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
Indias gross bullion imports increased by 5% to
Indias net gold imports for 2014 are estimated at

591tonnes, after deducting the 20% of required exports
as stipulated under the 80:20 scheme. This includes
gold refined from dor supplied to domestic market. This
number also nets off the quantity imported for export
64
35
400
30
Net-Imports
25
300
20
15
200
10
100
5
0
Q1-10
Q1-11
Q1-12
Q1-13
*Exports include bars, jewellery medallions and coins
0
Q1-14
Rupees/10g (thousands)
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.
Gold Price
Exports
Tonnes
GOLD BULLION TRADE
weaker in 2014 as consumer demand across most of the

region retreated, despite the near 10% drop in the dollar
gold price.
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 INDIAN BULLION IMPORTS*

(tonnes)
2007
2008
2009
2010
2011
2012
2013
862
760
779
1,123
1,208
969
781
877
9,378
12,319
15,310
18,386
24,003
29,730
29,310
28,278
Gross Imports*
Local Price (Rs./10g)
2014
*including Direct Imports (imports by premier trading houses), NRI Imports, Export Replenishments; 2012 to 2014 also includes
unofficial imports.
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
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
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
300
200
100
0
Q1-10
Q1-11
Q1-12
Q1-13
Q1-14
*Calculated quantites based on reported export and import values.
65
GOLD BULLION TRADE
Indias bullion trade discussion is incomplete without

touching upon unofficial imports. We estimate crossborder 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%.
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.
Tonnes
the requirement at any given month, with gold purity

averaging more than 90%.
from Shanghai and Hong Kong, we estimate that net

bullion imports in 2014 totalled 766 tonnes.
Calculating Vietnams bullion flows in recent years has

become an arduous task given the tight control the
State Bank now has on both the import and export of
bullion and scrap supplies. The domestic market in 2013
featured a series of auctions whereby gold imported
by the State Bank was auctioned and released into the
market. Last year the market tightened even further
with no officially-sanctioned imports of gold. This meant
that fabricators have had to source gold in the domestic
market which is now largely unofficially imported from
neighbouring countries. We estimate these combined
volumes from Cambodia, Laos and Thailand surged last
year to exceed 75 tonnes.
An acute drop in investment demand, coupled with a
double-digit decline in jewellery fabrication in Thailand
last year, accounted for the bulk of the 52% fall in gold
bullion imports. On a calculated basis, imports slumped
to an estimated 164 tonnes with flows from the largest
supplier Switzerland reduced by over 60%. Elsewhere,
shipments from the U.S., South Africa and Australia
retreated by 26%, 60%, and 33%, respectively. Turning
to exports, bullion flows (which includes scrap deliveries)
slipped 5% in 2014. Switzerland again featured as the
main destination for Thai exports at close to 40% of the
THAI BULLION IMPORTS*
Reviewing Australias bullion flows can often provide an

indication of demand trends across Asia as historically
the majority of bullion exports are destined for these key
markets. In recent years flows to China have dominated
bullion exports while the tightening of the import
regulations in India has seen shipments to this market
150
60
20
15
40
20
0
Q1-10
Q1-11
Q1-12
Q1-13
Q1-14
*Calculated quantities based on reported import values
10
Singapore
UK
Others
Rupee
200
India
150
100
Tonnes
80
125
China
RMB
75
100
50
50
25
0
Q1-10
Q1-11
Q1-12
0
Q1-13
Q1-14
Gold prices (Index, Q1 -10 = 100)
Gold Price
Gold Price (Baht per 15.244g, thousands)
25
66
Singapores bullion imports surged 19% in 2014 to an

estimated 284 tonnes. This may appear somewhat
counterintuitive, given that demand in the region last
year was considerably weaker than in 2013, but this
market is increasingly being used for vaulting and
has become a terminal market for supplying to China.
Imports were dominated by flows from Switzerland (47%
of the total) and Australia, which at 25%, increased
over 250% to an estimated 70 tonnes. We believe
exports jumped nearly 30% in 2014 to 250 tonnes,
driven predominantly by a surge in flows to China (at a
touch over 100 tonnes), although deliveries were also
augmented by a healthy rise in shipments to Malaysia,
Taiwan and Hong Kong.
30
120
100
A weaker jewellery market and a return to net

disinvestment, as higher domestic prices encouraged
profit taking, saw Japanese bullion exports gain 7% in
2014 to an estimated 80 tonnes. Outward flows were
dominated by shipments to Hong Kong (47% of the
total) with Thailand the second largest destination at
20%. Both markets recorded a modest rise over 2013
volumes. Large bar shipments to the UK also rose by
almost a quarter to just over seven tonnes. Bullion
imports remained modest at just 12 tonnes, although in
percentage terms they fell by 48%, with significant falls
in supply from Canada and Switzerland.
AUSTRALIAN GOLD EXPORTS
140
Tonnes
GOLD BULLION TRADE
Gold imports into Taiwan exceeded 22 tonnes in 2014, a

13% year-on-year increase and the highest volume since
2002. Among the dominant import regions, volumes
from Hong Kong dropped back to 2012 levels, while
imports from Japan increased by 130%. Bullion exports
rose by 46%, predominantly driven by bars flowing out
of the country for refining in Hong Kong. The increase in
exports primarily stemmed from the shut-down of some
bullion retailers over the year due to weak investment
sentiment at home.
total, with Hong Kong and Singapore the remaining main

official trade routes. One statistic of note was the sharp
uptick in shipments to Cambodia last year, which were
most likely destined for the closed market of Vietnam.
Ch6 BULLION
Turkey Official
Bullion Imports
Exports
TURKISH
IMPORTS
ANDand
EXPORTS
150
100
75
25
0
Q1-09
Q1-10
Q1-11
Q1-12
Source: Turkstat; GFMS, Thomson Reuters
In the Middle East, bullion imports were materially
Q1-14
Bullion imports into the United Arab Emirates (UAE)

were considerably weaker in 2014. A considerable
slowdown in jewellery consumption across the region
following the price-driven surge in 2013, and a generally
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 dor, with a handful of new refineries opening in
recent years to accept this trade. Dominated by flows
TURKISH BULLION IMPORTS SEASONALITY
60
130
50
110
Tonnes
40
Gold Price
30
90
20
Lira/g (thousands)
A weaker jewellery market and a hefty drop in investment

demand accounted for the 8% drop in Saudi Arabian
bullion imports last year. Despite the decline in these
key demand segments, bullion shipments remained
at historically elevated levels as scrap volumes in the
domestic market have fallen dramatically in recent
years, falling well short of the fresh supply needed for
fabrication. Direct shipments from Switzerland eased
just 6% last year while flows from Dubai and South Africa
(the two other main conduits) declined by double digits.
In contrast, exports (a combination of scrap and bullion)
were almost nonexistent, with all gold returned to market
consumed domestically.
Q1-13
70
10
0
Jan-12
Jul-12
Jan-13
Jul-13
Source: GFMS, Thomson Reuters; Turkstat
Jan-14
Jul-14
50
67
GOLD BULLION TRADE
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 80lira/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.
Exports
50
MIDDLE EAST
weaker in 2014 as consumer demand across most of

the region retreated, despite the near 10% drop in the
dollar gold price.
Turkish bullion imports fell 47% to 178 tonnes in
2014 as high local prices saw both more scrap come
into the market and dissuaded purchases of physical
bullion. On a net basis Turkey imported just over 102
tonnes in 2014.
Imports
125
Tonnes
contracted significantly. Last year, bullion exports to

China still dominated total shipments, at over 50%,
although declining by an estimated 10% to 156 tonnes,
reflecting the weaker demand in the Asian giant, while
flows to India halved according to trade statistics.
Elsewhere, deliveries to Thailand slumped by 47%, while
in an indication of the general weakness in most regional
markets, shipments to the UK jumped 44% year-on-year
to 21 tonnes.
year-on-year on the extraordinary year that was 2013,

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.
UAE BULLION IMPORTS*

200
150
2000
Gold Price
US$/oz
Tonnes
1500
100
1000
50
500
GOLD BULLION TRADE
H1-09
H1-10
H1-11
H1-12
H1-13
H1-14
*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
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
300per 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
Last year, British official import data showed a marked

increase of 38% to 439 tonnes. Imports from Canada
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.
Both countries exported 87 tonnes to Britain, a 145%
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 90tonnes of gold bullion on a calculated
basis to that country, a 50% yearonyear increase. The
substantial rise in imports in Germany in 2013 and 2014
ties in with the Bundesbanks 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 96tonnes 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.
SWISS GOLD BULLION TRADE
2014
Imports
Imports
2014 Exports
Exports
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
250
200
150
Tonnes
100
USA
UK
50
Italy
1,660 tonnes
50
UAE
Germany
100
Russia
Tonnes
Turkey
150
200
250
Others
1,741 tonnes
China
India
Hong Kong
Singapore
One cm2 is equal to 50 tonnes of gold and each countries flag is proportional to its 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.
Imports
Exports
Imports
Jan
250
200250
150200
100150
50 100
Tonnes
Tonnes
UK
India
Feb
Feb
Mar
Apr
Apr
May
May
Jun
Jun
Jul
Jul
Aug
Aug
Sep
Sep
Oct
Oct
Nov
Nov
Dec
Dec
0 50 0
0 50 0
UAE
UAE
Germany Russia
100 50
150100
200150
Tonnes
Tonnes
Others
Turkey
Turkey
Russia
China
China
Hong
Kong Singapore
HongIndia
Kong
Exports
Jan
Mar
USA UK Italy USA Germany

Italy
GOLD BULLION TRADE
2014 MONTHLY TRADE
Source: GFMS, Thomson

Reuters;
Swiss Impex*
Imports
Source: GFMS,
Thomson
Reuters; Swiss Impex*
250200
250
Others
Singapore
Exports
ANNUAL TRADE SINCE 1982
Jan
Feb
Mar
3000
2500
May Real 2014 Value of Imports
Bullion Imports into Switzerland
Jun Real 2014 Value of Exports
Bullion Exports from Switzerland
120
Jul
2000
Aug
90
Sep
1500
Oct
60
Nov
1000
250
500
0
US$ billion
Tonnes
150
Apr
Dec
200
150
UK
1982
Tonnes
100
USA
1987
50
Italy
India
0
Germany
50
UAE
Hong
1992 Kong
100
Russia
Tonnes
Turkey
China
1997 Singapore
2002
150
200
250
30
Others
2007
2012
Thomson
Reuters;
Swiss Impex*
Source:Source:
GFMS,GFMS,
Thomson
Reuters;
Swiss Impex*
Imports from the UK were high in the first two months of 2014
towards the festival season. Exports to Greater China were even
at 233 tonnes, representing outflow from ETFs in November
larger, with Hong Kong imports in February dwarfing any other
and December 2013, which saw investment bars re-refined to
export at 99 tonnes, as buyers took advantage of lower prices.
the kilo bars favoured by China. Exports to India were high
In the last quarter more flowed into the mainland, 109tonnes,
from September to November, as fabricators started to stock up
than Hong Kong at 104tonnes.
* All tonnages calculated from trade values in Swiss francs.
69
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
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 countrys 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.
North American imports rose to 318 tonnes in 2014,
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 dor from South American
countries, capitalising on that regions 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 dor,
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
800
Canada imported 178 tonnes of bullion and dor 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 doubledigit pace. South Americas 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 Canadas two largest export partners, the
UK and the US, increasing 31% and 28%, respectively.
Exports to Hong Kong fell 12% last year. Canadas
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 dor imports amounted to
1.3tonnes 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*
UK
Other
Hong Kong
India
500
Other
Hong Kong
400
Switzerland
USA
300
400
200
200
100
2005
2007
2009
2011
2013
*Calculated quantities based on reported export values.
70
Tonnes
UK
600
Tonnes
GOLD BULLION TRADE
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.
2005
2007
2009
2011
*Calculated quantities based on reported export values.
2013
7. FABRICATION DEMAND
CARAT JEWELLERY
Global fabrication declined 12% in 2014 from 2013s

elevated levels, to an estimated 2,834 tonnes.
The bulk of the drop was due to a 9% drop in jewellery
fabrication, despite the weaker US dollar price
environment, mainly due to a hefty fall in Chinese output.
Jewellery fabrication, excluding the use of scrap, saw a

similar contraction, slipping 8%, equivalent to a loss of
141 tonnes of new gold demand.
Following the remarkable surge in 2013, jewellery

demand across East Asia retreated 29% last year, chiefly
as a result of a 33% drop from China.
In contrast, Indian jewellery fabrication rebounded

14% in 2014 to a five-year high, as weaker rupee prices
boosted domestic consumption.
Jewellery fabrication in the Middle East declined 6% in

2014, while an improved economic environment and
weaker prices helped lift North American and European
demand by 5% and 10% respectively.
Following a record level in 2013, Official coin minting is
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.
4000
Other
Official Coins
2000
Electronics
Jewellery
Real Gold Price
Tonnes
1000
1000
500
2009
2011
2013
100
2000
Jewellerys Share
Real Gold Price
90
1500
80
1000
70
500
60
50
2000
1500
2007
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
JEWELLERYS SHARE OF TOTAL FABRICATION DEMAND
3000
2005
Last year jewellery fabrication in India rose to a record

level of 690 tonnes, rising 14% year-on-year and thereby
bringing a pause to three consecutive years of declining
growth. The rise in offtake, by almost 83 tonnes, is to
be viewed in the context of developments in two distinct
halves last year. While the first half saw demand decline
by 18% on a yearly basis, the second half delivered
an annual gain of 60%. Lower prices were one of the
obvious triggers as it led to restocking, but the most
important was the unplanned replenishment following
the closure of advance payment schemes run by retailers
to purchase gold through monthly savings; this by itself is
estimated to have created 75 tonnes of demand.
Jewellerys Share of Total Fabrication Demand (%)
WORLD GOLD FABRICATION
2014, as lower prices and advance purchases under

the gold savings scheme helped boost demand.
A 60% surge in second half demand helped negate
an 18% decline in the first half.
Jewellery fabrication in Pakistan declined by 15%,
despite a fall in gold prices as a drop in bullion
imports affected fabrication.
0
2005
2007
2009
2011
2013
71
FABRICATION DEMAND
estimated to have slumped 37% to 173 tonnes, the lowest

level since 2007.
Indian jewellery fabrication increased by 14% in
WORLD GOLD FABRICATION (INCLUDING THE USE OF SCRAP)

(tonnes)
Europe
Turkey
Italy
2006
2007
2008
2009
2010
2011
2012
2013
2014
303.4 242.0 276.8 236.7 111.3 109.0 136.3 114.2 178.1 155.8
290.2
235.9
228.4
186.7
134.6
126.3
103.3
95.9
92.3
96.0
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
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
218.8
210.9
179.0
175.2
173.4
179.1
166.7
146.9
160.0
149.8
26.8
22.0
22.2
40.1
48.4
43.7
44.9
32.4
44.5
31.7
Russia
Other Countries
United States
Canada
Mexico
Total North America
South America
Brazil
Chile
FABRICATION DEMAND
2005
Dominican Republic
Other Countries
Total South America
Asia
India
35.4
28.5
25.3
23.0
18.9
18.2
13.2
13.2
7.7
8.5
281.0
261.4
226.5
238.3
240.7
241.0
224.9
192.6
212.2
189.9
25.9 22.6 23.5 25.5 24.9 29.8 28.6 30.1 32.9 34.0
4.3
3.9
3.6
3.2
2.8
2.9
2.2
2.2
2.4
2.5
6.1
4.8
4.5
4.3
2.8
2.5
1.9
1.8
1.2
1.3
20.4
18.2
15.9
13.0
9.8
9.2
8.0
7.8
7.6
8.0
56.7
49.6
47.5
46.0
40.3
44.3
40.7
41.9
44.2
45.9
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
40.7
Malaysia
74.3
58.0
61.0
56.3
45.0
43.7
37.1
34.7
44.6
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
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
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
Total Asia
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
113.3
87.7
98.4
106.6
94.7
87.7
76.0
83.5
90.8
85.5
Total Africa
Oceania
Australia
9.9 10.3 10.5 14.0 14.6 12.0 13.9 13.3 19.6 14.8
Total Oceania
World Total
9.9
10.3
10.5
14.0
14.6
12.0
13.9
13.3
19.6
14.8
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
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.
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, 2005
GLOBAL JEWELLERY FABRICATION, 2014

Global Jwl Fab 13
Africa
111t
Africa
63t
Oceania 5t
Europe
730t
Europe
331t
Oceania 3t
North America
79t
South America
36t
North America
178t
Asia
1,645t
South America
52t
Asia
1,701t
73
FABRICATION DEMAND
Source: GFMS, Thomson Reuters *The key regional bullion markets
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*


Electronics
693.7
586.5
550.3
467.3
352.4
339.0
307.6
286.7
294.8
302.7
254.1 278.5 280.3 262.1 219.1 262.4 251.5 219.1 212.7 205.9
Dentistry
59.4

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

54.8
52.7
50.0
45.8
40.3
36.0
33.8
31.5
1.7
1.8
1.8
1.8
1.8
1.9
3.3
2.3
2.4
2.4
1,108.6
1,028.3
997.5
892.4
715.4
748.6
698.5
634.9
632.7
631.5
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
Sub total
Developing Countries*

57.7
Electronics

Dentistry
40.2
46.4
50.9
55.8
63.9
70.1
78.4
76.0
76.7
1,910.4
73.3
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

*Industrial and Developing countries consistent with IMF definitions
FABRICATION DEMAND
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
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
Turkey
UAE
Saudi Arabia
64.3 70.1 85.7 92.4 56.7 60.1 64.7 69.6 73.3 70.6
194.9
165.3
188.1
153.2
75.2
67.4
70.1
61.5
73.3
96.4
92.4
99.8
100.0
74.6
71.6
62.1
55.5
68.6
68.2
59.9
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
Iran
47.8 41.5 47.4 45.8 37.5 37.4 35.1 35.4 39.9 27.7
15.1
18.2
17.0
16.4
20.6
35.8
34.3
UK
59.4
52.5
50.3
Brazil
33.3
29.2
Pakistan
65.1
54.7
Italy
71.0
37.2
31.8
27.3
22.6
21.4
30.7
29.8
26.8
29.4
26.6
51.8
45.5
30.9
27.3
23.1
64.8
57.4
49.1
41.4
34.9
27.6
53.7
38.9
23.4
27.6
26.7
32.6
26.0
21.4
24.6
19.2
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

*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 midrange 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.
INDIAN GOLD JEWELLERY CONSUMPTION
Q3-14
Q4-14
161.0
187.0
207.0
Consumption
145.6
154.5
182.9
179.1
30,042
28,587
Average Price (Rs./10g)
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%.
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.
Scrap used in Fabrication
1000
250
Fabrication Excluding Scrap

30
15
50
10
5
Q1-12
Q1-13
Q1-14
GDP
200
600
150
400
Index 2005 =100
20
100
Agricultural Production
800
Rupees/10g (thousands)
150
Q1-11
27,830 26,680
35
Gold Price
25
Tonnes
Q2-14
135.0
TOTAL INDIAN FABRICATION DEMAND
200
0
Q1-10
Q1-14
Fabrication
Tonnes
250
(tonnes)
100
200
50
2005
2007
2009
2011
2013
Source: GFMS, Thomson Reuters; Indian Ministry of Agriculture
75
FABRICATION DEMAND
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 JEWELLERY FABRICATION AND CONSUMPTION
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
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
Italy
Other Countries
Total Europe
17.1
15.2
14.4
13.2
10.3
9.7
9.1
8.5
8.6
9.1
730.3
601.0
629.7
532.7
328.3
311.6
300.9
290.9
301.1
331.4
North America
United States
Canada
Mexico
Total North America
130.0
108.0
94.5
77.0
63.0
66.0
60.3
53.7
61.4
63.8
16.2
13.3
12.8
12.1
9.8
9.3
8.7
8.2
8.7
9.3
32.2
25.9
22.7
18.9
17.3
14.4
11.5
10.6
5.1
6.3
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
FABRICATION DEMAND
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
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
86.0
64.3
62.7
60.8
45.6
38.4
38.8
43.5
51.0
43.9
Indonesia
Malaysia
74.1
58.0
61.0
56.2
45.0
43.7
37.1
34.7
44.6
40.7
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
11.2
9.9
10.9
10.2
7.9
8.9
9.7
10.4
15.0
16.6
15.9
Saudi Arabia
Singapore
Jordan
6.9
7.9
8.9
9.9
10.9
11.9
12.9
13.9
14.9
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
7.7
6.8
6.0
4.5
4.1
3.5
3.2
3.8
3.6
Oman
76
7.1
CARAT JEWELLERY (INCLUDING THE USE OF SCRAP)

(tonnes)

Sri Lanka

Nepal
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
6.2
5.1
5.2
4.5
3.8
3.7
3.2
3.1
3.5
3.5
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
Other Countries
8.6
4.2
3.0
1.5
0.5
2.1
-0.8
1.9
-3.3
1.6
-5.1
1.7
-4.6
2.1
-3.9
1.9
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
8.1
7.5
7.0
7.4
5.1
4.5
3.7
3.5
3.3
3.4
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
South Africa
Libya
Other Countries
Total Africa
7.7
6.8
7.1
6.7
5.9
5.5
5.4
5.2
5.4
5.6
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
5.0
4.5
4.4
4.0
3.2
3.2
2.9
2.8
2.9
2.7
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
Total Oceania
World Total
2.7
...of which:-

East Asia*
611.9
Indian Sub-Continent* 718.0

Middle East*
CIS*
542.7
586.4
593.2
563.0
627.9
715.1
621.7 662.0 681.8 544.9 722.6 699.4
762.1
1151.9
649.1 643.6
820.6
720.1
618.2 470.8 530.1 474.9 292.6 269.6 237.6 232.7 276.7 293.3
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
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
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
FABRICATION DEMAND
Amidst these negative scenarios consumption still

clocked growth of 8% last year, rising to 662 tonnes,
the highest on record. At such volumes Indias 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.
RMB 358.6 bn ($57.8 bn). The majority of this material is
GOLD LEASING IN CHINA INFLATES IMPORTS

AND SGE TURNOVER
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.
Chinas net gold imports from Hong Kong, combined with

our estimates for imports into Shanghai and Beijing, reached
Our sources indicate that smaller Chinese banks are
1,136tonnes in 2014, 24% lower than in 2013. This is higher
increasingly entering into this sector. The interest rate for
than our estimates for consumption at 895 tonnes, itself down
borrowing physical gold is usually around 4%-5% per annum,
38% year-on-year, and different again from SGE delivery
which is much more than for monetary loans. As liquidity
volumes, which fell by only 4% in 2014 to 2,102 tonnes. The
tightened last year many corporations, particularly those in the
different measures capture different aspects of demand and
property development sector, scrambled for funds. As a result
we believe it is incorrect to equate SGE delivery volumes
several banks shifted some focus away from the traditional
directly with demand from Chinese consumers.
cash loan transactions towards lending physical gold, as

this would not affect the quality of their loan books and the
From extensive field research in China is it abundantly clear
borrowing rate is of course more attractive to the client.
that Chinese demand for gold at the retail level, for bars, coins
and jewellery fell by more than 4% in 2014. Nor were these
Moreover, several gold fabricators are also increasingly acting
numbers inflated by growth in pipeline stock that had helped
as credit providers, whereby they borrow gold from banks, and
to boost demand in 2013, indeed, for most of 2014 China
then lend the metal to companies in other industries, to pocket
was dealing with a stock overhang. The situation regarding
the difference in the interest rates. Field research findings
demand was further exacerbated by the governments
would suggest these funds are finding their way to higher
increased focus on corruption and the scrutiny of the so-called
risk projects, such as property development, where access
gifting segment. The softer economy and a fall in sentiment,
to traditional funding is limited in the current climate. This
according to our sources, has seen jewellery fabrication for the
practice is common in India and the return on this could be
local industry decline further, by between 15% and 20% year-
close to low double-digits and above.
on-year, for the first two months of 2015.
FABRICATION DEMAND
Coupled with golds increased role in leasing, and although

The higher levels of imports, and SGE deliveries, are boosted
weaker than in 2013, was the round tripping flows between
by a number of factors, but most notably by golds use as an
Hong Kong and the Chinese mainland, which also inflates the
asset class and the requirement for commercial banks to hold
SGE turnover and withdrawal figure. While the SGE data is a
physical gold to support investment products. China began
very good sign of the health of Chinas gold market, it blurs the
the 21st century with very low gold holdings in comparison to
lines between demand for gold and the use of gold in financing
countries with developed financial markets or a cultural affinity
and the movement of above-ground stocks; as such we do not
toward gold, of which China now has both. An indication of
believe that it is comparable to annual supply to a market.
the size of Chinese commercial banks holdings can be seen by

the value of total precious metals holdings as reported by just
Chinas 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.
Pakistans 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
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
300
East Asian GDP**

600
500
Tonnes
300
GDP (US$bn)
200
400
100
200
100
0
Q1-10
Q1-11
Q1-12
0
Q1-13
Q1-14
*The sum of total fabrication (including scrap) and physical bar investment
**Weighted average: Indonesia, South Korea, Thailand
EAST ASIA
Looking at intra-year developments, following a robust

2013, the momentum was carried forward to the start of
2014, with jewellery fabrication seeing an 11.5% yearon-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
gold pieces. Consumers also stocked up jewellery pieces,
as in Chinese culture, the Year of the Horse was an
auspicious year in which to get married. The end of the
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
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.
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.
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.
The third quarter also remained lacklustre, and despite

a slight improvement compared to the second quarter,
total jewellery offtake still retreated by 51% year-onyear, 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
FABRICATION DEMAND
After the extraordinary demand in jewellery seen in 2013,

Chinas 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.
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
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.
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
597.3
437.7
476.9
346.0
192.7
164.3
164.7
164.6
214.0
262.1
Total Europe
North America
United States
106.6
84.0
72.0
57.0
41.0
39.5
34.4
27.3
33.4
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
143.8
111.2
94.4
72.4
50.8
45.4
39.0
33.9
43.4
46.4
Total North America
35.3
South America
Brazil
17.4
12.2
13.0
12.6
8.1
9.3
6.7
6.5
6.4
Chile
3.8
3.3
2.8
2.3
2.1
2.1
1.3
1.3
1.6
1.7
15.6
16.6
17.6
18.6
19.6
20.6
21.6
22.6
23.6
24.6
36.8
26.8
23.6
20.2
13.0
13.3
10.0
9.7
10.4
20.8
Other Countries
Total South America
16.2
FABRICATION DEMAND
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
35.6
Malaysia
68.3
49.4
53.5
48.6
36.0
35.2
29.9
28.3
39.0
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
8.7
6.6
6.8
5.8
3.4
5.0
5.5
6.9
12.8
14.5
Singapore
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
5.3
Kuwait
4.2
2.7
3.4
4.1
2.9
3.0
3.1
3.1
4.5
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
Total Asia
80
29.4
21.2
27.5
22.8
14.1
13.1
9.4
8.6
11.2
11.4
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
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
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
World Total
...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
51.8
56.8
72.5
64.9
35.7
44.6
53.3
55.7
62.4
60.4
CIS*
Source: GFMS, Thomson Reuters *The key regional bullion markets
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
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
China
400
Bullion Imports
Fabrication
India
800
2000
600
1500
350
Gold Price
Tonnes
400
250
1000
RMB/g
Tonnes
300
200
200
500
150
0
2005
2007
2009
2011
2013
100
2005
2007
2009
2011
2013
81
FABRICATION DEMAND
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 midDecember. 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.
CONSUMPTION AND PER CAPITA DEMAND

(EXCLUDING BANK ACTIVITY)
banks to back paper products (a legal requirement in China)

and some double counting of gold that was involved in roundtripping to Hong Kong. Demand from India was also impacted
The tables below outline demand by country and consumption
for much of the year by import restrictions that were gradually
per capita GDP including the following: jewellery consumption;
reduced.
electronics; medical and dental; other industrial; coin

fabrication and bar hoarding. The data does not include any
In terms of per-capita consumption, city states, entrepts and
purchases, holdings or transfers by central or commercial
markets that serve a wider area naturally dominate the list.
banks.
The UAE, via Dubai, and Kuwait both serve not just domestic
markets but also the wider Gulf region and often see volumes
It should also be noted that opaque institutional investment
inflated due to hand-carry trade to India. This was especially
or disinvestment is not tracked in these figures and that
evident in the first half of 2014 when Indian premia were at
this particularly under-reports US and European tonnage
elevated levels.
movements and their impact upon the gold price. Meanwhile,

China and Indias appetites for holding physical bullion, rather
Hong Kong and Singapore have both fallen down the list
than allocations in a London bank, help to inflate the figures.
this year, a reflection of the lower buying levels in the Asian
It is also indicative of smaller scale investors looking to enter
bar and jewellery markets. Indeed, average per capita
the market; often individuals or families looking to store value
consumption saw a sharp fall globally over the course of 2014,
outside the financial system.
falling from 0.66 grammes per person to 0.51 grammes per

person.
FABRICATION DEMAND
Looking at demand by country China tops the list for the

second year running; however, the gap to India has closed
Outside the city states the remainder of the top 20 are
considerably, falling from almost 450 tonnes in 2013 to just
bolstered by a number of factors including: volatile local
43 tonnes in 2014. Chinese demand, as defined above,
currencies; fear of inflation; cultural reasons such as wedding
totalled 895 tonnes compared to India at 852 tonnes and the
gifting; coin fabrication; political instability and higher tax
USA in a distant third at 242 tonnes. Chinese imports of gold,
rates in neighbouring countries. Many of these factors will
and deliveries from the Shanghai Gold Exchange (SGE) were
also help to underpin golds role as a safe-haven investment
also considerably higher than the consumption number owing
even as the risk of systemic instability in financial markets
to growth in gold leasing, increased holdings by commercial
subsides.
CONSUMPTION (EXCLUDING BANK ACTIVITY)
CONSUMPTION PER CAPITA (SELECT COUNTRIES)
Country
2014 Demand
% of Global Total
Country
Rank
Grammes/Capita 2014
China
895 24.2%
UAE
1 8.54
India
852 23.1%
Kuwait
2 8.09
United States
242
Hong Kong
6.5%
6.14
Germany 129 3.5%
Singapore 4 4.94
Japan
119 3.2%
Qatar
5 2.43
Turkey
119 3.2%
Saudi Arabia
2.25
Thailand 93 2.5%
Belgium 7 1.97
Russia
93 2.5%
Canada
Iran
79 2.1%
Germany 9 1.60
UAE
71 1.9%
Turkey
8 1.64
10 1.55
Vietnam 69 1.9%
Thailand 11 1.40
Saudi Arabia
Taiwan
67
1.8%
12 1.22
Indonesia 58 1.6%
Australia 13 1.21
Egypt
58 1.6%
South Korea
14
Canada 58 1.6%
Iran
15 1.02
South Korea
55
1.5%
Japan
16 0.94
Hong Kong
44
1.2%
Vietnam 17 0.77
United Kingdom
41
1.1%
United States
18
Brazil
35 1.0%
India
19 0.69
Pakistan 33 0.9%
Egypt
20 0.68
82
1.10
0.76
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.
Gold jewellery continued to be dominant in the local

jewellery industry, but unlike some emerging markets,
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
10
60
8
40
6
4
20
2
0
0
2005
2007
2009
2011
2013
83
FABRICATION DEMAND
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
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.
Rupiah/US$ exchange rate (thousands)
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.
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 Kongs consumption
figure in 2015.
Tonnes
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.
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.
A feature of the Indonesian gold market last year was

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
FABRICATION DEMAND
Indonesias 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.
40
20
0
2005
2007
84
2009
2011
2013
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
Asias 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.
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.
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
On the domestic front, demand in the final quarter

registered healthy gains, helping to offset what for
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
JAPANESE JEWELLERY FABRICATION
MALAYSIAN JEWELLERY FABRICATION
15
80
Platinum
Domestic
Exports
White Gold
Yellow Gold
60
Tonnes
Tonnes
10
40
5
20
0
2005
2007
2009
Source: Japan Chain Makers Association
2011
2013
2005
2007
2009
2011
2013
85
FABRICATION DEMAND
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.
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 (Malaysias 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.
FABRICATION DEMAND
Jewellery fabrication in Taiwan reversed 2013s 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
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, Italys

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 years 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, Italys 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*
Swiss**
100
Index 2008 = 100
purchase gifts, especially for the elders. Despite the

strong finish to the year we believe Malaysias domestic
consumption volumes retreated by 9% last year.
Italy - Domestic
Italy - Export
80
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.
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 yearon-year with no detectable trends towards more usage of
either yellow, red or white gold pieces.
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
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
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 JEWELLERY FABRICATION
ITALIAN OFFICIAL JEWELLERY EXPORTS BY REGION
300
Europe*
250
N. America
Tonnes
200
S. America
150
Middle East
100
East Asia
50
Others
0
2005
2007
2009
2011
2013
*incl Russia and Turkey
10
15
Source: GFMS, Thomson Reuters;
20
25
Tonnes
30
35
40
Calculations based on Italian export data.Shows only the direct flow of finished pieces.
87
FABRICATION DEMAND
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 years 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.
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.
New Year holidays. Consumers rushed to spend their

weakening roubles, purchasing everything from vehicles
to household appliances, before prices went up.
FABRICATION DEMAND
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-onyear. 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
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% yearon-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 silverintensive.
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.
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% yearon-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.
Gold jewellery fabrication in Mexico rose to six tonnes in

2014, a 22% increase over the previous year. This doubledigit increase was in part due to a shift from a door-todoor sales model to distribution via jewellery centres
and chainstores. Dedicated store fronts tend to hold
larger inventories than single door-to-door sales people.

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
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 FABRICATION
UNITED STATES JEWELLERY IMPORTS
160
140
Dentistry
Other Industrial & decorative
Official Coins
200
Others
East Asia
Electronics
120
South America
150
Turkey
Tonnes
Tonnes
100
80
Italy
100
60
40
50
20
0
0
2005
2007
2009
2011
2013
2005
2007
2009
2011
2013
89
FABRICATION DEMAND
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, Macys, and Tiffanys, 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.
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.
MIDDLE EAST
SOUTH AMERICAN JEWELLERY CONSUMPTION
80
Jewellery fabrication in the Middle East increased by
Other
almost 6% last year to a five-year high, boosted in

part by the high premia in India, which encouraged
increased exports of 22-carat jewellery.
Brazil
Tonnes
60

Fabrication in the Turkish market saw its strongest year
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.
40
20
0
2005
2007
2009
2011
2013
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
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.
MIDDLE EAST JEWELLERY CONSUMPTION
400
Others
Turkey
Egypt
GCC*
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
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 FABRICATION
Gold Price
1800
700
1500
600
500
600
100
300
0
H1-06
0
H1-08
H1-10
H1-12
*GCC: Saudi Arabia, UAE, Oman, Bahrain, Kuwait, Qatar
90
H1-14
US$/oz
900
Tonnes
1200
200
Others
Egypt
Turkey
300
Tonnes
FABRICATION DEMAND
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.
In the domestic market the year was heavily influenced

by changes in credit restrictions. Soon after Valentines
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.
GCC*
400
300
200
100
0
2005
2007
2009
2011
2013
*GCC: Saudi Arabia, UAE, Oman, Bahrain, Kuwait, Qatar
The domestic market is always price sensitive in Turkey

and to understand 2014s 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.
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.
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 its
expected a pick up will ensue below the
92-93 lira/gramme range.
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.
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 exSoviet 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
Moreover, item weights have fallen dramatically during

the elevated price environment and this has compounded
the decline in fine gold consumption. To this end,
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 governments 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
FABRICATION DEMAND
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 Turkeys 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.
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.
FABRICATION DEMAND
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
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% yearon-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.
92
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 Brotherhoodled 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 Egypts 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
EGP Gold Price
60
280
210
40
140
20
70
0
2005
2007
2009
2011
2013
Egyptian Pound/g
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
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.
Tonnes
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.
ELECTRONICS
GLOBAL BILLINGS
(semiconductor billings, millions US dollars)
Gold used in electronics declined 4% in 2014,

dragged down by softer economic conditions and
ongoing substitution.

Global electronics demand fell for the fourth year in
succession in 2014, slipping a further 3.5% to
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
in consumer demand for electronics on the back of an
improving economic environment, globally it is far from
uniform. Economies within the Eurozone, China, and
Japan, all major markets for the production of electronics,
have felt the impact of sluggish economic growth.
The impact of the economic slowdown was widespread,
with falls registered in almost all key markets. Japan,
the largest market in this group, declined 4% year-onyear, while South Korea and Taiwan retreated by 9%
and 3% respectively. The US market, benefiting from an
improving economic environment, saw offtake largely
unchanged compared to 2013 volumes.
350
Other Asia/Pacific
303.3
60.5
34.5 35.1 173.2
2014
Americas
Europe
Japan
Asia
333.6
68.3
37.4
35.0
192.9
Change
30.2
7.8
2.9
0.0
19.6
Change %
10%
13%
8% -0.1% 11%
Source: SIA
with silver and aluminium also being used widely in

commercial applications. In addition, fabricators are also
looking to alternatives in the area of gold salts used in
the electronics field. With life expectancy of electronics
appliances just a few years these days compared to
longer life cycles just a decade ago, longevity and
performance is becoming less important as fabricators
look to lower the ticketed price.
Global demand for semiconductors reached a record high
in 2014, rising by 10% according to the Semiconductor
Industry Association (SIA). As was the case in 2013,
the market was led by the Americas, which enjoyed an
impressive 12.8% annual rise. Elsewhere, European sales
improved considerably, while Japan, falling back into
recession last year, saw new sales stagnate. Turning to
this year, we expect this broad trend to continue, with
rising demand for finished goods, resulting from stronger
economic growth, being more than offset by further
substitution losses for the yellow metal across the sector.
Last year, gold used in Japanese electronics fabrication
declined 4% from the previous year, slipping to an
estimated 83 tonnes. This represents the lowest level
since 2002. Domestic demand was impacted by the
fragile economy which fell back into recession during
the middle of the year following a robust start to the
year. Coupled with the decline in local offtake, further
WORLD FABRICATION OF GOLD BONDING WIRE
Europe
200
Americas
120
Japan
160
210
120
Tonnes
280
140
OECD Industrial Production

100
80
80
70
40
2005
Source: SIA
2007
2009
2011
2013
Industrial Production (2010 = 100)
Global Semiconductor Billings (millions of USD)
GLOBAL SEMI-CONDUCTOR BILLINGS
World
2013
60
2005
2007
2009
2011
2013
Source: GFMS, Thomson Reuters; OECD
93
FABRICATION DEMAND
While underlying electronics demand is expanding, the

use of the gold in this industry is retreating, largely as
a result of substitution losses. Gold used in bonding
wire production, which is widely used in semiconductor
fabrication and consumes a significant portion of total
offtake in this sector, has seen its market share fall from
above 90% in 2008 to an estimated 42% last year as
fabricators looked to lower the cost of production in
a rising gold price environment. Copper wires (both
bare and palladium-coated), which were initially only
used in the most basic electronic appliances, is now
commanding a combined 45% market share (and is
being increasingly used in main stream applications),
ELECTRONICS (INCLUDING THE USE OF SCRAP)

(tonnes)
Japan
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
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
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
17.1 18.1 17.1 16.1 19.4 18.1 16.7 16.2 15.6
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
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
294.3
324.9
331.2
317.9
282.9
332.5
330.0
295.1
289.5
279.3
World Total
2.2
2.2
2.2
2.0
2.0
2.1
2.0
2.0
1.9
FABRICATION DEMAND
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 golds 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.
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.
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.
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.
94
Electronics demand in Europe fell by 4% in 2014, back

to levels seen in 2012. Last years 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
DENTISTRY (INCLUDING THE USE OF SCRAP)

(tonnes)
2005
World Total
2006
2007
2008
2009
2010
2011
2012
2013
2014
62.4 60.7 57.6 55.7 52.7

48.4 42.9 38.6 36.3 33.9
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.
DENTISTRY
In addition, prolonged economic weakness also helped

to explain last years 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.

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.
DENTAL GOLD FABRICATION

80
United States
Other
Japan
Germany
Tonnes
60
40
20
2005
2007
2009
2011
2013
the lower price environment, with global offtake

retreating a further 7%.
In previous generations alloys used in dental applications

contained as much as 65% to 70% gold whereas today
golds 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
FABRICATION DEMAND
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.
Substitution-led losses continued last year, despite
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
Brazil
4.2 5.1 4.9 6.3 7.2 7.2 9.2 10.8 11.3 8.8
Italy
9.8
7.0
India
11.3
11.1
10.0
11.8
11.4
10.8
10.6
10.3
7.8 9.7 10.9 8.6 8.0 7.7 8.2 8.4 8.5
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
92.0
94.5
98.0
97.4
86.4
94.8
95.0
92.3
92.8
87.1
World Total
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 golds 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.
Global demand slipped 6% last year to a five-year

low, dragged lower by a material fall in Indian
offtake.
Other industrial & decorative fabrication in Europe

remained broadly flat last year. European gold
compounds, produced mainly in Germany, are primarily
gold potassium cyanide (GPC) and are used as plating
salts for decorative and industrial use. Industrial demand
OTHER INDUSTRIAL & DECORATIVE USES
120
100
India
Other Europe
East Asia
Switzerland
Other
80
Tonnes
FABRICATION DEMAND
OTHER INDUSTRIAL AND DECORATIVE USES
60
40
20
0
2005
2007
96
2009
2011
2013
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 niches 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
goods plating. However exports to other European countries
remained strong as demand held and switching from local to
German supply of GPC by electronics manufacturers.
Gold consumed in the other industrial and decorative sector
in India declined 24% to 7 tonnes last year, the lowest level
recorded in recent history. A comparison to 2004 numbers
reveal demand has dropped to just one-third of that level.
Such a steep decline is largely related to a shift from plated
items to high value products with greater intrinsic value, a
shift which is natural as the population moves higher up in
the income pyramid. The trend was no different last year
when prices fell sharply with consumers from low income
groups preferring to purchase 22-carat jewellery in the form
of chains or rings with most purchases in the range of five to
eight grammes.
The jari (thread made of gold, silver, and silk, as is used in
the weaving of saris) market suffered again last year. Its
consumption is primarily derived from making wedding
brocades and saris. However its usage has been limited
over the years to just immediate family members during
weddings, and thrifting has played a key role due to a
higher gold price in rupee terms, and shifting fashions.
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.
Chinas 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.
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 20032011 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.
FABRICATION DEMAND
Elsewhere, a weaker economic environment last year drove

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
Japan
20
Tonnes
Hong Kong
Europe
15
10
0
2005
2007
2009
2011
2013
97
8. APPENDICES
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
104
105
106
107
108
109
110
111
112
APPENDICES
Appendix 1 - Gold Futures and Options Turnover (COMEX, SHFE, and TOCOM)
98
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
Feb
3,632,342
435,263
1,038,071
249,915
124,902
1,339,193
140,800
141,559
Mar
3,906,568
408,594
887,611
346,681
124,504
957,936
143,098
108,422
Apr
5,218,768
421,087
1,434,651
794,755
107,970
1,719,855
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
Feb
2,607,548
386,303
Mar
4,199,295
367,561
Apr
2,692,897
541,515
92,038
659,603
1,659,041
617,552
2,782,670
203,574
680,718
78,739
211,928
702,569
380,212
673,526
81,700
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.
APPENDICES
Source: Thomson Reuters and respective exchange websites
99
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
Germany
8,135
11.04
130.78
70.7%
261.50
8,134
11.04
315.37
72.6%
110.21 3,428 56.54
55.10 55.0%
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
9.65
33.89
Switzerland
41.48 1,290 21.34 20.74 36.4%
33.44 1,040 39.44 40.32
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
19.69
India
11.50 358 4.10 5.75 4.2%
600
4.07
1.91
1.2%
11.17 55.4%
1,054
9.82
40.87
1.0%
7.4%
612 23.61 23.75 55.2%
17.93 558 19.38 21.63 6.7%
Turkey
3.73 116
Taiwan
13.61 423 4.66 6.81 2.6%
13.62 424 4.87 16.43 3.8%
Portugal
13.42 417
12.30 383 14.75 14.83 75.3%
6.89
1.87 3.6%
108.81 3,384 130.48 131.22 67.8%
6.71 65.9%
17.01 529 20.40 20.52 16.1%
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
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
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
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
1.99
4.03
4.85
Mexico
0.11
124
2.05
1.35 2.6%
9.7%
3 0.06 0.05 0.1%
125
4.83
11.12 21.9%
8.82 34.7%
9.9%
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
0.07
3.36
104
14
0.23
0.1%
4.79
4.05
1.1%

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

World
APPENDICES
991.30
30,833 1,029.90
32,034
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
100
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
12,256
2008
871.96
712.50
1,011.25
19,071
30,267
2,907
1,033.13
229,694
194.79
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
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
APPENDICES
* Prior to 1999 Deutsche Mark prices have been converted into euros at the official conversion rate
102
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
Dec 509.42 510.10 536.50 489.00 13,829 21,396
1,947 684.77 104,298 293.06
7,131
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$/oz; other currencies reindexed to 2nd January
600
US$/oz
550
500
Swedish National Bank

announces 15t and a further
45t of sales under new CBGA
Syria announces plans
to withdraw from
the Lebanon
Chinese yuan
revalued by 2.1%
Dutch vote no
to EU constitution
French vote
no to EU
constitution
First Palestenian
election since 1996
Oil price
at record
high
Gold at 24-year
high
US first time jobless

claims at 2-year high
Rand
A$
350
Terrorist
attacks
on London
Bank of Korea to
diversify reserves
Iraqi election
Jan
Mar
Feb
Apr
May
Jun
Yen
Euro
450
400
Paris riots
begin
Jul
US$/oz
Swedish National Bank

announces plans to sell 10t
under year two of CBGA 2
Katrina
strikes
the US
Gulf coast
Aug
APPENDICES
650
Bank of Portugal
reveals 10t of sales
over past month
Sep
Oct
Nov
Dec
103


AM fix
PM fix
PM fix
PM fix
rupees/
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

US$/oz; other currencies reindexed to 3rd January
APPENDICES
800
750
Iran removes UN
seals at the Natanz
uranium plant
US$/oz
700
650
Hamas wins
Palestinian
elections
Silver ETF
starts trading
Gold at
26-year
high
Rand
ECB announce 57tonne gold sale
600
Oil price at
17-month low
450
US$/oz
Israel attacks
Lebanon
BT pension fund to invest
3% in commodities
Jan
Mar
Feb
104
Yen
A$
550
500
Euro rises to 1.32

against US dollar
Banco de Portugal
reveals 20 tonnes sale
N. Korea conducts
first nuclear test
N. Korea
missile test
Apr
May
Jun
Jul
Euro
Israel-Hezbollah
conflict
Aug
Sep
Oct
Chinese central bank

comments on
reserve allocation
Nov
Dec

London
London
High
Low

AM fix
PM fix
PM fix
PM fix
rupees/
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

US$/oz
800
Bear Stearns provides

$3.2bn in loans to
bail out hedge fund
Cut in Fed
Funds rate,
basis points
SNB announces
plan to sell 250t
over CBGA year
Dollar weakens
on lower than
expected US
trade report
Turkish troops
cross into
US$/oz
Iraq
Newcrest reveals
2.3 Moz hedge
book cut
Slump in
bond markets
50
News emerges of
prospective Iranian
and US talks
Yen
Rand
700
Euro
Benazir Bhutto
assassinated
A$
Euro
600
500
Iran detains
UK personnel
Global stock
markets fall
Jan
Mar
Feb
Novartis pension
fund reveals 4%
move into
Lihir buyback
commodities
revealed
Apr
May
Jun
Turkish forces
occupy Iraqi
village
25
25
ECB injects 95bn

to reassure markets
Jul
APPENDICES
900
Aug
Sep
Oct
Gold price at
27-year high
Nov
Dec
105

London
London
High
Low

AM fix
PM fix
PM fix
PM fix
rupees/
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
Minimum
17,015
26,398
2,134
692.50
712.50
1,374 276,780
908
185,415
607.45
14,105
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
Feb
924.28
Mar
971.06
922.30
971.50
887.50
20,103
32,320
968.43
1,011.25
925.75 20,048
31,514
Apr
911.60
909.70
946.00
871.00
18,565
May
889.13
Jun
889.54
888.66
927.50 853.00
18,374
29,851
889.49
930.25
18,381
29,665
862.25
29,649
3,080 1,009.10 200,499

3,176 1,010.01
451.79
11,284
11,886
227,169
469.63
3,140 1,047.54 248,320
483.51
12,618
3,002
11,829
977.78
227,189
459.16
2,981
936.24
217,581
452.26
12,165
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

Collapse
of Bear
Stearns
APPENDICES
1300
South
African
power
crisis
1200
1100
Dollar at record
low against euro
US$/oz
Israeli/Gaza
conflict
begins
50
Bailout
of AIG
Rand
A$
1000
US$/oz
Euro
75
900
800
700
600
500
75
50
75
25
Cut in Fed
Funds rate,
basis points
Jan
Feb
106
Collapse of
Washington
Mutual
Gold at
record high
Mar
Apr
May
Oil price at
record high
BT Pension Fund
invests 350m
into commodities
Jun
Jul
Yen
50
Collapse
of Lehman Brothers
Aug
Sep
Oct
US interest
rates at
historic low
Nov
Dec

London
London
High
Low

AM fix
PM fix
PM fix
PM fix
rupees/
yen/g
A$/oz rand/kg
/oz
10g
Annual Average
972.35
22,409
33,834
2,919 1,235.22 261,600
621.07
15,233
Maximum
1,218.25 1,212.50
973.66
25,857
38,963
3,442 1,543.63 324,690
729.97
18,220
Minimum
19,910
29,318
2,337
552.67
12,905
813.00
810.00
1,126.74
232,031
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
14,777
Feb
939.76
943.16
989.00 895.00
23,711
35,327
2,817 1,452.13 302,852
654.60
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
21,402
32,626
2,900 1,136.98
573.97
14,968
Sep
996.44
932.75
242,761
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

1200
China reveals a
454-tonne increase
in its gold reserves
ECB cuts
interest
rate by 50
basis points
1100
US consumer
prices fall most
since 1955
Germany, Japan
and France
exit recession
Yen
Euro
US$/oz
1000
Rand
900
800
APPENDICES
1300
Suspension of
IMF approves gold
Dubai World
sales of 403.3 tonnes
debt repayment
India buys
200 tonnes of
Barrick announces
gold from IMF
the closure of all
US$/oz
gold hedges
Record inflows
into ETFs
700
A$
FOMC
begins debt
monetisation
600
US unemployment
at 26-year high
New CBGA
announced
500
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
107

London
London
High
Low

AM fix
PM fix
PM fix
PM fix
rupees/

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
668.89
16,055
1,197.71 258,374
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
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
1,115.55 1,113.34 1,136.50 1,090.75

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

APPENDICES
1500
US$/oz
1400
1300
1200
IMF announces sale of 10 tonnes

to the Central Bank of Bangladesh
Eurozone sovereign
debt crisis
1600
North Korea torpedoes

South Korean ship
Euro
Anglogold Ashanti completes 95 tonne

buyback
US$/oz
Greece asks for EU-IMF

financial rescue package
EU-IMF endorse Irish bailout
Yen
1000
FOMC announces
$600 billion QE2 package
BIS announces it received 346 tonnes

of gold in swap operations
900
Jan
Feb
Mar
Rand
A$
Earthquake
in Chile
1100
108
North Korea shells

South Korea
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec

London
London
High
Low

AM fix
PM fix
PM fix
PM fix
rupees/
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
Maximum
1,896.50 1,895.00
43,403
52,578 4,697.99 1,801.96 468,817
1,188.73
23,899
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
Mar
1,422.85 1,424.01 1,447.00 1,400.50
32,328
41,892 3,645.73 1,361.18 316,975
850.73
20,333
32,676
42,041 3,740.14 1,408.63 315,893
881.20
Apr
20,811
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
US$/oz; other currencies reindexed to 4th January
2200
IEA releases 600 million

barrels of stockpiled oil
Bond sales by
Italy and Spain
APPENDICES
2500
Italian P.M Berlusconi
resigns
Fed announces
Operation Twist
Rand
US$/oz
1900
Political tension in
MENA
Greek government
passes austerity cuts
A$
Portugal seeks EU bailout
US$/oz
Euro
1600
Yen
1300
1000
Earthquake strikes
north-east Japan
Jan
Feb
Mar
Osama bin Laden killed
Standard & Poors

downgrades US debt to AA+
SNB announces a ceiling for CHF against the Euro
Apr
May
Jun
Jul
Aug
Sep
Libyan leader Gadaffi killed

North Korean leader
Kim Jong-il dies
Oct
Nov
Dec
109

London
London
High
Low

AM fix
PM fix
PM fix
PM fix
rupees/
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
49,114 4,439.99 1,589.72 408,376 1,057.45
27,979
40,731
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
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
51,935 4,484.45 1,654.56 486,317 1,078.30

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
US$/oz; other currencies reindexed to 3rd January
APPENDICES
2200
Fed minutes lower

Fed launches QE3 and anticipates low
hopes of QE3
interest rates through mid-2015
Greek default
avoided FOMC minutes
Mario Draghi pledges
Rand
released, no sign of QE3
to do whatever it takes
Spain seeks
to save euro
banking rescue
Euro
Fed says interest

rates to stay low
until at least 2014
US$/oz
1900
1600
1300
Standard & Poors

downgrades 9 Eurozone
nations, 14 put on
negative outlook
Fed Chairman Bernanke

fails to mention QE3
Francois Hollande
elected as
French President
ECB launches
second round of LTRO
Moodys changes Fed minutes prompt

Germanys outlook increased hopes of QE3
to negative
Fed extends
Operation Twist
ECB announces unlimited
until year-end
bond-buying scheme
Greece bailout
funds approved
Yen
German court ratifies

Eurozone permanent
rescue fund
A$
US$/oz
S&P cuts Spains

credit rating
Fed announces
QE4 package
Barack Obama re-elected
as US President
1000
Jan
Feb
Mar
110
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec

London
London
High
Low

AM fix
PM fix
PM fix
PM fix
rupees/
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
37.6%
28.4%
Range:Average
35.5%
35.6%
37.3%
38.9%
28.4%
21.9%
26.1%

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
30,091
39,513
48,450 4,859.41 1,539.98
Mar
1,591.01 1,592.86
1,613.75 1,574.00
1,579.14 463,478 1,052.42

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
407,174
748.53
30,172
35,191 4,071.12
1,363.12

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
30,152
37,067 4,107.70 1,372.84 414,522
789.03
30,617
1,276.16

1800
Sequester triggers
US spending cuts
Indian government
Q3 U.S. GDP climbed
Import duty in
raises import duty
2.8% annualised
India raised to 10%
to 8%
vs. expected 2.0%
EC suggests
Imports to India get
Cyprus sells
US government shuts
linked to volume of exports
US Fed reduces
400mn worth
down temporarily
US economy shows
bond buying
of gold
on budget impasse
better-than-expected
by $10 bn a month
housing data and
unemployment rate falls
US$/oz
1600
APPENDICES
2000
Indian goverment raises

import tax on gold and
platinum from 4% to 6%
Rand
Yen
1400
1200
Fed will keep interest rate

near zero until unemployment
ECB cuts interest
falls below 6.5%
rate to new low of
President Obama signs
0.5% amid regions
bill to avoid fiscal cliff
ongoing worries
A$
US$/oz
Fed announces it could
start slowing asset
purchases by end-2013
1000
Jan
Mar
Feb
Apr
May
Jun
Jul
Aug
Sep
US: added 203,000 new jobs,

Euro
jobless rate fall to 7%
Oct
Nov
Dec
111


AM fix
PM fix
PM fix
PM fix
rupees/
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
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
30,411
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

Additional taper
takes stimulus down
CME cuts
to $55bn per month Gold short-covering rally
gold futures
A further $10bn
margins by 10%
meets profit taking followed
taper
is
announced
by
heavy
technical
sales
1400
US April NFP rose 304,000
APPENDICES
1500
US November NFP
ECB cuts refinancing
rose by 321,000
rates to 0.05%
Indian festival
and overnight
deposits to -0.20% demand reaches
peak for the year
Yen
Euro
US$/oz
1300
1200
1100
1000
Rand
President Yanukovych
leaves Ukraine
US debt ceiling rises through to
March 2015, technical default averted
ISIS occupies Fallujah;
Ukraine crisis adds
to geopolitical risk.
Jan
Mar
Feb
112
A$
US$/oz
Argentina
India eases gold
defaults on
Malaysian
its debt
Russia threatens import rules
commercial airliner
military exercise
crashes in Ukraine
along Ukraine border
Apr
May
Jun
Jul
Aug
Indias gold import

Russian rouble weakens rule 80:20
13% in a week to scheme abolished
lowest on record
Sep
Oct
Nov
Dec
The cover of the GFMS Gold Survey 2015 is sponsored by the following companies:

Tanaka Precious Metals is Japans leading precious metals refiner and manufacturer. Although best known
internationally for its high specification industrial products, used in various applications ranging from semiconductors
to communications, the company is also a producer and trader of a wide range of gold bullion bars and coins. Tanaka
bars are acceptable good delivery on the London gold market.
Valcambi is a leader in precious metals refining and operates one of the worlds largest and most efficient integrated
precious metals plants situated on a 33 hectare site, at Balerna, Switzerland.
We are one of the worlds largest manufacturers of minted ingots. Reacting to the demands of investors in
different markets around the globe we are continuously carefully developing within the size range from 0.5 g to
1000 g, gold, silver, platinum and palladium minted bars in different forms and new designs. For our clients, according
to their wishes we customize individually obverse and reverse of the bars, certificates and tailored packaging solutions.
All products produced in our foundry and minting facilities are certified by our laboratory, carefully inspected by our
operators, individually packed and controlled before shipment. The Hallmark is not only a guarantee for quality of
Swiss workmanship, it guarantees also the fineness of the most sought after bars in the world, desired by precious
metals connoisseurs and investors alike.
A Valcambi manufactured bar is not only sold at an outstanding price but is synonymous with unique craftsmanship,
guaranteed fineness, transparency and reliability.
GFMS Gold
Gold Market
Market Research
Research
GFMS
and Forecasts
Forecasts
and
SEEK MORE
SEEK MORE
Dig deeper into the gold market with GFMS research

Dig
deeper
into on
theThomson
gold market
withEikon.
GFMSUse
research
and
forecasts
Reuters
the
and
forecasts
on Thomson
Eikon. Use the
the key
new
GFMS gold
pages to Reuters
quickly understand
new
GFMS
gold market
pages to
quickly understand
key
drivers
behind
movements.
See whichthe
factors
drivers
market movements.
See
which
drovebehind
price performance
in the past,
what
willfactors
drive
drove
price performance
in the past,
willand
drive
the evolution
of these markets
in thewhat
future,
what is
the
evolutioninside
of these
markets
in the
future,
and today.
what is
happening
various
sectors
of the
industry
happening inside various sectors of the industry today.
The cover of GFMS Gold Survey 2015 features the wide range of Tanaka and Valcambi minted and cast bars.
Differentpictures on a celluloid symbolise reasons why gold should be looked at as an investment.
Cover designed by Valcambi and executed by BtoB Creativity, Coldrerio, Switzerland.

Historical supply and demand statistics
Historical
supply and demand statistics
Forecasts of supply, demand and price
Forecasts
of supply,
and price
Field research
reportsdemand
on key markets
Field
research
reports
on key markets
Exclusive
analyst
commentaries
giving expert
Exclusive
commentaries
giving expert
insight onanalyst
news and
market developments
insight on news and market developments
To find out more contact us on commoditiesenergy@thomsonreuters.com

ToFor
findmore
out more
contactvisit
us thomsonreuterseikon.com
on commoditiesenergy@thomsonreuters.com
information
For more information visit thomsonreuterseikon.com
2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content,
including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters.
Thomson Reuters and the Kinesis logo are trademarks of Thomson Reuters. S020029 03/15.
THOMSON REUTERS
www.valcambi.com
www.tanaka.co.jp

GFMS Gold Survey 2015

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

GFMS Gold Survey 2015

Uploaded by

Copyright:

Available Formats

GFMS GOLD SURVEY 2015