The much anticipated CPM Group Gold Yearbook 2012 has arrived and once again promises to be a standard reference for both academics and investors as to what is really happening in the precious metals business. Highly recommended :
Gold prices continued to rise for the tenth consecutive year, on an annual average basis, during 2011. Prices averaged $1,527.00 during the year, up 27.9% from 2010. Gold prices touched a nominal record high settlement price of $1,889.70 on 22 August 2011. Prices touched a nominal record high of $1,920.70, on an intraday basis, on 6 September. Over the next 14 trading days gold plunged to $1,532.70, on 26 September. The circumstances that drove gold to these record levels and then led to a 20% decline in three weeks are analyzed and discussed in detail in CPM Group’s Gold Yearbook 2012, released March 30th.
Investor fears over a host of economic, financial, and political problems drove investors to buy large volumes of gold during the first three quarters of last year. By late September there was a palpable shift in investor attitudes. Financial conditions and economic prospective still looked bleak, but it was becoming increasingly evident to investors that even though the global financial system remained under severe strains, the dollar, the euro, the European Central Bank, and major commercial banks perhaps were not going to collapse. Investors stopped buying indiscriminately of prices and became more price sensitive, buying on dips instead of into rallies. Gold prices are forecast to remain at elevated levels during 2012, but are unlikely to rise above the record high level reached in 2011.
Investment demand, the key driver for gold prices, remained at historically high levels last year. Net additions to private investor gold holdings declined to 34.3 million ounces in 2011, down 5.8% from 2010 levels. Even though net additions to private investor holdings slipped lower in 2011, a year in which prices touched a record high, the decline had followed two years of double-digit growth from already high levels of net additions to investor holdings.
Many of the major issues that are adversely affecting the global economic environment, such as debt, deficit, and trade imbalances, that have been driving investors to buy gold, driving prices higher, are expected to take years if not decades to be corrected. Investors in emerging market economies, particularly in China and India, continue to buy gold as a form of savings. Low real interest rates and various government restrictions over other investments have helped Chinese investment demand for gold to grow at a double-digit rate since 2008. In 2011 Chinese investors are estimated to have added more than 4.0 million ounces of gold to their holdings. Going forward, most investors are expected to hold onto the gold they already own and should seem likely to be interested in adding to their holdings. They are not expected to chase gold prices higher as they have over the past few years, however. Instead investors are expected to add to their holdings on price declines. Net additions to gold holdings over the course of 2012 are expected to be flat from levels seen in 2011. Such high levels of net additions to investor holdings are expected to keep gold prices at elevated levels.
Central banks were net buyers of gold for the fourth consecutive year in 2011, adding 12.7 million ounces of the metal to their holdings on a net basis. This was up from the 10.1 million ounces of the metal added to holdings in 2010. Gross purchases by central banks have been trending lower over the past three years, possibly as a result of rising gold prices, but gross sales have been declining at a faster rate than gross purchases. The trend of central banks buying gold to diversify their monetary reserves away from the U.S. dollar and euro is expected to continue.
Newly refined market economy annual gold supply rose to 119.9 million ounces in 2011, marking the fifth consecutive annual increase in gold supply. This 0.8% year-on-year increase was mostly driven by higher mine production. Annual gold mine output rose for the third consecutive year to 70.4 million ounces in 2011, up 2.1% from 68.9 million ounces in 2010. Secondary supply of gold rose to 40.6 million ounces in 2011, which was up 0.5% from 40.3 million ounces the previous year. Higher prices boosted scrap sales of gold, but broad consumer expectations for higher gold prices curbed growth. This year’s Gold Yearbook contains an in-depth analysis of the shift in global gold mine production over the past decade, with a look at expected growth over the next ten years from the largest gold producing countries today and future significant producers.
Gold fabrication demand rose 0.6% to 72.9 million ounces in 2011, slower than the 2.3% growth in 2010 due to higher gold prices. Despite higher prices, many consumers sought to purchase more gold jewelry, specifically in developing countries, as a hedge against inflation and form of savings. Developing countries’ demand for gold in the form of jewelry rose to 50.2 million ounces, up from 49.6 million ounces. Meanwhile developed countries’ demand for gold jewelry continued to decline, toward 8.4 million ounces in 2011 from 8.7 million ounces the previous year, backed by the continued transfer of jewelry manufacturing from these countries to developing countries.
CPM Group has been producing annual Yearbooks on gold, silver, and platinum group metals, in a series of reports that began in 1971. This year’s reports are being published by Euromoney Books and Metal Bulletin. This year’s reviews have been priced at $150.00 plus shipping and handling to make them readily available to individual investors as well as institutions, corporations, and governments.
The Gold Yearbook 2012 is sponsored by Barrick Gold Corporation, Bahrain Financial Exchange, CME Group, Commodities Now, The Electrum Group of Companies, Global Board of Trade Ltd., Institute of Scrap Recycling Industries, Inc., Kitco Metals Inc., Multi Commodity Exchange of India Ltd, New Zealand Mint, Noah Financial Innovation, Pretivm, Primero Mining, Sabin Metal Group of Companies, and the Singapore Mercantile Exchange.
CPM Group is an independent commodities research, consulting and investment banking company headquartered in New York. The company is considered the foremost authority on markets for precious metals, and provides detailed and highly regarded research on specialty and base metals, energy, and agricultural markets. CPM Group provides advisory services relating to commodity risk management and asset management as well. The group has produced annual reports on gold and silver since 1971, and annual surveys of the platinum group metals markets since 1981.
2012 Calendar
Silver Yearbook Release and Precious Metals Investment Seminar: Thursday, 17 May 2012.
Platinum Group Metals Yearbook Release: Tuesday, 26 June 2012.
Platinum Group Metals Seminar: Wednesday, 19 September 2012.
For more information, please contact CPM Group.
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