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With the increase in volatility and uncertainty in the global economy, the price of gold, as a traditional safe-haven asset, has been climbing in recent years. Recently, the international gold price approached $2,700 per ounce, and the total market value of global physical gold also ushered in a historic breakthrough - crossing the $20 trillion mark for the first time!
How is it calculated? According to the latest data released by the World Gold Council in February, the global stock of mined gold was 212582 tonnes at the end of 2023, and when converted into ounces (1 tonne = 35,273.96 ounces) and multiplied by the current gold price (which hit a high of $2,670 on Wednesday's session), the total market capitalization is just over $20 trillion.
How strong is the purchasing power of $20 trillion in gold? If we compare it with the stock market, we can find that the world's gold market value can almost buy the world's top 10 listed companies. That's equivalent to the combined market capitalization of Apple, Microsoft, Nvidia, Amazon, Google, Saudi Aramco, Meta, Berkshire, TSMC, and Eli Lilly.
It is worth noting that before the outbreak in 2020. At that time, the total market capitalization of gold did not exceed $10 trillion. However, as uncertainty increases in the global economy, gold prices are starting to accelerate their upward trajectory. In just two years, the total market value of gold has doubled.
At present, the Federal Reserve and major central banks around the world have entered a new easing cycle to cope with downward pressure on the economy and inflation. It undoubtedly provides strong support for the further rise of gold prices. So far this year, the price of gold has risen by nearly 30%, making it the largest increase in the same period in the past 30 years.
Analysis of global gold production
From the perspective of gold production, according to the statistics of the World Gold Council, global gold mine production continued to grow from 2015 to 2018, reaching a peak of 3,655.84 tons in 2018; From 2019 to 2020, gold mine production showed negative growth, partly affected by factors such as the epidemic, high mining costs, and the increasing difficulty of mining the remaining gold mines. Growth resumed again in 2021-2022, close to the previous peak, with global mine production of 3,627.72t in 2022. In the first half of 2023, global mine production totaled 1,780.5t.
China is the world's largest gold producer
According to the statistics of the World Gold Council, the global gold mine production in 2022 will be 3627.72 tons, China, Australia and Russia account for 1/3 of the world's gold production, and the top five major gold producing countries account for 45% of the gold production. China is the world's largest gold producer, accounting for nearly 11% of global mine production in 2022, followed by Australia and Russia with 10%.
From the perspective of gold price trends, from 2017 to the first half of 2020, the global gold price showed a fluctuating growth trend, reaching a high of US$2,000 per ounce in July 2020. From 2021 to 2023, the global gold price fluctuated at a high level, reaching $2,045.4 per ounce in December 2023.
The price of gold has always fluctuated and is affected by a variety of factors, such as global political situation, economic development, inflation, etc. Gold prices have been relatively high in recent years and play the role of a safe-haven asset in financial markets. As global economic uncertainty increases, so does the demand for gold. Factors such as increased investment demand, geopolitical tensions, interest rate cuts and central bank purchases could all boost gold prices, as Bank of America commodity strategist Michael Widmer wrote in a recent note to clients. BofA expects gold to reach $3,000 an ounce in the next 12 to 18 months.
Note: This article is for content purposes only and does not constitute any investment advice.
Prospective Economist APP Information Group
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