Modern Mining January 2021

the end of September. Funds listed in other regions added 6,1 t during the quarter, with Australia added 5,3 t of the total. In its latest report, the Wold Gold Council notes that in terms of price performance, gold rose 25% during 2020, hitting a historical high of US$2 067,15/oz on 6 August. Despite dropping 12% in March, when markets were rocked by the onset of the COVID-19 pandemic, gold recovered to finish the year among the best-performing assets, despite many stock indices reaching or surpassing all-time highs. Gold’s volatility during the year was also higher, with annualised volatility at 20%, the highest level since 2013 and significantly above the longer-term average of around 16%. However, the increase in gold’s volatility should be viewed in the context of the volatility of all assets. Most assets saw volatil- ity rise last year. For example, the volatility of the S&P 500 climbed to a whopping 32%, almost double its long-term average of 18%. Exploration in the spotlight Gold production and exploration data forms an important part of the World Gold Council’s market analysis and reports. Street says the council has seen some increases in gold exploration in recent years, driven by gold miners having healthier bal- ance sheets and the need to ensure an adequate project pipeline to replace aging assets. “There has been a lack of significant new dis- coveries over the past decade despite gold mining companies investing more in exploration, as this has tended to focus on known deposits or exist- ing operations. While increased M&A activity and weaker gold prices, as well as the impact of the COVID-19 pandemic, have impacted exploration

outbreak, she says, due to the environment of low or negative real interest rates and geopolitical uncertainty. “However, the spread of COVID-19 across the globe heightened investors’ appetite for gold. Global investment demand for gold (incorporating retail investment in gold coins and small gold bars as well as inflows into gold-backed ETFs) reached 494,6 t in Q3 2020. This was 21% higher than the Q3 2019 total,” she says. “However, investor demand has changed since we last reported these results in our Q3 Gold Demand Trends report. Following months of record inflows for gold-backed ETFs, November marked the first month of outflows in exactly a year. These monthly outflows were the second largest ever, decreasing by US$6,8-billion (2,9% AUM), though net inflows in 2020 (US$50,3-billion) remain well above any previous full-year inflows,” she adds. It is perhaps unsurprising, adds Street, that investors felt more optimistic as news of COVID-19 vaccines dominated the global news agenda. “That said, 2020 has been defined by market volatility and swings in all asset classes,” she says. Judging by the data from the World Gold Council’s Q3 Gold Demand Trends report, investors across the three major global regions increased their holdings in gold-backed ETFs. North American-listed funds saw by far the largest share, attracting 70% of the global volume inflow during Q3. Holdings in the region grew by 190,9 t to stand at 2 089,4t (AUM US$126,8-billion) by the end of the quarter. European-listed fund accounted for 54,9 t, 20% of global additions during the quarter. Meanwhile, Asian-listed gold-backed ETFs saw their highest ever reported quarterly inflows of 20,7 t in Q3, which took holdings in this region to an all-time high of 121 t at

Mine production is expected to improve this year.

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