Modern Mining January 2021

GOLD

stoppages compared to those seen in the early stages of the pandemic. 2021 outlook Street expects uncertainty to continue to play a big role in investment behaviour and gold demand all over the world this year. There is ongoing uncer- tainty as to the longer-term impact of the pandemic on economies throughout the world and what shape the recovery will be, she says. And this will continue to shine a spotlight on gold’s role as an effective risk hedge. “Looking ahead, there are various economic and geopolitical conditions that are likely to be sup- portive of gold. For example, the higher inflation allowance policy introduced by the US is gaining momentum in multiple regions, assuring that global real rates remain extremely low or negative for the foreseeable future. Our research shows that gold has traditionally performed well in both inflationary and deflationary environments,” adds Street. Looking ahead, the World Gold Council believes that investors will likely see the low interest rate envi- ronment as an opportunity to add risk assets in the hope that economic recovery is on the immediate horizon. That said, investors will likely also be navi- gating potential portfolio risks including ballooning budget deficits, inflationary pressures and market corrections amid already high equity valuations. “In this context, we believe gold investment will remain well supported while gold consumption should benefit from the nascent economic recovery, especially in emerging markets,” concludes Street. 

over the past two years, we could see more activity this year,” she says. Meanwhile, in its Gold Outlook 2021 report, the World Gold Council notes that mine production is likely to improve this year. Recovery in mine produc- tion is likely this year after the fall seen in 2020, the report says. Production interruptions peaked dur- ing the second quarter of last year and have since waned. While there is still uncertainty about how 2021 may evolve, it seems very likely that mines will experience fewer stoppages as the world recovers from the pandemic. This would remove a head- wind that companies experienced in 2020 but that is not commonly part of production drivers. Even if potential second waves impact producing coun- tries, major companies have introduced protocols and procedures that should reduce the impact of

While there is still uncertainty about how 2021 may evolve, it seems very likely that mines will experience fewer stoppages as the world recovers from the pandemic.

Key takeaways  The COVID-19 pandemic had a substantial impact on global gold demand in 2020, with global demand dropping by 19% year-on-year to 892 t in Q3 2020, as consumers continued to feel the impact of the pandemic  Despite the decline in overall demand, Q3 saw significant growth in invest- ment demand, which rose by 21% y-o-y  The World Gold Council has seen some increases in gold exploration in recent years, driven by gold miners having healthier balance sheets and the need to ensure an adequate project pipeline to replace aging assets  Looking ahead, the World Gold Council believes that investors will likely see the low interest rate environment as an opportunity to add risk assets in the hope that economic recovery is on the immediate horizon

28  MODERN MINING  January 2021