Global gold scrap recovery rose 27 per cent to 1,200 tonnes in 2008 as consumers benefited from arbitrage opportunities in local versus global markets. Scrap supply surges on waning investors’ interest towards gold and other asset classes look more profitable.
A Gold Field Mineral Services (GFMS) survey shows higher levels of gold recycling in 2008, largely because of profit taking and distress selling by individuals, although the retail trade and manufacturers also melted larger quantities of unsold jewellery.
The most significant increase was reported by Turkey due to a combination of soaring local prices and the economic downturn, which saw the country achieve a record level of recycling in 2008. High local prices were also a key driver in other countries, such as India, which saw its recycling rise by nearly a quarter last year.
Talking about rising retail investment, Philip Klapwijk, chairman of GFMS, a London-based independent precious metal research consultancy, said that gold investment experienced a dramatic surge in 2008 although the market experienced wide fluctuations in investment activity, including an eventual sharp divergence between that in ‘paper’ products and in gold’s physical investment markets.
Robust speculative inflows in the futures and over-the-counter (OTC) markets earlier in the year gave way to an explosive rise in demand for physical investment products.
Overall, 2008 saw a growing interest from smaller retail investors, high net worth individuals and, perhaps most importantly, increased participation by a broader group of institutional players in the gold market.
Klapwijk said that speculative inflows into commodities, soaring energy prices, fresh lows in the dollar, inflationary threats and the ongoing credit crisis drove the gold price to record highs in the first quarter, as investors were lured by positive price expectations as well as gold’s appeal as a safe haven and dollar/inflation hedge.
