Recycled gold, which accounted for an average of about a third of total global gold supply in the last 20 years, fell to its lowest level in the last seven years in 2014, and is likely to remain ‘muted’ in 2015.
According to a report — The ups and downs of gold recycling: understanding market drivers and industry challenges — by the World Gold Council (WGC) and the Boston Consulting group gold recycling fluctuates fluidly with gold prices and economic conditions.
In 1999, it accounted for just 17 per cent of the total gold supply. In 2009, with higher gold prices and the global economy faltering, recycled gold hit a record 1,782 tonne, accounting for 42 per cent of the total gold supply.
In 2014, gold recycling fell to its lowest level at 1,122 tonne or 26 per cent of the total gold supply. “We expect it to remain low throughout 2015. This is partly a result of gold prices being lower than they were several years ago, leading to less ‘distress selling’ as a result of greater economic stability, and the depletion of near-market gold recycling materials,’’ the report says.
“That said, recycling is the most dynamic element of supply and helps balance the gold market,’’ said WGC Head (Marketing Intelligence) Alistair Hewitt. “Any price increase in 2015 may elicit an increase in gold recycling volumes.’’
The level of recycling has remained fairly stable in India, and makes up a remarkably small proportion of its total stock of gold — less than 0.5 per cent of the estimated annual 22,000 tonne in India, the report says.
“In India, gold consumers generally opt for the jewellery channel to sell gold,’’ WGC Managing Director (India) P.R. Somasundaram said.
“In 2014, India recycled just 77 tonne. The attitude towards gold has kept recycling low, and recycling tends to happen when there is a switch to another asset class.”
He said the recent policy announcement introducing a standard India gold coin, bonds and a new monetisation scheme sought to address varied consumer preferences linked to gold, which were also likely to impact recycling.
“More London Bullion Market Association (LBMA) accredited refiners in India will result in more confidence, and the gold monetisation scheme in particular can usher in more recycling. It can be the biggest game-changer over the next decade for the Indian gold consumer,” Mr. Somasundaram said.
