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Visualizing the Power of Gold Versus Currencies

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The Power of Gold Versus Currencies

The Power of Gold Versus Currencies

Since the gold standard was abandoned in 1971, the relationship in value between currencies and gold has moved in only one direction: down.

At that time, U.S. President Richard Nixon suspended the convertibility of the dollar into gold, effectively bringing the Bretton Woods system to an end.

Today’s visualization comes from the In Gold We Trust report, and it shows that over the last 40 years, the purchasing power of the world’s most popular currencies have declined significantly against the precious metal.

Turbulent Years

In the first decade after the gold standard was abandoned, the international monetary system was seriously shaken. Several U.S. recessions, coupled with international conflicts and high price inflation put the world’s reserve currency under enormous pressure.

During the 1973-74 oil crisis the price of gold rose 65%. In 1978, U.S. bonds had to be issued in the hard currencies of the Swiss franc and the German mark–the so-called Carter bonds.

The next decade saw the rehabilitation of the dollar through a highly restrictive monetary policy run by the Federal Reserve that led to sky-high interest rates. The trend continued with the fall of the communist Eastern Bloc in the early 1990s.

The Erosion of Purchasing Power is Accelerating

Gold is still the universal reserve asset to which central banks, investors, and private individuals return in times of crisis. Since 1971, the average annual growth rate of the metal price in U.S. dollars is just over 10%. Since the Euro was introduced in 1999, the gold price in EUR has risen by 356%, or on average 7.8% per year.

Unsurprisingly, over the last 40 years, the best performing G-10 currency was the Swiss franc, largely due to its close relationship with gold. The Swiss National Bank has one of the largest reserves worldwide.

CountryGold Reserve (Tonnes)
Value (US$ billions)
🇺🇸 United States8,133.46$493.6
🇩🇪 Germany3,362.45$204.1
🇮🇹 Italy2,451.84 $148.8
🇫🇷 France2,436.19$147.8
🇷🇺 Russia2,298.53$139.5
🇨🇳 China1,948.31$118.2
🇨🇭 Switzerland1,040.00$63.1
🇯🇵 Japan765.22$46.4
🇮🇳 India676.64$41.1
🇳🇱 Netherlands612.45$37.2

Despite significant corrections, gold was able to outperform virtually every other asset class and above all, every other currency between 2001 and 2019.

Gold breakout

Amid the turmoil brought about by Covid-19, investors again increased their exposure to gold. In August, the metal price surpassed $2,000 per ounce for the first time ever.

As political and economic tensions tend to endure over the next decades, so does gold’s role as an anchor during uncertain times.

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Visualizing Global Gold Production in 2023

Gold production in 2023 was led by China, Australia, and Russia, with each outputting over 300 tonnes.

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Graphic breaking down global gold production in 2023

Visualizing Global Gold Production in 2023

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Over 3,000 tonnes of gold were produced globally in 2023.

In this graphic, we list the world’s leading countries in terms of gold production. These figures come from the latest USGS publication on gold statistics (published January 2024).

China, Australia, and Russia Produced the Most Gold in 2023

China was the top producer in 2023, responsible for over 12% of total global production, followed by Australia and Russia.

CountryRegion2023E Production (tonnes)
🇨🇳 ChinaAsia370
🇦🇺 AustraliaOceania310
🇷🇺 RussiaEurope310
🇨🇦 CanadaNorth America200
🇺🇸 United StatesNorth America170
🇰🇿 KazakhstanAsia130
🇲🇽 MexicoNorth America120
🇮🇩 IndonesiaAsia110
🇿🇦 South AfricaAfrica100
🇺🇿 UzbekistanAsia100
🇬🇭 GhanaAfrica90
🇵🇪 PeruSouth America90
🇧🇷 BrazilSouth America60
🇧🇫 Burkina FasoAfrica60
🇲🇱 MaliAfrica60
🇹🇿 TanzaniaAfrica60
🌍 Rest of World-700

Gold mines in China are primarily concentrated in eastern provinces such as Shandong, Henan, Fujian, and Liaoning. As of January 2024, China’s gold mine reserves stand at an estimated 3,000 tonnes, representing around 5% of the global total of 59,000 tonnes.

In addition to being the top producer, China emerged as the largest buyer of the yellow metal for the year. In fact, the country’s central bank alone bought 225 tonnes of gold in 2023, according the World Gold Council.

Estimated Global Gold Consumption

Most of the gold produced in 2023 was used in jewelry production, while another significant portion was sold as a store of value, such as in gold bars or coins.

  • Jewelry: 46%
  • Central Banks and Institutions: 23%
  • Physical Bars: 16%
  • Official Coins, Medals, and Imitation Coins: 9%
  • Electrical and Electronics: 5%
  • Other: 1%

According to Fitch Solutions, over the medium term (2023-2032), global gold mine production is expected to grow 15%, as high prices encourage investment and output.

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Charted: The Value Gap Between the Gold Price and Gold Miners

While gold prices hit all-time highs, gold mining stocks have lagged far behind.

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Line chart comparing gold price and gold mining stocks since 2000.

Gold Price vs. Gold Mining Stocks

This was originally posted on our Voronoi app. Download the app for free on Apple or Android and discover incredible data-driven charts from a variety of trusted sources.

Although the price of gold has reached new record highs in 2024, gold miners are still far from their 2011 peaks.

In this graphic, we illustrate the evolution of gold prices since 2000 compared to the NYSE Arca Gold BUGS Index (HUI), which consists of the largest and most widely held public gold production companies. The data was compiled by Incrementum AG.

Mining Stocks Lag Far Behind

In April 2024, gold reached a new record high as Federal Reserve Chair Jerome Powell signaled policymakers may delay interest rate cuts until clearer signs of declining inflation materialize.

Additionally, with elections occurring in more than 60 countries in 2024 and ongoing conflicts in Ukraine and Gaza, central banks are continuing to buy gold to strengthen their reserves, creating momentum for the metal.

Traditionally known as a hedge against inflation and a safe haven during times of political and economic uncertainty, gold has climbed over 11% so far this year.

According to Business Insider, gold miners experienced their best performance in a year in March 2024. During that month, the gold mining sector outperformed all other U.S. industries, surpassing even the performance of semiconductor stocks.

Still, physical gold has outperformed shares of gold-mining companies over the past three years by one of the largest margins in decades.

YearGold PriceNYSE Arca Gold BUGS Index (HUI)
2023$2,062.92$243.31
2022$1,824.32$229.75
2021$1,828.60$258.87
2020$1,895.10$299.64
2019$1,523.00$241.94
2018$1,281.65$160.58
2017$1,296.50$192.31
2016$1,151.70$182.31
2015$1,060.20$111.18
2014$1,199.25$164.03
2013$1,201.50$197.70
2012$1,664.00$444.22
2011$1,574.50$498.73
2010$1,410.25$573.32
2009$1,104.00$429.91
2008$865.00$302.41
2007$836.50$409.37
2006$635.70$338.24
2005$513.00$276.90
2004$438.00$215.33
2003$417.25$242.93
2002$342.75$145.12
2001$276.50$65.20
2000$272.65$40.97

Among the largest companies on the NYSE Arca Gold BUGS Index, Colorado-based Newmont has experienced a 24% drop in its share price over the past year. Similarly, Canadian Barrick Gold also saw a decline of 6.5% over the past 12 months.

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