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LAWRIE WILLIAMS: Gold in almost any other currency…

My colleague (boss) Ross Norman has published an article on this site looking at the precious metal’s performance in many other currencies than the U.S. dollar in which the gold price is almost universally quoted (see: The Stealth Gold Bull Market). Ross points to a couple of examples in major currencies – the UK pound and the Euro. Since 2014 the gold price in U.S. dollars is pretty much unchanged but in the British pound it has risen from £748 to £955 - a 30% rise. In the Euro it has similarly risen from €888 to €1,080 a gain of around 27%.

Ross also notes that in Chinese Yuan gold is up 15% in the same period; in the Russian ruble it is up a massive 94%; in the Indian rupee up 18% and in the Turkish Lira up an enormous 156%. Even in Swiss Francs, Ross notes, gold is up13% since 2014.

As can be seen from the Russian and Turkish examples where sanctions and geopolitical issues have affected the domestic currencies adversely I don’t think Ross has gone far enough in making his point. In Argentina for example the gold price has advanced around 467% in the domestic currency and in Venezuela, where hyperinflation is still raging, the rise has been astronomical.- up almost 3.6 million% in the local currency.

Most currencies have been slipping against the mighty dollar, at leastsince April this year, and as a consequence there are few, if any, currencies, in which gold has not advanced over the past four to five years.. As noted above even what might be considered a pretty stable currency like the Euro and the Swiss Franc have seen what might be considered significant gains. Even the Japanese yen has seen a 4.75 increase in the local gold price over the past five years.

But it is, in particular, worth looking at gold price rises in the principal gold producing nations which may be why global production is not falling to the extent anticipated in the various peak gold scenarios so beloved of gold analysts. A couple of the world’s major gold producers – China and Russia – are among the nations which have seen the gold price appreciate in their local currencies over the past five years. See Table below for the top 10 gold producing nations giving the five year price rises in local currencies (Anomalies with figures in text above due to slightly different timescales involved.)

Table: Top 10 2017 Gold producers

Rank

Country

2017 gold production (tonnes)

5 year price rise over USDin local currency

1

China

429

+3.75%

2

Australia

287

+22.8%

3

Russia

272

+86.6%

4

USA

244

-9.0%

5

Canada

171

+13.8%

6

Peru

167

+10.1%

7

South Africa

157

+34.4%

8

Ghana

130

+100.5%

9

Mexico

122

+36.9%

10.

Indonesia

114

+ 25.1%

 Source: lawrieongold.com, Goldprice.org

 As can be seen in the table in a number of cases the gold price rises in local currencies have been sufficient to stimulate increased gold exploration and consequent production rises. This has been particularly important for gold miners and explorers in Australia and Russia – the number 2 and 3 global gold producers, both of which have seen decent gold output increases in the past couple of years, and has been significant too in staving off more closures in South Africa’s deep, and high cost, gold mines. In the world’s No.1 producer, China, the price rise has been insufficient to counter environmental pressures at some of the country’s mines which have led to closures.

 

26 Oct 2018

About the author

Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London – recently described as the World’s No. 2 University (after MIT).

e: lawrie.williams@sharpspixley.com

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