Blog Series 10: A Week in Precious Metals

21st September 2018

The Royal Mint’s Director of Precious Metals, Chris Howard, looks back at what the week has held for precious metals:

It’s been a mixed week for our favourite metal as, initially, gold investors had sided with the dollar amid heightened trade tensions between the US and China. President Trump imposed 10% tariffs on around $200 billion goods worth from China which, combined with interest rate hikes in the US, meant the resolve of investors was tested. However, research from the International Monetary Fund (IMF) found that gold constituted 10% of global FX reserves at the end of H1 2018, demonstrating the metal’s importance to central banks. Let’s take a look at some of the interesting stories from this week in the world of precious metals.

• Off to Turkey firstly, where commercial banks have turned to gold reserves as the lira continues to struggle. Doubts over President Erdogan’s influence on monetary policy and an ongoing political row with the U.S culminated in a staggering 40% drop in the lira against the dollar since the start of the year. In June, it was reported, the Central Bank of Turkey’s weekly gold holdings fell by almost 20%, and now the country, which is the 5^th largest global consumer of the metal, is dipping further into its reserves to boost cash flow. While I am wholly in favour of reduced political tensions between the U.S and Turkey and hope the lira revives in order to kickstart the economy, it just further demonstrates the perception society has of gold. That is, in difficult times, it can be relied upon due to its safe haven qualities.

• Encouraging news from India, as it has been reported that the country has the capacity to produce over 100 tonnes of gold annually. The country currently imports around 900 tonnes per year to satisfy huge domestic demand but after the closure of the iconic Kolar Gold Field in 2001, there remains just one mine. The solitary mine produces 1-1.5 tonnes of gold per year but experts have said the capacity is there to bring about a much higher production rate. If there is an appetite from the Indian government and private companies to invest in the infrastructure, I think this represents a great opportunity to provide jobs to thousands and create a booming gold export economy.

• We end this week with a peculiar discovery in Canada’s Yukon Territory gold mine: the mummies of an ice-age caribou and wolf pup. The mining area, known for discoveries of fossilized bones of animals, was once home to a diverse range of ice-age mammals like woolly mammoths and sabre-toothed cats. Radiocarbon analysis of the skin of caribou and wolf pup reveal they could be between 50,000-80,000 years old! It seems like the Yukon Territory produces more than one type of golden discovery. 

*At the time of publication, this information is correct. Please note we are unable to provide financial advice, so we recommend that you speak with a financial advisor regarding your options.