The price of gold is reaching record highs. Between March and August 2024, he “beat its historical record each month in nominal value, exceeding the threshold of 2 500 dollars per ounce of gold in August »describe four economists from the Banque de France in a recent blog note on this subject.
“Adjusted for inflation, the price of gold is approaching the peak of 1980, consequence of the oil shock of the previous year, and the peak of 2011 result of the sovereign debt crisis in the euro zone, they retrace. It has already passed the peak of the economic shock of 2020. »
Such excitement is surprising “while the rise in real interest rates, the deceleration of inflation and a strong dollar should have favored a decline”emphasize the economists. In fact, the explanation is undoubtedly more geopolitical than economic.
“Financial” gold rather than “physical” gold
Because the demand for so-called “physical” gold, that is to say for the material itself, coming from jewelry (49% of total demand) or the electronics sector (7%) is stable. It is the demand for gold as a financial asset that is growing, in particular from certain central banks which seek to diversify their reserves to face international sanctions which affect their stock of dollars.
We think first of Russia. But Chinese and Indian central banks, for example, are also seeking to “dedollarize” to avoid having too much exposure to the greenback, perceived as a weakness in a context of growing geopolitical tensions.
Result, “although the dollar remains the predominant currency in central bank reserves, its share has fallen to 59 %, the lowest since 25 ans »specifies the Bank of France. And, “in total, central bank demand for gold has doubled over the last two years”.
The increase in demand for gold for financial reasons is also driven by the change in behavior of certain groups of investors, due to the change in economic fundamentals in their countries.
So, “Chinese and Indian households have significantly increased their investments in gold, excluding jewelry, probably in the face of real estate markets (…) falling in China and increasing their savings capacities in India ».
Strong growth in Africa
This very sharp rise in the price of gold is not without consequences for producing countries, particularly on the African continent. “Gold in Africa has a very long history,” retraces the last issue of the magazine Contemporary Africadevoted to this subject, and in particular to the artisanal aspect of African gold production.
Il “occupies an important place in African societies since the Neolithic (…) and was at the center of trans-Saharan trade in the Middle Ages”.
More recently, gold rushes took place as soon as significant price increases were observed, “throwing a large number of people on the roads and tracks in search of a higher income”, describes Marc Raffinot, emeritus lecturer at Paris-Dauphine University and specialist in development economics in the introduction to the file.
So, “the rapid increase in the international price of gold explains the growth in gold production in Africa from the early 2000s”. In 2020, the continent represented no less than 20% of global production, with Ghana, South Africa, Sudan, Mali and, to a lesser extent, the Democratic Republic of Congo (DRC) and Burkina Faso.
“It is often the production of modern mines which attracts attention, particularly from public authorities, warns Marc Raffinot. But this industrial production coexists with considerable artisanal production, both in terms of jobs and income and in volume of production. »
We then talk about gold panning, an activity which employs a million people, supports more than six million on the continent and suffers from a bad reputation, at the very least from an ambivalent representation, between wealth and the “curse of natural resources”. “.
“Gold panning is often accused of all evils [accidents, pollutions, maladies, destruction de l’environnement, corruption, violence, financement du terrorisme etc., NDLR]unlike the modern sector which would represent, at least potentially, resources favorable to development”summarizes the specialist.
Gold panning or industrial extraction?
A simplistic vision that the various contributions brought together by the journal attempt to overcome. Certainly, we cannot neglect the shortcomings in terms of security suffered by gold miners during accidents, nor the violence induced by a desire to appropriate the resource, whether by the dominant elites or by the rebels in the Sahel region. , for example, particularly in the case of illegal gold panning.
The benefits, for the State and the community, of an industrial gold extraction activity are often overestimated
But, conversely, the benefits, for the State and the community, of an industrial gold extraction activity are often overestimated. Particularly because this sector benefits from advantages created by mining codes to attract foreign companies, including exceptional tax regimes.
Furthermore, the companies in question “have multiple possibilities to minimize their profits on an accounting level, in particular via transfer prices or payments to other subsidiaries of the group”. The main players in the modern mining sector in Africa are indeed multinationals from Canada, South Africa, Russia, the United States and even Australia.
In fact, from the turn of the 2020s, several studies had already called for going beyond this virtuous industrial sector / artisanal activity to be repressed. They suggested, rather than repression, putting in place “public policies that accompany enrichment” generated by gold panning.
It would be a question of getting out of the dilemma between severe repression and total laissez-faire. A proposal whose numerous field studies presented in Contemporary Africawhich take us to Mali as well as to Kenya, Ivory Coast or Burkina Faso, confirm the relevance.
Another observation highlighted: the need for national authorities to take into account local practices for reforms to be successful. In other words, the opposite of what happened, for example, in the DRC during the attempted mining reform of 2018, which was followed by very few effects.
“The development objectives, already limited (…), only take into account the government and mining companies without any consideration of the opinions, aspirations of communities and mining operators in the artisanal segment, despite its weight in the economy national”, explains Gédéon Mulamba Tchomba, from the University of Middle Lualaba, located in one of the provinces with high gold potential in the country.
Turn resources into wealth
Conversely, in western Kenya, after having failed to impose an overly technical reform of the mining code on gold miners, the regional office of the Ministry of Oil and Mines ended up providing support to gold miners who are united within a team.
Objective: to help them operate their wells in the safest possible conditions, by advocating the adoption of standard gallery sizes, as well as minimum thicknesses for the boards or beams that line them, explains Joseph Bohbot, doctoral student in geography at the Sorbonne, who is preparing a thesis on Kenyan gold prospectors.
The support of the ministry made it possible to give legitimacy to the actions of this control team, and thus to accept the financial contribution requested from the gold miners visited, but also, for the ministry, to compensate for the weakness of its resources and to allow better acceptance of checks by minors, the latter being carried out by their peers.
“The local context plays a huge role in whether a resource becomes wealth or turns into a curse”, Marc Raffinot, economist
Without demonizing or sweeping under the carpet the challenges posed by gold panning, the fact that this sector is a wealth or a curse for the different countries concerned therefore depends largely on the action of the States concerned to regulate the practice. The observation goes beyond the sole case of gold. “The local context plays a huge role in whether a resource becomes wealth or, on the contrary, becomes a curse”explains Marc Raffinot.
The researcher points in particular to the exemplary case of Botswana, whose economy is based on diamond mining and shows, despite the recent weakening of the sector, “that it is possible to considerably increase the standard of living of the population with development based on a single raw material”. This is something that not all countries with significant resource potential have been able to do.
