Record gold prices boost jewelry recycling

Record gold prices boost jewelry recycling
Record gold prices boost jewelry recycling

“Unlike many other metals, gold is infinitely recyclable,” without losing its properties, says an expert. (Photo: 123RF)

Record gold prices are weighing on overall demand, but boosting the recycling of the precious metal, with individuals offloading their jewelry to take advantage of the high prices.

“Historically, there is a close relationship between the price of gold and recycling, because when prices rise, people tend to sell their goods to take advantage of the high price levels,” Krish Gopaul told AFP. analyst at the World Gold Council.

According to the World Gold Council (WGC), mining production typically accounts for around 75% of the world’s supply of the yellow metal each year. The rest of the supply is ensured through recycling.

Since the start of the year, the price of the precious metal has risen more than 13% to reach the all-time high of 2,431.52 US dollars on April 12, galvanized by expectations of lower US interest rates which are making the dollar less attractive American.

Heightened geopolitical tensions with the war in Ukraine and that between Israel and Hamas also contribute to the appetite for gold as a listed asset, for its character as a traditional safe haven.

These high prices, on the other hand, weighed down global demand for gold in the first quarter (-5% year-on-year), but boosted recycling.

“Recycling is the Source of gold supply that responds most immediately to price and economic shocks,” says the World Gold Council, when on the contrary, mining production fluctuates more slowly due to “long lags between exploration and the discovery of new deposits and the entry into production of a mine.

The CMO thus noted a 12% increase in recycling in the first quarter year-on-year, a peak since the end of 2020, according to a quarterly report.

“Unlike many other metals, gold is in some sense infinitely recyclable,” without losing its properties, notes Krish Gopaul.

Almost all recycled gold comes from jewelry, and the rest concerns the technology sector where gold is used due to its many virtues: robustness, excellent conductivity, but also the fact that it does not oxidizes or corrodes.

Lack of alternatives

Krish Gopaul notes, however, that some gold owners are holding on to their assets in light of macroeconomic and geopolitical uncertainties, counting on possible even higher gains down the road or wishing to hold on to an asset at a value that is preserved even in times of turbulence. .

This is for example the case in Turkey, a country plagued by hyperinflation and which has experienced an impressive depreciation of its currency.

In these markets, “there is also a lack of valid alternatives to gold”, offering the same performance in times of crisis.

“When times are tough, gold is an asset that many people want to hold on to,” says Krish Gopaul.

“This is one of the reasons why we think that the amount of gold that people are willing to resell is still lower than it was in the past during price peaks,” he continues.

Unlike the demand for jewelry, which suffered from the high price of gold, purchases by central banks were maintained, totaling 289.7 tonnes for the first three months of the year, with monetary institutions also favoring the yellow metal for its virtues of hedging against inflation and geopolitical risk.

If prices remain high in 2024, “recycling should continue, as in the first quarter in response to the rapid rise in prices,” notes the Council in its quarterly report.

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