Appendix I: Composition and trends of gold demand and supply

20 January, 2022

A large yet scarce market

The gold market has two attractive features for investors. Gold’s scarcity supports its long-term appeal. But gold’s market size is large enough to make it relevant for a wide variety of institutional investors – including central banks. 

There are approximately 205,238t of gold above ground, worth more than US$11.9tn (Chart 16).1

Mine production has added approximately 3,400t per year over the past decade, equivalent to an annual 2.0% increment of above-ground stocks.2 Mine production is also well diversified across regions (Chart 17).

The approximate breakdown of above-ground stocks of physical gold,3 based on its use, is:

  • Jewellery: 94,464t (US$5.5tn) 46%
  • Official sector: 34,592t (US$2tn) 17%
  • Bars and coins: 41,885t (US$2.4tn) 20%
  • ETFs and similar: 3,570t (US$0.2tn) 2%
  • Other and unaccounted: 30,726t (US$1.8tn) 15%

The financial gold market is made up of bars, coins, gold-backed ETFs, and central bank reserves. This segment of the gold market compares favourably to the size of major financial markets (Chart 16).

 

Chart 16: The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

(a) Value of above-ground gold and gold derivatives

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*
(a) Value of above-ground gold and gold derivatives
* As of 31 December 2021. ** Represents open interest in COMEX, TOCOM and OTC transactions. *** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%). On Goldhub.com see: Financial market size. Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Society, World Gold Council

Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Survey, World Gold Council; Disclaimer

* As of 31 December 2021.

** Represents open interest in COMEX, TOCOM and OTC transactions.

*** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%).

On Goldhub.com see: Financial market size.

 

Chart 16: The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

(a) Value of above-ground gold and gold derivatives

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*
(a) Value of above-ground gold and gold derivatives
* As of 31 December 2021. ** Represents open interest in COMEX, TOCOM and OTC transactions. *** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%). On Goldhub.com see: Financial market size. Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Society, World Gold Council

Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Survey, World Gold Council; Disclaimer

* As of 31 December 2021.

** Represents open interest in COMEX, TOCOM and OTC transactions.

*** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%).

On Goldhub.com see: Financial market size.

 

Chart 16: The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

(a) Value of above-ground gold and gold derivatives

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*
(a) Value of above-ground gold and gold derivatives
* As of 31 December 2021. ** Represents open interest in COMEX, TOCOM and OTC transactions. *** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%). On Goldhub.com see: Financial market size. Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Society, World Gold Council

Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Survey, World Gold Council; Disclaimer

* As of 31 December 2021.

** Represents open interest in COMEX, TOCOM and OTC transactions.

*** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%).

On Goldhub.com see: Financial market size.

 

Chart 16: The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

(a) Value of above-ground gold and gold derivatives

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*
(a) Value of above-ground gold and gold derivatives
* As of 31 December 2021. ** Represents open interest in COMEX, TOCOM and OTC transactions. *** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%). On Goldhub.com see: Financial market size. Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Society, World Gold Council

Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Survey, World Gold Council; Disclaimer

* As of 31 December 2021.

** Represents open interest in COMEX, TOCOM and OTC transactions.

*** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%).

On Goldhub.com see: Financial market size.

 

Chart 16: The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

(a) Value of above-ground gold and gold derivatives

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*
(a) Value of above-ground gold and gold derivatives
* As of 31 December 2021. ** Represents open interest in COMEX, TOCOM and OTC transactions. *** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%). On Goldhub.com see: Financial market size. Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Society, World Gold Council

Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Survey, World Gold Council; Disclaimer

* As of 31 December 2021.

** Represents open interest in COMEX, TOCOM and OTC transactions.

*** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%).

On Goldhub.com see: Financial market size.

 

Chart 16: The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

(a) Value of above-ground gold and gold derivatives

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*
(a) Value of above-ground gold and gold derivatives
* As of 31 December 2021. ** Represents open interest in COMEX, TOCOM and OTC transactions. *** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%). On Goldhub.com see: Financial market size. Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Society, World Gold Council

Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Survey, World Gold Council; Disclaimer

* As of 31 December 2021.

** Represents open interest in COMEX, TOCOM and OTC transactions.

*** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%).

On Goldhub.com see: Financial market size.

 

Chart 16: The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

(a) Value of above-ground gold and gold derivatives

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*
(a) Value of above-ground gold and gold derivatives
* As of 31 December 2021. ** Represents open interest in COMEX, TOCOM and OTC transactions. *** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%). On Goldhub.com see: Financial market size. Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Society, World Gold Council

Sources: Bloomberg, Bank for International Settlements, ETF company filings, Metals Focus, Refinitiv GFMS, US Geological Survey, World Gold Council; Disclaimer

* As of 31 December 2021.

** Represents open interest in COMEX, TOCOM and OTC transactions.

*** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%).

On Goldhub.com see: Financial market size.

 

Chart 16: The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*

(a) Value of above-ground gold and gold derivatives

The size of the financial gold market is large compared to many global assets, and dwarfs known open interest in gold derivatives*
(a) Value of above-ground gold and gold derivatives
* As of 31 December 2021. ** Represents open interest in COMEX, TOCOM and OTC transactions. *** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%). On Goldhub.com see: Financial market size. Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Society, World Gold Council

Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Survey, World Gold Council; Disclaimer

* As of 31 December 2021.

** Represents open interest in COMEX, TOCOM and OTC transactions.

*** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%).

On Goldhub.com see: Financial market size.

(b) Total gold supply can fit in just under three Olympic size swimming pools***

  1. Jewellery ~94,464t, 46%
  2. Bars and coins (including gold backed ETFs) ~45,456t, 22%
  3. Central banks ~34,592t, 17%
  4. Other ~30,726t, 15%
  5. Proven reserves ~53,000t

Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Survey, World Gold Council; Disclaimer

* As of 31 December 2021.

** Represents open interest in COMEX, TOCOM and OTC transactions.

*** Based on 2021 above ground estimates and the standard Olympic swimming pool dimensions of (length = 164ft, width = 82ft, depth = 9ft). 1Includes “other fabrication” (13%) and “unaccounted for” (2%).

On Goldhub.com see: Financial market size.

 

Chart 17: Fewer supply shocks reduce gold’s volatility

Chart 17: Fewer supply shocks reduce gold’s volatility

Gold supply is a mix of mined (72%) and recycled gold (28%); mine production is spread across continents, contributing to gold’s low volatility compared to commodities

Chart 17: Fewer supply shocks reduce gold’s volatility
Gold supply is a mix of mined (72%) and recycled gold (28%); mine production is spread across continents, contributing to gold’s low volatility relative to commodities
*Computed using average annual supply from 2010 to 2020. Regional breakdown excludes central bank demand due to data availability. Source: On Goldhub.com: Gold mine production

Sources: Bloomberg, Bank for International Settlements, ETF company filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, US Geological Survey, World Gold Council; Disclaimer

*Computed using average annual supply from 2010 to 2020. Regional breakdown excludes central bank demand due to data availability.

Source: On Goldhub.com: Gold mine production.

Demand diversity underpins gold’s low correlations

 

Chart 18(a): Gold is bought around the world for multiple purposes – as a luxury good, a part in high-end electronics, a safe-haven investment, or a portfolio diversifier*

Gold is bought around the world for multiple purposes – as a luxury good, a component in high-end electronics, a safe-haven investment, or a portfolio diversifier*

Gold is bought around the world for multiple purposes – as a luxury good, a component in high-end electronics, a safe-haven investment, or a portfolio diversifier*
*Computed using 10-year average annual demand from 2011 to 2020. Regional breakdown excludes central bank demand due to data availability. Includes: jewellery and technology net of recycling, in addition to bars and coins, ETFs and central bank demand which are historically reported on a net basis. It excludes OTC demand. Figures may not add up to 100% due to rounding. **Net jewellery and technology demand computed assuming 90% of annual recycling comes from jewellery and 10% from technology.
 

Chart 18(b): Gold demand is geographically diverse, but 69% comes from emerging markets, with China and India representing 51% of all demand.*

Gold demand is geographically diverse, but 72% comes from emerging markets, with China and India representing 50% of all demand.*

Gold demand is geographically diverse, but 72% comes from emerging markets, with China and India representing 50% of all demand.*
*Computed using 10-year average annual demand from 2011 to 2020. Regional breakdown excludes central bank demand due to data availability. Includes: jewellery and technology net of recycling, in addition to bars and coins, ETFs and central bank demand which are historically reported on a net basis. It excludes OTC demand. Figures may not add up to 100% due to rounding. **Net jewellery and technology demand computed assuming 90% of annual recycling comes from jewellery and 10% from technology.

*Computed using 10-year average annual demand from 2012 to 2021. Regional breakdown excludes central bank demand due to data availability. Includes: jewellery and technology net of recycling, in addition to bars and coins, ETFs and central bank demand which are historically reported on a net basis. It excludes OTC demand. Figures may not add up to 100% due to rounding. 
**Net jewellery and technology demand computed assuming 90% of annual recycling comes from jewellery and 10% from technology.

Source: Bloomberg, Company Filings, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, World Gold Council

Major trends have reshaped gold demand

Consumer demand is fuelled by transformational economic growth in China and India. In the early 1990s China and India accounted for 25% of global gold demand. Today, increased wealth has boosted their joint share to 54% (Chart 19).4 Expansion of wealth is one of the most important drivers of gold demand over the long run, fuelling jewellery consumption, investment in technology and the acquisition of gold bars and coins.5

 

Chart 19: India and China have doubled their gold market share in less than two decades

Strat Ass 2022: Chart 19 [FOR AFTER EMBARGO]

Emerging market economic development has created consumer demand and increased market share in India and China*

Sources: Metals Focus, Refinitiv GFMS, World Gold Council; Disclaimer

*As of 31 December 2021. Consumer demand is defined as the sum of jewellery, bar and coin demand.

On Goldhub.com see: Gold Demand Trends

Among institutional and retail investors the introduction of gold-backed ETFs and similar products has had a material impact on the demand for and exposure to gold. By the end of 2021, gold ETFs had amassed approximately 3,570t of gold, worth US$209bn, since they were first launched in 2003 (Chart 20).6 The recent growth is particularly pronounced in Europe, where market share has neared levels on par with North America, a sign of global acceptance. Additionally, gold ETFs have become a larger component of overall investment demand in China and India (see: Global gold ETFs: A popular gateway to the gold market).

 

Chart 20: Gold-backed ETFs have introduced new investors to gold across the world

Chart 20: Gold-backed ETFs have introduced new investors to gold across the world

Annual ETF gold demand and cumulative holdings*

Chart 20: Gold-backed ETFs have introduced new investors to gold across the world
Annual ETF gold demand and cumulative holdings*
*As of 31 December 2021. Includes gold-backed ETFs and similar products. On Goldhub.com see: Global gold-backed ETF holdings and flows. Source: Bloomberg, Company Filings, World Gold Council

Sources: Bloomberg, Company Filings, World Gold Council; Disclaimer

*As of 31 December 2021. Includes gold-backed ETFs and similar products. 

On Goldhub.com see: Global gold-backed ETF holdings and flows.

Central bank demand transformed in recent years. Reserve managers have been net buyers of gold since 2010 and, more recently, have bought multi-decade record amounts of gold, using the asset to diversify their foreign reserves (Chart 21).

 

Chart 21: Central banks have been a steady net source of demand since 2010, led by emerging markets

Central banks have been a steady net source of demand since 2010, led by emerging markets

Net global central bank gold demand*

Central banks have been a steady net source of demand since 2010, led by emerging markets
Net global central bank gold demand*
*As of 31 December 2020. On Goldhub.com see: Monthly central bank statistics Source: Metals Focus, Refinitiv GFMS, World Gold Council

Sources: Metals Focus, Refinitiv GFMS, World Gold Council; Disclaimer

*As of 31 December 2021.

On Goldhub.com see: Monthly central bank statistics

Footnotes

  1. Based on the 31 December 2021 LBMA Gold Price and 2021 above-ground estimates by Metals Focus, Refinitiv GFMS and the World Gold Council.

  2. Based on Metals Focus and Refinitiv GFMS 10-year mine production average as a percentage of above ground stocks, as of 31 December 2020.

  3. Ibid footnote 2.

  4. As of 31 December 2021. 

  5. Ibid. 

  6. As of 31 December 2021.

Important disclaimers and disclosures [+]Important disclaimers and disclosures [-]