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Gold Outlook 2020

    Gold shone in 2019

    Gold had its best performance since 2010, rising by 18.4% in US dollar terms last year. It also outperformed major global bond and emerging market stock benchmarks in the same period (Chart 1). In addition, gold prices reached record highs in most major currencies except the US dollar and Swiss franc . 

    Gold prices rose most between early June and early September as uncertainty increased and interest rates fell. But investors’ appetite for gold was apparent throughout the year, as seen by strong flows into gold-backed ETFs, growing gold reserves  from central banks, and an increase in COMEX net longs positioning.  

    Chart 1: Gold outperformed bonds and EM stocks

    Annual performance of major global assets *

    Created with Highstock 6.2.0Annual returnChart context menuDownloadOilS&P 500EAFE stocksGoldEM stocksUS CorporatesUS HYCommoditiesUS TreasuriesGlobal TreasuriesUS cash010203040

    Sources: Bloomberg, ICE Benchmark Administration, World Gold Council;

    *As of 31 December 2019. Annual returns based on the LBMA Gold Price, Bloomberg Barclays US Treasury Index and Global Treasury Index ex US, ICE BAML US 3-month Tbill Index, Bloomberg Barclays US Corporate and High Yield Indices, MSCI EM Index, Bloomberg Commodity TR Index, MSCI EAFE Index, S&P 500 Indices, and Bloomberg Oil TR Index.

     

    High risks and low rates on the horizon

    We expect that many of the global dynamics seeded over the past few years will remain generally supportive for gold in 2020. 

    In particular, we believe that: 

    • Financial and geopolitical uncertainty combined with low interest rates will likely bolster gold investment demand
    • Net gold purchases by central banks will likely remain robust even if they are lower than the record highs seen in recent quarters
    • Momentum and speculative positioning may keep gold price volatility elevated
    • And while gold price volatility and expectations of weaker economic growth may result in softer consumer demand near term, structural economic reforms in India and China will support demand in the long term.

    Gold Outlook 2020 Focus: A supportive environment for gold investment

    Gold has historically performed well in the 12 to 24 month period following policy shifts from tightening to “on-hold” or “easing” – the environment in which we currently find ourselves. And, historically, when real rates have been negative, gold’s average monthly returns have been twice as high as the long-term average (Table 1). Even slightly positive real interest rates may not push gold prices down. Effectively, our analysis shows that it has only been in periods with significantly higher real interest rates – an unlikely outcome given the current market conditions – that gold returns have been negative.

    Gold Outlook Table 1: Gold performance nearly doubles in periods of negative interest rates

    Gold performance in various real rate environments*

      Long term
    average    		 Low (<0%) Moderate (0%-2.5%) High (>2.5%)
    Monthly Return 0.6% 1.2% 1.0% 0.3%
    Standard Error 0.2% 0.4% 0.4% 0.3%
    Different from 0? Yes Yes Yes No

    *Based on nominal gold returns between January 1971 and September 2019. Real rate regimes based on the 12-month constant maturity US T-bill minus the corresponding y-o-y CPI inflation. Difference from zero computed as a two-way T test at a 5% significance level.

    Source: Bureau of Labour Statistics, Federal Reserve, ICE Benchmark Administration, World Gold Council

    Download the Gold Market Outlook for 2020

     

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    Reproduction or redistribution of any of this information is expressly prohibited without the prior written consent of Transworld Resources or the appropriate copyright owners, except as specifically provided below.

    The use of the statistics in this information is permitted for the purposes of review and commentary (including media commentary) in line with fair industry practice, subject to the following two pre-conditions: (i) only limited extracts of data or analysis be used; and (ii) any and all use of these statistics is accompanied by a citation to Transworld Resources and, where appropriate, to Metals Focus or other identified third-party source, as their source.

    Transworld Resources does not guarantee the accuracy or completeness of any information. Transworld Resources does not accept responsibility for any losses or damages arising directly or indirectly from the use of this information.

    This information is not a recommendation or an offer for the purchase or sale of gold, any gold-related products or services or any other products, services, securities or financial instruments (collectively, “Services”). Investors should discuss their individual circumstances with their appropriate investment professionals before making any decision regarding any Services or investments.

    This information contains forward-looking statements, such as statements which use the words “believes”, “expects”, “may”, or “suggests”, or similar terminology, which are based on current expectations and are subject to change. Forward-looking statements involve a number of risks and uncertainties. There can be no assurance that any forward-looking statements will be achieved. We assume no responsibility for updating any forward-looking statements.
     

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    Discussing the Responsible Gold Mining Principles at Evolve 2019

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    The Responsible Gold Mining Principles (RGMPs), a new framework that sets out clear expectations for consumers, investors and the downstream gold supply chain as to what constitutes responsible gold mining.

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    World Gold Council's Responsible Gold Mining Principles

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    Responsible Gold Mining Principles
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    The World Gold Council, the market development organisation for the gold industry, has today announced the launch of its Responsible Gold Mining Principles. The Principles are a framework that set out clear expectations for consumers, investors and the downstream gold supply chain as to what constitutes responsible gold mining. The World Gold Council, working with its Members, the world’s leading gold mining companies, has set out the Principles that it believes address key environmental, social and governance issues for the gold mining sector.

    It is the World Gold Council’s aim that the Responsible Gold Mining Principles will become a credible and widely recognised framework through which gold mining companies can provide confidence that their gold has been produced responsibly. The World Gold Council recognises that ESG considerations are becoming increasingly important to consumers.

    The Responsible Gold Mining Principles are intended to recognise and consolidate existing standards and instruments under a single framework.

    Companies implementing the Responsible Gold Mining Principles will be required to obtain external assurance from a third party, independent assurance provider. This will provide further confidence to purchasers of gold that the gold they buy is responsibly mined and sourced.

    Gary Goldberg, CEO of Newmont Goldcorp, who oversaw this initiative on behalf of the Board of the World Gold Council, said: “Adherence to strong Environmental, Social and Governance principles should be a key part of any responsible gold mining business and, as such, the Members of the World Gold Council have collaborated, along with key industry stakeholders, to develop the Responsible Gold Mining Principles. Given the Members’ sustained focus on improving ESG performance, the formalisation of the Responsible Gold Mining Principles is a natural evolution of our daily working practices. It is my hope that these Principles will be widely adopted, not only by Member companies, but by the industry more broadly.”

    Terry Heymann, Chief Financial Officer of the World Gold Council, said: “It is our aim that the Responsible Gold Mining Principles reinforce trust in gold and the gold mining industry. Consumers, investors and the downstream gold supply chain will be able to know, with confidence, that their gold has been responsibly sourced. The Principles incorporate feedback from more than 200 organisations and individuals over two rounds of consultation and are designed to support the efficient operation of the gold market.”

    The Principles can be accessed here.

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    Welcome to Transworld Resources Limited – "TRL"

    Transworld Resources Limited (TRL) is committed to preserving and supporting sustainable food production and engaging in the responsible trading of other natural resources. Enhanced by a brand new website, TRL looks set to capture an even broader audience as it continues to expand and flourish its current project portfolio.

    New features on the site will enable all of TRL’s social channels to be aligned in one place, facilitating across-the-board coverage across its current and evolving projects. This encompasses its YouTube, Facebook, Twitter and Google+ channels, all with tailored updates appropriate to each platform.

    Team profiles provide viewers the opportunity to put a face to TRL’s constantly evolving projects. The team’s success comes from its diverse background including legal, financial, international business & development, agribusiness, brokerage, franchising and commercial diving.

    Currently, the TRL website showcases its activities in Responsible Gold mining and trading and Tasmanian natural foods resources brokerage and marketing.

    As Transworld Resources continues to grow so will the features and information on the site – watch this space for updates and opportunities.

    Thanks for stopping by,

    The TRL Team

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    The Most Dangerous Job In The World?

    Many professions carry risk, but none quite so much as that of the commercial abalone diver. For these intrepid individuals the work can be cold, wet and fraught with dangers, including strong currents and sharks.

    Australia is the only country recommended by WWF Hong Kong as a sustainable source of wild-caught abalone. Australia's tiny state of Tasmania is the country's biggest source - bringing in almost 2,000 tonnes a year - or about a quarter of the world's wild abalone. Diving for wild abalone is year-round, but demand starts to increase around this time as processors and suppliers start to prepare for Lunar New Year.

    That's why Fishing Investment and Management (FIM) – a Transworld Resources Limited (TRL) company and new member of the Transworld Group – is gearing up for business. As Australia's leading broker and advisor to the seafood industry, FIM handles the majority of abalone quota sales and valuations in Tasmania and Victoria. As well as brokering $multimillion deals, it is also involved in many aspects of the international fishing industry.

    FIM was established in 1991 and after being acquired by TRL in 2013, it has consolidated its position as Australia's one-stop shop for all fisheries sales, valuations and asset management. More importantly, with the full weight of the Transworld Group and its international experience behind it, FIM can fulfil ambitious plans to expand the business into brokering highend seafood products into international markets.

    Check out our recent visit to Tasmania and interviews with FIM's founders and leading figures in Tasmanian fisheries.

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