India's lust for gold is legendary. Indian households hold over
$950 billion of the yellow metal, revealed a recent research by Macquarie research. India imports most of its requirements: a quarter of all the gold sold globally is imported by us.
But in recent times, another country has matched India's hunger for
gold. China, the largest producer of the precious metal, became a net
importer in 2011, as domestic demand soared.
Sometime this
year, China is expected to overtake India as the largest gold consumer.
China, which is among the top producers of gold globally, has high entry
barriers for private miners and also uses its production for building
up national reserves.
Entry barriers for entrepreneurs are high
in Russia as well. South Africa and Australia, both big producers of
the yellow metal, are becoming unpopular due to, respectively, high
taxation and high production costs.
Some European gold reserves,
for example the Rosia Montana in Romania, the largest untapped reserves
in Europe, are facing problems due to environmental regulations.
That begets the question: where will India get its gold from? The US,
and other countries in the Americas. North America has always been
significant in the global gold stakes.
Globally, there have
been 99 significant gold discoveries (defined as a deposit containing at
least 2 million oz of the metal) during 1997-2011.
The
Americas hold the greatest share in these discoveries—not surprising
given that the Americas have accounted for more than half the industry's
discovery-oriented gold exploration spending during the period.
In 2010, the gold exploration budget rose to $5.4 billion, which was
59% more than in 2009. In 2011, mines in the US produced gold worth
about $12 billion.
Gold mining
companies are again flocking to the Americas. In Canada, miners are
making huge new discoveries as well re-starting old mines that were
deserted due to lack of funds. In 2011, production rose 21% year-on-year
to Canada's highest output in five years. Mexico's large mineral belts
have been equally attractive for gold miners.
North America Accounts for Lion's Share
With 2011 production coming in at an estimated 85 mt, Mexico has seen a
254% increase in output. In all, North America was responsible for 16%
of mine production in 2011.
And with a year-on-year production
growth of 9%, well above the global average, along with a bevy of
ongoing junior exploration, North America will be pumping out gold from a
lot of new mines.
Mining companies without proven reserves—the so-called juniors— are equally enraptured by North America.
More than 70% of them own a project in North America, with over half
owning a project in Canada, 17% in the US and 11% in Mexico, according
to research by Zeal Llc, a consultancy.