Record Gold Prices Shine a Light on Jewelry Recycling

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Editor’s Note

As gold prices reach record highs, this article examines the resulting shift in market dynamics, where overall demand softens while recycling activity surges.

Les prix record de l’or font reluire le recyclage de bijoux
Gold Price and Recycling Link

Record gold prices are weighing on overall demand but boosting the recycling of the precious metal, as individuals offload 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,” explains Krish Gopaul, an analyst at the World Gold Council, to AFP.

According to the World Gold Council (WGC), mining production generally accounts for about 75% of the global supply of the yellow metal each year. The rest of the supply is met through recycling.
Since the beginning of the year, the price of the precious metal has risen more than 13% to reach a historic record of $2,431.52 on April 12, galvanized by expectations of lower US interest rates which make the US dollar less attractive.
Increased 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 traditional safe-haven characteristics.

Communication interne

These high prices, however, have weighed on global gold demand in the first quarter (-5% year-on-year), but are boosting recycling.

“Recycling is the source of gold supply that reacts most immediately to price and economic shocks,” states the World Gold Council, whereas, in contrast, mining production fluctuates more slowly due to the “long lead times between exploration and discovery of new deposits and a mine coming into production.”

The WGC thus recorded 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 a way 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, and also the fact that it does not oxidize or corrode.

Lack of Alternatives
Santé mentale et bien-être

Krish Gopaul notes, however, that some gold owners are holding onto their assets in view of macroeconomic and geopolitical uncertainties, counting on possible even higher gains in the long term or wishing to retain an asset whose value is preserved even in times of turbulence.
This is the case, for example, in Turkey, a country plagued by hyperinflation and which has seen 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 hard, gold is an asset that many people want to hold onto,” explains Krish Gopaul.
“This is one of the reasons why we believe that the amount of gold people are willing to resell is still lower than it was in the past during price peaks,” he continues.

Unlike jewelry demand, which has suffered from the high price of gold, central bank purchases have held up, totaling 289.7 tonnes for the first three months of the year, with monetary institutions also valuing the yellow metal for its virtues as a hedge against inflation and geopolitical risk.

Performance manufacturière

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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⏰ Published on: June 18, 2024