A year ago, during the inaugural edition New Era of Mining The price of gold upon publication was just under $2,000 per ounce; This was a historic high number. Twelve months later, the precious metal has gained nearly 35 percent to over $2,600 at the time of writing.

Gold purchases by central banks in developing countries remain the main factor driving prices, but the size of the stockpiles indicates intentions beyond simply hedging against geopolitical risk. China, the prime suspect, has purchased more than 2,800 tonnes of gold from abroad in the past two years; This is more than any metal-backed gold ETF globally. As some industry leaders acknowledge, a frenzy on this scale is a sign of seismic change. In simple terms, the BRICS countries, led by Beijing, are trying to de-dollarise their economies. John McCluskey, CEO of Alamos Gold, explains: “This trend shows increasing dependence on gold to support a parallel economic trading bloc resulting from mutual distrust between these countries.”

Part of Beijing’s motivation is to gain immunity from potential future sanctions of the kind the West has imposed on Russia. “When the US froze Russian assets, central banks took notice, and now countries like China are diversifying to ensure their assets are not frozen in future disputes,” says Martino De Ciccio, CEO of Montage Gold. While it’s hard to predict when the gold-buying frenzy will end, De Ciccio, whose company recently won all permits to mine in Ivory Coast, is confident we’re witnessing only the beginning of a permanent trend. Indeed, China’s gold reserves are still relatively low among all major economies, suggesting Beijing’s aggressive purchasing strategy will continue in the long term. With this in mind, many gold producers are confidently expanding their operations around the world. Canada’s B2Gold, for example, is investing heavily in further research and development and soon plans to produce approximately 600,000 additional ounces of gold per year.

This report was paid for by a third party. The views and opinions expressed, news week and is not an endorsement of the products, services or people mentioned.

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