Many factors have an impact on the performance of gold. The gold price typically increases in times of perceived stock market risk as a safe haven investment. Over the last 6 years, goldโs value has been driven by a range of geopolitical and economic risks, from US/China trade wars and Brexit, to the emergence and impact of the novel coronavirus. Then, investor uncertainty rose to depression-level stock market flight, sending the price of gold to its highest recorded value of R35 947.90 ($2 067.15) per ounce in August 2020.
Today, escalating tensions between Russia, the Ukraine and its allies is once again seeing demand for the yellow metal surge, with a 4.2% increase in value in February 2022.
In South Africa, the price of gold is further impacted by the exchange rate between the South African Rand and US Dollar (USD).
How has gold performed since 2000?
Gold has performed remarkably over the last 22 years, having increased in value by over 558% since 2001, where it traded around the $271/oz. mark (down from $320/oz. the year before).
Beginning in 2000 in the wake of the โdot-com crashโ of internet-related company stock, until registering its then-highest spot-price of $1 928 in 2011, gold experienced a tremendous, near-perfect run, interrupted only by the 2007-2008 financial crisis.
The next decade saw falling commodity prices as the market entered a period of correction following the previous years of super cycle, with gold falling to a low of $1 062.63 on December 14, 2015.
A general rally over the next five years culminated in 2020, where on August 7, gold traded at its highest price ever of $2 067.15/oz, where investor fears during the coronavirus pandemic drove the metal to unprecedented value.
Read more about investing in gold in 2022 and why now is the best time to invest in gold shares.
Gold Stats in South Africa
- In 2021, South Africa produced an estimated 100 tonnes of gold, up from 86 tonnes in 2020.
- South Africa is now the worldโs 10th largest producer of gold. It is the 2nd largest producer of gold in Africa, after Ghana (since 2019). South Africa produces 4.2% of the worldโs annual gold output.
- Gold contributed about 13% of South Africaโs revenue from minerals, behind PGM (platinum, palladium and rhodium) sales (38%) and coal (17%). Sales from South Africaโs mines were valued at R307.9 billion in 2021.
- South Africa is home to the worldโs deepest mines, including Mponeng (near Johannesburg) and Driefontein mines, which have a vertical depth of nearly 4 000 m.
- The first gold discovery in South Africa was alluvial gold, found in the Barberton area in the 1880s.
- There are currently 28 operational gold mines in South Africa, and an additional 58 mining projects in various phases of development
- The Witwatersrand basin is the worldโs largest gold resource and has produced about 40% of the worldโs mined gold.
Tracking the gold rate in South Africa
Gold mining in South Africa can be divided into four phases:
The first stage covers the period from first discovery in the 1880s to the Union of South Africa in 1910. The period is marked by rapid growth in gold mining activities, both in the area around Barberton as well as the Witwatersrand, and interrupted only by the Anglo Boer War from 1899-1902.
The second phase, from 1911 to 1950, is characterised by slowing growth rate, largely due to the outbreak of the First World War, the Rand Rebellion in 1922, the effects of the Great Depression in the late 1920s, and finally the Second World War. Gold production in this phase peaked at approximately 450 tonnes in 1941.
During the third phase, South Africaโs gold production grew remarkably from 400 tonnes in 1951 to 950 tonnes in 1965, through new goldfields in Carletonville, Klerksdorp, the Free State and Evander areas becoming operational.
Apart from the period 1966 โ 1970, the fourth phase is characterised by a general decline in mining production, from 1 000 tonnes of gold mines in 1970, to 100 tonnes in 2021.