Historically speaking gold has always been a big winner. Its upward trajectory continues unabated in 2024 hitting record highs.
Gold is a great way to diversify a portfolio due to its low correlation to most other asset classes including equities, bonds and the U.S. dollar. Unlike other commodities, gold tends to retain its value during recessionary and deflationary periods. Gold is also a historic safe haven, acting as a hedge against domestic currency depreciation as well as falls in equity and credit markets.
Gold’s performance historically and over the last few decades vindicates its status as a valuable diversifier, surging relative to other investment classes. Auric believes it will continue to do so because gold is more than a mere commodity, it is a currency.
The fundamental drivers of gold demand remain largely unaltered while supply is hampered by low discovery rates and increasing costs, coupled with declining grades and jurisdictional risk.
Demand drivers for gold also include increased purchasing from central banks worldwide, emerging market demand and currency debasement protection.
It’s true. Gold holds its own compared to any other investment. In fact gold has risen 30% in price over the past year and a massive 250% over the past 15 years.
Over that past 15 years silver has risen 103%, Oil 45%, the FTSE 17%, Nikkei 72%, while 30 year T Bonds are at -56% and 10 year T notes -65%.
A quick look at global currencies and gold show that in the past decade and a half gold in USD is up 250%, gold in Euros up 227%, gold in Pound Sterling up 311%, and gold in Australian dollars up 206%. For smart investors these are irresistible pointers to the march of gold ever upwards.
In early 1931, Larkinville, near Widgiemooltha, was an alluvial field of hard-won dust. “The area is useless,” a prospector said after six weeks of digging and shaking the dirt. He gave up the search for gold, removed his tools and abandoned the lease on which the Golden Eagle nugget lay buried beneath a road.
Gold is the most malleable substance on the planet. An ounce can be hammered and stretched to a length of 80 km.
Ever wondered why gold never rusts or causes skin irritation? That’s because very few chemicals or elements can attack gold. Even when it’s been buried for thousands of years, gold will always keep its shine.
Gold is considered one of the best conductors of electricity. Unlike other metals, gold does not tarnish easily when exposed to air. We use it in on specific materials like circuit board parts or small electrical connectors.
Archaeology confirms to us that gold coins were first struck in an area that is now Turkey some 3000 years ago. These days gold is readily tradable and is a hedge against inflation. In that way ‘its better than cash’. Just one cubic foot of gold weighs half a tonnes.
Due to gold’s unique properties and its irresistible lustre, the metal has been revered by nearly all cultures. The most visible use of gold is in jewellery. But, it’s also a part of cultural and religious practices.
Gold was known to have been used by dentists almost 3000 years ago. That practice has never ceased and today gold remains the first choice by dentists.
Nearly all vehicles, phones, TVs and computers have gold inside them. Across all technologies gold is evident – even in space as we see through the recently launched James Web Space Telescope with its 18 hexagonal mirror segments made of gold-plated beryllium.
‘We gathered nuggets like spuds in a paddock.’ Gold mining in Western Australia has shaped the country’s fortunes for more than a century now.
Gold mining remains front and centre as a key ingredient of the economy in WA. Indeed, after iron ore and petroleum, gold mining is the third largest commodity sector in Western Australia, creating almost $12 billion annually in revenue.
Gold mining in Western Australia dates back more than 130 years. Originally there had been some small finds in the Kimberley and further south into the Murchison as pioneers moved to explore the vast interior of Western Australia in the late 1800s.
But that all changed in September 1892 when Arthur Bayley and William Ford announced their discovery of gold in Coolgardie. “We gathered nuggets like spuds in a paddock,” said Ford.
The richest find so far, Coolgardie was eclipsed nine months later when Paddy Hannan and his mates located gold at Kalgoorlie, thus stimulating the series of discoveries that unveiled the Golden Mile between Kalgoorlie and Boulder.
These discoveries provoked a migrant influx. In 1894 alone, 25,000 men decided to try their luck in the West, most of them coming from Victoria and South Australia.
It was the wild west for many and prosperity started to abound. Infrastructure followed. By 1894 Coolgardie, Kalgoorlie and all the major centres of the Murchison goldfield were connected by telegraph and a railway line ran all through the area by 1896.
In 1896, the Sons of Gwalia mine was established by Welsh miners. Herbert Hoover, the later President of the United States, served as the mine manager in 1898.
Also in 1896, gold was first found at Wiluna and in 1897 three prospectors found a 14kg nugget, at that time the largest ever nugget found in the colony of Western Australia.
By the start of the 1900s, WA’s population had shifted with more than 30 per cent living in the Eastern Goldfields, with Kalgoorlie the dominant regional settlement second only to Perth in size.
But, as the surface gold was quickly found and mined, it soon became depleted. By 1903 the industry had peaked. Only where larger companies developed underground mines did some towns manage to survive. As a result, the population in the harsh and arid climate started to drop.
Gold was done in the short term and the industry declined until gold led WA’s economic recovery in the 1930s. In no small part this was due to the efforts of Claude de Bernales, who from selling second hand mining machinery, had advanced to the promotion of renovated mining companies and to a notably elegant lifestyle. Between 1933 and 1935 he floated eight companies on the London Stock Exchange and in 1936 acquired the Great Boulder Proprietary mine.
In 1937, for the first time in more than 20 years, the State’s gold production exceeded one million fine ounces.
If we look at gold production statistics for the era it is worth noting that the industry was in sharp acceleration until 1903 when 50 tonnes of gold was mined. Production then declined into the late 1920s to a point WA was the only State producing gold. After the Second World War gold production remained relatively stable, then crashed into the middle sixties and finally bottomed out in 1976.
Gold does have its booms and busts though and recent times have been no exception. By the mid 1980s it was good times again and in 1990 some 150 tonnes of gold was being produced per year, topping out at more than 250 tonnes in 2001 – meaning that WA was producing 10 per cent of the world’s annual production.
In 2019 Australia produced 310 tonnes of gold, or nearly ten million ounces, which was the country’s largest yield in 20 years. Gold mining is continuing to boom in Western Australia.
Australia is the second largest gold producer in the world.No one can mine gold more efficiently than the Australians.
With scores of mining companies investing heavily in expansion projects, the nation is positioned as a global gold powerhouse. In fact Australia has 14 of the world’s biggest gold mines, 11 of which are in the state of Western Australia.
Here are some of the biggest mines in the country.
The Super Pit - Kalgoorlie
The Kalgoorlie ‘Super Pit’ mine has an annual production of more than 650,000 ounces, and is owned by Northern Star Resources. The mine has been in production for 130 years. In 1989, the mine was consolidated and the super pit was born, with a lifetime production of more than 65 million ounces of gold. It is Australia’s largest mine in terms of scale, with its pits covering more than five square kilometres and descending to a maximum depth of 700m.
Cadia-Ridgeway Mine
The Cadia Valley mine is near the top as one of Australia’s biggest gold mines. Back in 1992, Newcrest Mining discovered the Cadia Hill gold-copper porphyry deposit and in 1994 Cadia East was discovered.
Owned and operated by Newcrest, the Cadia Mine is 20kms south of Orange in central NSW, and is composed of a series of large underground and open-cut gold and copper mines.
In 2018, Cadia unseated Newmont Goldcorp’s Boddington gold mine in WA to become our top-producing gold mine. In 2023 the mine produced 600,000 ounces of gold.
Boddington
After purchasing a controlling position in the Boddington mine, just south of Perth, in 2009 Newmont Mining ramped up production to more than three quarters of a million ounces of gold per year.
The company maintains that the mine will continue to be a profitable project in the long term. It has invested A$500m into an expansion project at the mine’s south pit, which aims to increase annual production to 850,000 ounces and extend the mine’s lifespan beyond 2025.
With proven and probable reserves of over 11.2 million ounces, Newmont is optimistic that the mine will continue its strong production figures for a number of years. In 2023 ounces produced totalled 745,000.
Jundee
The Jundee project is also located in Western Australia, and was purchased from Newmont by Northern Star in 2014 for $82.5m. The project is notable for its exclusive use of underground mining, as opposed to open pit mining, and produces around 1.8 million tonnes of ore per year, yielding 500,000 ounces of gold.
The mine has recently yielded significant profits for Northern Star. The owners plan to expand the project following the discovery of high-grade gold ore, measured to 765 grams per tonne to a depth of 0.5m at the mine’s Zodiac region. With a strong resource base of 1.4 million ounces of gold, Northern Star estimates the mine will continue production for a further decade.
Telfer
Newcrest’s Telfer mine in the eastern Pilbara is one of the oldest in Australia, producing around 6 million ounces of gold between 1975 and 2000, when operations were suspended due to high operating costs. Work resumed in 2004 and the mine has since produced over 5 million ounces, producing 425,536 ounces in the 2018 financial year alone. With two open pit mines and a separate underground operation, the Telfer mine is an expansive site.
Tropicana Gold Mine
Located 330 kilometres east-north-east of Kalgoorlie, on the edge of the Great Victoria Desert, Western Australia, Tropicana Gold Mine was discovered in 2005.
A joint venture between AngloGold Ashanti Limited and Regis Resources Ltd Tropicana Gold Mine’s proven and probable gold reserves are estimated to be 57.1 million ounces. The mine is producing in excess of half a million ounces a year.
