Commodity Futures | Our Services

After moving in a sideways pattern for most of the year, gold prices staged a spectacular rally in September 1999, moving from under $260 per ounce to over $320 per ounce. There were a number of developments in the gold market involving the sale of gold stocks by central banks. In May, the Bank of England indicated that it would sell over 400 metric tonnes of its gold stocks in a series of 25 tonne auctions. That news forced gold prices lower and lower until late September when several European central banks indicated that they would limit gold sales. Some fifteen central banks, plus the United Kingdom, Switzerland and Sweden, reported that they would limit gold sales to 400 tonnes per year for a five-year period. This was considered very positive news in the gold market and led to the strong rally. In effect, the agreement limits gold sales by the banks to an aggregate total of 2,000 tonnes. The high prices were quickly retraced on announcements by central banks of intentions to make some gold sales, with the Netherlands indicating it would sell a total of 300 tonnes over the next five years. Switzerland was to sell 1,300 tonnes of excess gold reserves. As the year 2000 began, the gold market appeared to be concerned about sales of gold reserves while at the same time it looked like demand for gold was starting to exceed the supply of gold. The U.S. Geological Survey reported that U.S. production of gold in June 1999 was 31,900 kilograms, up 2 percent from the previous month and 4 percent less than a year ago. In the January-June period, U.S. production of gold was 176,000 kilograms. In 1998, U.S. gold production was 366,000 kilograms. Gold is produced in about 70 major lode mines, a dozen or more large placer mines and numerous smaller placer mines. Many of the placer mines are in Alaska and the Western States. Some gold in the U.S. is produced as a by-product of processing base metals such as copper. Some thirty mines yielded about 90 percent of the gold produced in the United States. Production of gold in Nevada in June 1999 was 22,200 kilograms, up 2 percent from the previous month but down 13 percent from the year before. In the January-June 1999 period, gold production in Nevada was 127,000 kilograms while for all of 1998 it was 273,000 kilograms. California gold production in June 1999 was 1,510 kilograms, up 4 percent from the previous month but down 24 percent from a year ago. In the January-June 1999 period, California gold production was 8,350 kilograms while for all of 1998 it was 18,700 kilograms. Other states, including Alaska, Colorado, Idaho and Montana, produced 8,160 kilograms in June 1999 compared to 8,030 kilograms in May 1999. In June 1998, other states production was 5,530 kilograms. In the first half of 1999, other gold producing states had production of 39,800 kilograms and for all of 1998 production was 72,700 kilograms. U.S. exports of gold in May 1999 were 16,800 kilograms. This was some 45 percent less than the previous month. Exports of refined bullion in May 1999 were 8,870 kilograms. The major markets for gold were Switzerland, the United Kingdom and Mexico. In the first five months of 1999, U.S. exports of gold were 104,000 kilograms while for all of 1998 they were 522,000 kilograms. In addition to bullion, the U.S. exports other gold products like waste and scrap and gold metal powder. U.S. imports of gold in May 1999 were 16,700 kilograms, up 34 percent from the previous month. The major suppliers of gold to the U.S. were Canada, Brazil, Peru, Mexico and Nicaragua. In the January-May 1999 period, U.S. imports of gold were 87,700 kilograms while for all of 1998 they were 278,000 kilograms. In the first five months of 1999, imports of gold waste and scrap were 8,960 kilograms. Imports of gold metal powder in the same period were 2,730 kilograms.

See also  Corn

Futures Markets

Gold futures are traded on the Bolsa de Mercadorias & Futuros (BM&F), the Tokyo Commodity Exchange (ToCom), the Chicago Board of Trade (CBOT) , the MidAmerica Commodity Exchange (MidAm) and the COMEX division of the New York Mercantile Exchange. Gold options are traded on the BM&F, The Amsterdam Exchanges (AEX-Optiebeurs), the MidAm, and the COMEX.

Excerpted from the CRB Commodity Yearbook.