The World Gold Council brought together industry experts, economists and renowned authors to discuss trends that will affect the price of gold from now to at least 2048 including the gold price Australia.
From their discussions several macroeconomic forces were identified and three trends came out strong are the rising middle class in emerging markets, shifting demands for gold and the economic uncertainty spurred on by rising geopolitical tensions. Let’s look at these trends closely:
#1. The Rise of The Middle Class
Demographics have always played a role in the economy. It is estimated that more people in emerging markets like India and China. Economists predict that in the next 17 years over 170 million people from China and India will enter the middle class. China’s middle class has been expanding, their major problem is that they will have an aging population because of their one child policy. This has just recently been relaxed but it could be a case of too little too late. India on the other hand is the second biggest country by population following China. The country also happens to be the largest consumer of gold in the world. India has made some radical political and economic reforms in the last couple of decades. If these work as well as everyone hopes, the country can expect to see a rise in its middle class. India’s love for gold and the rising middle class is a key driving force in the global gold market.
These two countries are the biggest producers of gold and they consume more gold than they are able to produce. A rising middle class means a rising demand for gold.
#2: A Shift in The Demand And Uses Of Gold
Traditionally, jewellery and investment grade gold bullion is what drives the demand for gold. However, this precious metal is used in various applications. Because of its conductivity and corrosion resistant properties, gold is used in a lot of electronics. The industrial use of gold is expanding because of the myriad of technological innovations.
As we hurtle towards the Internet of Things (IoT), we will need more gold. As we change the vehicles we buy to electric cars, even self-driving automobiles, the more gold we will need. We will need more gold as we move to alternative energy production by harnessing solar energy using solar panels. The use of gold in medicinal applications has also changed things and added more strain of the supply of gold.
There are more applications requiring gold, however, the supply of gold from mining operations is dwindling because of low gold discoveries and rising operating costs. The rise of gold buyers who buy old gold and recycles it back into the value chain play a very important part in the industry. ABC Bullion has been in the business of buying and selling fold since 1972 and have seen how gold reacts to a myriad of factors.
New mine supplies are expected to decline over the next three decades. Gold miners are already struggling to keep up with the demand for gold this puts pressure on the price of gold in the long run and the recycling of old gold will become ever more important to make up for the shortfall of gold mining.
#3: A Volatile Future
The investment landscape will change radically in the next three decades. Demographic, technological and macroeconomic trends will create structural changes in the economy. The working-age population is shrinking, labour may be scarce and more AI will be adopted. As this happens countries in the west will be burdened by this scarcity of labour and aging population, which in turn will bring the economic growth to a screeching halt. India and China will have reached their golden demographic in the next decade giving them time to reset. Because demographics have such a profound impact on the economy, the economic power will begin to shift from the west to the east. The bottom line is that we are heading towards an unstable political and financial future. Gold performs exceptionally well during volatile times as a hedge against a complete financial crisis. This means the price of gold is likely to go up in the next decade or so.
These macro trends suggest that business will be booming for gold dealers and the gold price Australia. More people will try to get into the industry. Investing in gold can help offset losses. Buying gold from a reputable dealer with a long history like ABC Bullion is the best financial decision you can make to secure your future.