AGC’s Gold Trading Hubs Turn All Yellow
By Shawn Blore - May 14, 2020
All of the world’s gold trading hubs have turned yellow (restricted but open) for the first time since the AGC created the Supply Chain Dashboard in mid-April. The Dashboard evaluates the trading status of the world’s six major gold trading hubs: Dubai, Switzerland, India, the UK, the USA and Hong Kong. When the dashboard debuted, on April 14, all but one of these gold hubs was labelled red, or stopped, due to a combination of domestic lockdown measures, restrictions on air traffic and border entry, and the closure of critical gold infrastructure including refineries or trading areas.
The shutdown of these trading hubs cascaded all the way down to the level of artisanal producers, who saw crashing prices for artisanal gold in the field. In Latin America prices crashed by as much as 50%. In Africa, prices dropped by 30-50%.
The AGC began documenting conditions and gold prices country by country, and storing this information in database form. In Burkina Faso artisanal gold prices dropped by 39%. In Sierra Leone by 42%. In Colombia’s Choco region by 13%. In Peru by 48%.
Since then restrictions in these gold trading hubs have gradually eased. Switzerland early on (April 6) allowed the major refineries in the Ticino valley to re-open at 50% capacity. That combined with limited air freight operations allowed some gold to begin flowing, though the closure of the other major gold hubs continued to hamper operations. Dubai on April 25 allowed malls and some shops to open, but kept the Gold Souk closed. India similarly eased its lockdown around this time, allowing markets and some local malls to operate at limited capacity. Mumbai, the centre of India’s gold trade, remained in strict lockdown.
On April 30, lockdown measures in several key states in the US were eased or lifted, resulting in US dashboard status changing to yellow. Hong Kong relaxed its restrictions on domestic travel and public gatherings, and allowed business to resume with precautions. That and air freight operations allowed its status to change to yellow as well.
The final switch to yellow came on May 13, as the Dubai souk re-opened at least partially, and as India loosened its lockdown measures enough for the gold business to operate at least partially. With those changes, both India and the UAE switched to yellow, meaning limited gold trade is now possible.
The partial restoration of the world’s gold trading hubs has had a trickle down effect in the field. Initial indications from Burkina Faso for example, show that gold prices in the field have risen to about 84% of world spot price, still about 10% below pre-COVID levels, but a significant improvement over the 55% of spot miners received in the weeks immediately following the COVID-19 shutdowns.
However, the situation is far from back to normal. While some gold trade has resumed in some countries, miners in most artisanal gold producing countries continue to receive prices well below the pre-pandemic levels. And it is as yet unclear who exactly is involved in the new gold trade links forming between Africa and South America and the world’s gold trading hubs. While it’s possible the new and adapted gold routes are being conducted legally, there’s an equal or greater chance the COVID-19 pandemic has pushed the artisanal gold trade into even greater levels of informality.