The gold supply chain involves a series of stages, from exploration and mining to refining, fabrication, and finally, distribution to end-users or investors.
Here is an overview of how the gold supply chain typically works:
Processing and Production
Exploration and Mining: The gold supply chain begins with exploration and mining. Exploration activities identify areas with potential gold deposits. Once the miners discover the gold deposits, mining operations commence to extract the gold ore. Mining methods vary and can include open-pit mining, underground mining, or alluvial mining.
Ore Processing: After extraction, the gold-bearing ore undergoes processing to extract the gold. Common methods include crushing, grinding, and chemical processes like cyanidation. The result is often a concentrate or doré, a semi-pure alloy of gold and silver.
Refining: Miners send the concentrate or doré to a refinery for further purification and the refining processes involve separating gold from impurities, such as other metals and minerals. Common refining methods include smelting, electrolysis, and chemical processes. The final product is high-purity gold.
Bullion Production: Once refined, the gold may be cast into bars, minted into coins, or is used to produce other forms of bullion. Bullion refers to physical gold in the form of bars, coins, or rounds, typically containing a high percentage of pure gold.
Distribution to Wholesalers and Dealers: The refined gold or bullion is then distributed to wholesalers and dealers. These entities act as intermediaries between refineries or mints and the end-users, such as jewelry manufacturers, industrial users, or investors.
Jewelry and Industrial Use: Suppliers use a significant portion of the gold supply for jewelry and industrial purposes. As you may know people value gold for its beauty and conductivity, making it a popular choice in various industries, including electronics and medical technology.
Financial Markets: Investors also trade gold on financial markets. Investors can buy and sell gold futures contracts or invest in gold exchange-traded funds (ETFs) that track the performance of the gold market. Financial instruments like gold derivatives provide exposure to gold price movements without the need for physical ownership.
Jewelry Manufacturing: Gold is a key material in jewelry manufacturing. Manufacturers alloy gold with other metals to create durable and aesthetically pleasing jewelry items. Jewelry manufacturers source their gold from wholesalers or directly from refineries.
Retail Distribution: Manufacturers distribute jewelry and gold products for investment to retail outlets. These include jewelry stores, bullion dealers, and banks. Consumers can purchase gold in various forms, such as jewelry, coins, or bars.
End-User Acquisition: The final stage involves end-users acquiring gold products for various purposes. This can include individuals purchasing gold jewelry, collectors buying numismatic coins, or investors adding gold to their portfolios.
Throughout the gold supply chain, there are regulatory frameworks, ethical considerations, and environmental practices that influence the industry. Responsible sourcing and sustainable mining practices are increasingly becoming priorities within the gold supply chain to address environmental and social concerns. If you are a curious on the latest status of the gold, don’t miss out on our weekly gold snapshot report where we analyse all the gold movements to ensure your decision about investing in gold is well informed and that your investments are safe.
Always prioritize security, and if in doubt, seek advice from security experts or professionals in the precious metals industry.