The Pulse: Gold’s value growing; Race for small reactors; Japan buying uranium again
Don’t listen to the naysayers – look at the figures. In 2012, gold consumption around the world was 15% higher than the average for the past five years. Much of that growth came from the physical bar segment of investment demand and from central bank purchases.
So says the World Gold Council in its report for 2012.
And even those sections that have seen their share of gold consumption decline – mainly jewellery and technology users – have all still increased in value terms. So all sectors of the gold business have experienced considerable expansion; some are just growing faster than others. And the higher price each year helps keep the sector’s value increasing.
Demand in 2012 total $236.4 billion. Tonnage was down slightly – by 4% – to 4,450.5 tonnes.
But it’s the increase in bar and coin investment that has been impressive: from $3.6 billion in 2003 to $76.6 billion in 2012.
The WGC says the expectation for 2013 is for jewellery demand to soften in volume terms while sustaining healthy values. Investment demand, although dependent on the movement in the gold price and exchange rates, should again exceed historical averages as investors continue to focus on gold’s role as a store of value. This will also be aided by new investment products, such as gold accumulation plans in India and China.
Get our daily investorintel update
And there’s another aspect of gold that tends to be overlooked: its use in technology. Certainly the yellow metal’s industrial demand is nowhere near that for silver (or many specialist metals), but last year it accounted for 302.7 tonnes, although that was down 5% over the previous year. This decline was due largely to global economic issues in affecting the demand for electronic goods, although this was partially offset by the greater use of gold in industrial and automotive applications.
However, gold used in dentistry suffered its eighth successive annual decline, with the rising price being the main factor. Still, 39.9 tonnes still went into people’s mouths, to the tune of $2.1 billion.
NUCLEAR ENERGY: The atomic energy industry is shifting its focus to smaller reactors in order to meet surging demand from emerging economies which remained undeterred by the Fukushima accident. The Financial Times reports the Russians are building floating nuclear power plants capable of being towed to where they are needed, and providing enough electricity for a city of 200,000 people.
The newspaper said cost is a big advantage: the small reactors – the Russian ones have a capacity of 35MW, but they don’t have to be floating plants – have much lower capital price tags. They also have flexibility: they can operate alone or be put together in batches to provide flexibility in meeting variations in demand, such as conventional peak-load stations do.
The newspaper sees the countries most enthusiastic about nuclear power being mainly Asian countries and, in particular, China, South Korea, India, Vietnam and Indonesia.
At the same time, the US, Argentina, China, Russia, South Korea and others are vying to develop a commercial-scale small modular reactor.
URANIUM: Bloomberg reports that, two years after the Fukushima disaster, Cameco Corp has revealed Japan is stepping up uranium imports on speculation the government in Tokyo will allow more of the presently idled reactors to restart. Cameco says Japanese utilities are again accepting consignments of uranium under long-term contracts. The Canadian company says it expects as many as eight reactors to resume operating this year.
This coincides with a report from the Nikkei news service that Japanese power companies are spending heavily on safety upgrades. This may mean some older reactors will be permanently de-commissioned because of the prohibitive cost of upgrading them. Nikkei notes that, of Kansai Electric’s 11 reactors, seven are more than 30 years old. Japanese law now requires reactors to cease operating after 40 years. (The unstated corollary is that the other six will be upgraded and restarted.)
The problem is cost, and the difficulty the utilities – which saw big dents in profitability due to the nuclear crisis – have in raising sufficient capital to carry out the safety upgrades. Akihiro Sawa, an executive senior fellow with the 21st Century Public Policy Institute, says power companies need more radical business plans to reform their nuclear power operations, the Nikkei reports.
InvestorIntel is a trusted source of reliable information at the forefront of emerging markets that brings investment opportunities to discerning investors.