The Hidden Fifth of Gold Supply
This month the World Gold Council turned its attention to where gold actually comes from. Around one fifth of the world's annual gold production comes from artisanal and small-scale mining: millions of independent miners working outside the big corporate operations, supporting some 20 million livelihoods across Africa, Latin America and Asia-Pacific. It is one of the hardest parts of the market to measure, and it is growing.
The Big Picture
The growth is striking. In Peru, small-scale output has risen more than 160% in ten years to reach 100 tonnes, with over 300,000 operators. In Tanzania, Africa's fourth-largest producer, more than a million artisanal miners work alongside the major mines. Better measurement of this sector has already led to upward revisions in estimates of global mine production. For investors, the message is simple: real gold supply is broader than official figures long suggested, and bringing it into formal, traceable channels is now a global priority.
Key Market Drivers
Small Mines, Big Numbers: Artisanal and small-scale mining is far from a niche activity. Higher gold prices, limited alternative employment in producing regions and better access to equipment have all driven its share of global supply steadily higher over the past decade.
Better Data Is Reshaping the Supply Picture: Because production is spread across thousands of informal operations, it has long been undercounted. New measurement work using satellite analysis and big data has already pushed historical estimates of world mine production upward. Clearer supply data means better-informed markets.
Formalisation Creates Opportunity: Efforts to bring legitimate small-scale gold into formal, traceable supply chains, including origin-verification technology and centralised processing, support responsible sourcing. Over time, a more transparent supply chain strengthens confidence in gold as an institutional asset.
The Macro Picture: Credit, Liquidity and Gold
Our advisors see deflationary pressure building in the global credit system. In their assessment the quality of debt is deteriorating even as more of it is issued, and the pool of high-quality collateral is shrinking. The US Treasury market is showing a pattern that has preceded or accompanied most major global downturns since the Second World War: short-term yields falling faster than long-term ones. In the near term our model reads copper's strength as supportive of risk assets, but it also suggests the broader equity market could peak around the turn of the year. Historically, that kind of turning point has produced the strongest entry signals for gold equities.
Looking Ahead
We are watching three things: copper as a near-term risk signal, the shape of the US Treasury curve, and credit spreads, where a decisive widening has historically preceded capitulation and, shortly after, the point at which gold equities begin to lead. Our model waits for its confirmation signal before deploying, and the Fund is prepared to act when it arrives. As always, timing is never guaranteed.
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