Governments chose to move away from gold to protect their currencies more than thirty years ago. Now changing consumer habits and new environmental priorities have put another serious dent in the long-term demand for gold.
US and European consumers are being pummeled by an increasing number of pressure groups highlighting water and environmental impacts and targeting jewelry retailers.
But, at the heart of the problem seems to be India’s changing consumer habits, especially the increasingly wealthy younger generation. Historically families have preserved wealth by buying and storing huge gold reserves.
A decade ago the total wealth held by Indians in gold was believed to exceed the total value of Indian stock markets by a factor of three.
The Indian government’s continued pleas to Indians to “release the capital value in private gold assets to benefit the Indian economy” seemed to mirror the wealthy young generation’s move ‘from gold to Gucci and Sony’. New lifestyles more akin to 1970s Silicon Valley have driven demand for gold jewelry down substantially.
Now that Western consumers are also being convinced by a five-year campaign against ‘dirty gold’, it is the alternate consumer choices that are getting the biggest share of wallet.
Campaigners insist that each ounce of gold produced creates in its wake 30 tons of toxic waste. With China’s new-found eco-wisdom in mind, Western buyers are trying to be equally mindful of the environmental impact of their purchases.
Gold miners may be hoping for a return to global instability to drive up the gold price. In the meantime they are radically innovating their technologies to earn the ‘clean gold’ accolade.