Gold has a rich history throughout the centuries as a store of value and a means of exchange (money) for goods and services between peoples all over the world, no matter the particular culture. Perhaps that is because gold is found in so many locations around the globe. Today, gold producing countries are found on nearly all continents and run the gamut from economic superpowers like the United States to small, emerging market economies. No single country produces more than 14% of the gold mined each year, making it truly a global industry [for more gold news and analysis subscribe to our free newsletter].
With gold’s spectacular rise in price over the last decade and the increased demand from individual investors for the precious metal, it may be worth investors’ time to find out about what countries own the gold – meaning, what countries have the largest in-ground gold reserves to see if there are investment opportunities to be found there.
The list of the three countries with the largest gold reserves is somewhat different than the list of the three current largest producers of gold, which are China, Australia and the United States. Also the country with the most listed gold mining companies – Canada – did not make the list. The countries with the biggest in-ground gold reserves, according to the U.S. Geological Survey, are Australia, South Africa, and Russia. We’ll now take a brief look at each country [see also 3 Reasons Why Gold Is Overvalued].
The gold mining industry started in Australia with its first gold rush in 1851, which was centered near Orange in New South Wales. Today, the “lucky country” of western Australia accounts for about 75% of gold production and approximately two-thirds of its gold mines reserves, roughly 7,500 tons of gold.
The Super Pit/Kalgoorie mine in western Australia is believed to be the 10th biggest gold mine on the planet. It is owned by North American gold mining companies Barrick Gold (ABX) and Newmont Mining (NEM). Investors can also claim some of the country’s gold riches through Australia’s largest gold mining company, Newcrest Mining ADR (NCMGY) [see also Were Gold and Silver Manipulated Alongside LIBOR?].
South Africa dominated the global gold industry from 1896 until the early 21st century. During one year – 1979 – the country accounted for an incredible 79% of the world’s production of gold. But times have changed. Even just a few short years ago, it was still the world’s second-largest gold producer. But now it has dropped to fifth and is still falling. But it still has enormous gold reserves, estimated to be approximately 6,000 tons of gold.
The problem with South Africa’s mines is that they are very deep, making them dangerous to mine. The poor working conditions have led to increasing militancy among mining union workers who are clamoring for higher wages and improved working conditions. Also the mining process consumes a lot of power, which is not good in a country notorious for its power shortages. Combined, these factors have led to less gold being mined in recent years from South Africa and at higher cost.
For investors interested in South Africa’s mining industry, there are a number of ADRs listed here in the United States, which can be traded including two of South Africa’s larger gold companies, AngloGold Ashanti (AU) and Gold Fields (GFI) [see also Why Peter Schiff Urges a Return To a Gold Standard].
Russia is better known by investors for its abundance of energy resources, but it is also a major player in precious metals including gold, having been so since the 19th century. It is estimated to have the world’s third-largest gold reserves at approximately 5,000 tons of gold and is currently the world’s fourth-biggest producer of gold.
Two-thirds of Russian gold production is estimated to come from six eastern “federal subjects” in the country: Amur, Irkutsk, Khabarovsk, Krasnoyarsk, Magadan and Sakha-Yakutia. Two of the most prominent gold mining companies in Russia are Polyus Gold International ADR (OGYPY) and Polymetal International, which is listed on the London Exchange. Other large gold producers are Omolon Gold and Buryatzoloto, but, of course, the central government still plays a major role in the industry.
Disclosure: No positions at time of writing.