Gold has a rich history as a store of value and means of exchange for goods and services between peoples all over the world, no matter the particular culture. This is in part due to that fact that 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 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 dicsover which countries have the largest in-ground gold reserves to see if there are investment opportunities to be found there.
The below list of the three countries with the largest gold reserves is somewhat different than the list of the three current largest producers of gold, 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 largest in-ground gold reserves, according to the U.S. Geological Survey, are Australia, South Africa, and Russia. Let’s take a brief look at each country [see also 3 Reasons Why Gold Is Overvalued].
The gold mining industry began 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 approximately 75% of gold production and approximately two-thirds of gold mine reserves, roughly 9,800 tons of gold.
The Super Pit/Kalgoorie mine in western Australia is believed to be the 10th biggest gold mine on the planet. It’s 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 in particular (1979), the country accounted for an incredible 79% of the world’s production of gold. But times have changed. Even up to just a few short years ago, South Africa was still the world’s second-largest gold producer. Now it has dropped to fifth place and falling. The county still has enormous gold reserves, however, estimated at approximately 6,000 tons of gold.
The problem with South Africa’s mines is that they are very deep, making them dangerous to mine. Poor working conditions have led to increased militancy among mining union workers clamoring for higher wages and improved conditions. In addition, 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 mined in recent years at a higher cost.
For investors interested in South Africa’s mining industry, there are a number of ADRs listed in the United States that 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 such as gold, and has been since the 19th century. The country is estimated to have the world’s third-largest gold reserve at approximately 5,000 tons of gold, and is currently the world’s fourth-largest 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 (POLY), which is listed on the London Stock Exchange. Other large gold producers are Omolon Gold and Buryatzoloto. At the same time, the central government still plays a major role in the industry.
Disclosure: No positions at time of writing.