Markets
The Impact of COVID-19 Shutdowns on the Gold Supply Chain
How COVID-19 Shutdowns Impact the Gold Supply Chain
Chains are only as strong as their weakest link—and recent COVID-19 shutdowns have affected every link in the gold supply chain, from producers to end-users.
Increased investor demand for gold coupled with a constrained supply has led to high prices and a bullish market, which has been operating despite these pressures on the supply chain.
Today’s infographic comes to us from Sprott Physical Bullion Trust and it outlines the gold supply chain and the impacts COVID shutdowns have had on the gold market.
The Ripple Effect: Stalling a Supply Chain
Disruptions to the gold supply chain have rippled all the way from the mine to the investor:
- Production
Some gold mines halted production due to the high-risk to COVID-19 exposure, reducing the supply of gold. In many nations, operations had to shut down as a result of COVID-19 based legal restrictions. - Delivery
Strict travel regulations restricted the shipment of gold and increased the costs of delivery as less air routes were available and medical supplies were prioritized. - Refinery
Refineries depend on gold production for input. A reduction in incoming gold and the suspension of labor work shortened the supply of refined gold. - Metal Traders
Towards the other end of the gold supply chain, traders have faced both constrained supply and increased cost of delivery. These increased costs have translated over to end-users. - The End Users
Higher demand, lower supply, and increased costs have resulted in higher prices for buyers of gold.
Gold: A Safe Haven for Investors
As the virus spread around the world threatening populations and economies, investors turned to safe-haven investments such as gold to hedge against an economic lockdown.
This increase in investor demand affected the four primary financial markets for gold:
- Futures Contracts:
A futures contract is an agreement for the delivery of gold at a fixed price in the future. These contracts are standardized by futures exchanges such as COMEX. During the initial periods of the pandemic, the price of gold futures spiked to reach a high of US$70 above the spot price. - Exchange-Traded Funds (ETFs):
An ETF is an investment fund traded on stock exchanges. ETFs hold assets such as stocks, bonds, and commodities such as gold. From the beginning of 2020 to June, the amount of gold held by ETFs massively increased, from 83 million oz to 103 million oz. The SPDR Gold Trust is a great example of how the surge in ETF demand for gold has played out—the organization was forced to lease gold from the Bank of England when it couldn’t buy enough from suppliers. - Physical Gold for Commerce and Finance:
The London Bullion Market Association (LBMA) is a market where gold is physically traded over-the-counter. The LBMA recorded 6,573 transfers of gold amounting to 29.2 million oz ($46.4 billion)—all in March 2020. This was the largest amount of monthly transfers since 1996. - Coins and Small Bars:
One ounce American Gold Eagle coins serve as a good proxy for the demand for physical gold from retail investors. The COINGEAG Index, which tracks the premium price of 1 oz. Gold Eagles, spiked during the early stages of the lockdown.
Each one of these markets requires access to physical gold. COVID-19 restrictions have disrupted shipping and delivery options, making it harder to access gold. The market for gold has been functioning nonetheless.
So how does gold get to customers during a time of crisis?
Gold’s Journey: From the Ground to the Vault
Gold ore goes through several stages before being ready for the market.
- Processing:
Gold must be released from other minerals to produce a doré bar—a semi-pure alloy of gold that needs further purification to meet investment standards. Doré bars are typically produced at mine sites and transported to refiners. - Refining:
Refineries are responsible for turning semi-pure gold alloys into refined, pure, gold. In addition to reprocessing doré bars from mines, refiners also recycle gold from scrap materials. Although gold mining is geographically diverse and occurs in all continents except Antarctica, there are only a handful of gold refineries around the world. - Transportation:
Once it’s refined, gold is transported to financial hubs around the world. There are three main ways gold travels the world, each with their own costs and benefits:- Commercial Flights:
Cheapest of the three options, commercial flights are useful in transporting gold over established passenger routes. However, the volume of gold carried by a commercial flight is typically small and subject to spacing priorities. - Cargo Planes:
At a relatively moderate cost, cargo planes carry medium to large amounts of gold along established trade routes. The space dedicated to cargo determines the cost, with higher volumes leading to higher shipping prices. - Chartered Airlines:
Chartered airlines offer a wider range of travel routes with dedicated shipping space and services tailored to customer demand. However, they charge a high price for these conveniences.
- Commercial Flights:
After reaching its destination via air, armored trucks with security personnel move the gold to vaults and customers in financial hubs around the world.
The World’s Biggest Gold Hubs
The U.K.’s bullion banks hold the world’s biggest commercial stockpiles of gold, equal to 10 months of global gold mine output. London is the largest gold hub, with numerous vaults dedicated to gold and other precious metals.
Four of the largest gold refineries in the world are located in Switzerland, making it an important part of the gold supply chain. Hong Kong, Singapore, and Dubai are surprising additions and remain significant traders of gold despite having no mines within their borders.
COVID-19: The Perfect Storm for Gold?
As countries took stringent safety measures such as travel restrictions and border closures, the number of commercial flights dropped exponentially across the world. For the few commercial airlines that still operated, gold was a low-priority cargo as space was dedicated to medical supplies.
This impeded the flow of gold through the supply chain, increasing the cost of delivery and the price of gold. However, thanks to the diverse geography of gold mining, some countries did not halt production—this helped avoid a complete stall in the supply of gold.
The COVID-19 pandemic has created the perfect storm for gold by disrupting the global supply chain while investor demand for gold exploded. Despite heightened delivery risks and disruptions, the gold market has managed to continue operating thus far.
Markets
Ranked: The World’s 50 Top Countries by GDP, by Sector Breakdown
This graphic shows GDP by country, broken down into three main sectors: services, industry, and agriculture.

Visualized: The Three Pillars of GDP, by Country
Over the last several decades, the service sector has fueled the economic activity of the world’s largest countries. Driving this trend has been changes in consumption, the easing of trade barriers, and rapid advancements in tech.
We can see this in the gross domestic product (GDP) breakdown of each country, which gets divided into three broad sectors: services, industry, and agriculture.
The above graphic from Pranav Gavali shows GDP by country, and how each sector contributes to an economy’s output, with data from the World Bank.
Drivers of GDP, by Country
As the most important and fastest growing component of GDP, services make up almost 60% of GDP in the world’s 50 largest countries. Following this is the industrial sector which includes the production of raw goods.
Below, we show how each sector contributes to GDP by country as of 2021:
Country | Services (% GDP) | Industry (% GDP) | Agriculture (% GDP) | Other (% GDP) | GDP (T) |
---|---|---|---|---|---|
🇺🇸 U.S. | 77.6 | 17.9 | 1.0 | 3.6 | $22.9 |
🇨🇳 China | 53.5 | 39.3 | 7.2 | 0.0 | $16.9 |
🇯🇵 Japan | 69.9 | 28.8 | 1.0 | 0.4 | $5.1 |
🇩🇪 Germany | 62.9 | 26.7 | 0.9 | 9.5 | $4.2 |
🇬🇧 UK | 71.6 | 17.3 | 0.7 | 10.4 | $3.1 |
🇫🇷 France | 70.3 | 16.7 | 1.6 | 11.4 | $2.9 |
🇮🇳 India | 47.9 | 26.1 | 17.3 | 8.7 | $2.9 |
🇮🇹 Italy | 65.0 | 22.7 | 1.9 | 10.4 | $2.1 |
🇨🇦 Canada* | 67.7 | 24.1 | 1.7 | 6.6 | $2.0 |
🇰🇷 South Korea | 57.0 | 32.4 | 1.8 | 8.8 | $1.8 |
🇧🇷 Brazil | 57.8 | 20.2 | 7.5 | 14.6 | $1.6 |
🇦🇺 Australia | 65.7 | 25.5 | 2.3 | 6.5 | $1.6 |
🇷🇺 Russia | 54.1 | 31.8 | 3.9 | 10.3 | $1.6 |
🇪🇸 Spain | 67.4 | 20.4 | 2.6 | 9.6 | $1.4 |
🇲🇽 Mexico | 59.2 | 30.8 | 3.9 | 6.1 | $1.3 |
🇮🇩 Indonesia | 42.8 | 39.8 | 13.3 | 4.1 | $1.2 |
🇮🇷 Iran | 47.3 | 38.0 | 12.4 | 2.3 | $1.1 |
🇳🇱 Netherlands | 69.4 | 17.9 | 1.5 | 11.2 | $1.0 |
🇨🇭 Switzerland | 71.9 | 24.6 | 0.6 | 2.8 | $0.8 |
🇹🇷 Turkiye | 52.8 | 31.1 | 5.5 | 10.6 | $0.8 |
🇹🇼 Taiwan | 60.6 | 38.0 | 1.5 | 0.0 | $0.8 |
🇸🇦 Saudi Arabia | 46.5 | 44.7 | 2.7 | 6.1 | $0.8 |
🇵🇱 Poland | 56.9 | 27.9 | 2.2 | 13.0 | $0.7 |
🇧🇪 Belgium | 68.8 | 19.6 | 0.7 | 10.9 | $0.6 |
🇸🇪 Sweden | 65.0 | 22.5 | 1.3 | 11.3 | $0.6 |
🇮🇱 Israel | 72.4 | 17.2 | 1.3 | 9.1 | $0.5 |
🇦🇷 Argentina | 52.5 | 23.6 | 7.1 | 16.8 | $0.5 |
🇦🇹 Austria | 62.4 | 25.8 | 1.2 | 10.5 | $0.5 |
🇳🇬 Nigeria | 43.8 | 31.4 | 23.4 | 1.4 | $0.5 |
🇹🇭 Thailand | 56.3 | 35.0 | 8.7 | 0.0 | $0.5 |
🇮🇪 Ireland | 55.4 | 37.8 | 1.0 | 5.8 | $0.5 |
🇭🇰 Hong Kong | 89.7 | 6.0 | 0.1 | 4.3 | $0.4 |
🇩🇰 Denmark | 66.7 | 19.3 | 0.9 | 13.1 | $0.4 |
🇸🇬 Singapore | 70.3 | 24.4 | 0.0 | 5.3 | $0.4 |
🇿🇦 South Africa | 63.0 | 24.5 | 2.5 | 10.0 | $0.4 |
🇵🇭 Philippines | 61.0 | 28.9 | 10.1 | 0.0 | $0.4 |
🇪🇬 Egypt | 52.5 | 31.2 | 11.4 | 4.9 | $0.4 |
🇧🇩 Bangladesh | 51.3 | 33.3 | 11.6 | 3.7 | $0.4 |
🇳🇴 Norway | 51.8 | 36.3 | 1.7 | 10.2 | $0.4 |
🇻🇳 Vietnam | 41.2 | 37.5 | 12.6 | 8.8 | $0.4 |
🇲🇾 Malaysia | 51.6 | 37.8 | 9.6 | 1.1 | $0.4 |
🇦🇪 U.A.E. | 51.6 | 47.5 | 0.9 | 0.0 | $0.4 |
🇵🇰 Pakistan | 52.1 | 18.8 | 22.7 | 6.4 | $0.3 |
🇵🇹 Portugal | 64.7 | 19.6 | 2.2 | 13.5 | $0.3 |
🇫🇮 Finland | 60.3 | 24.1 | 2.3 | 13.4 | $0.3 |
🇨🇴 Colombia | 58.0 | 24.9 | 7.6 | 9.5 | $0.3 |
🇷🇴 Romania | 59.1 | 26.7 | 4.5 | 9.6 | $0.3 |
🇨🇿 Czechia | 58.8 | 30.3 | 1.8 | 9.1 | $0.3 |
🇨🇱 Chile | 54.4 | 31.3 | 3.6 | 10.6 | $0.3 |
🇳🇿 New Zealand* | 65.6 | 20.4 | 5.7 | 8.4 | $0.2 |
Industrial sector includes construction. Agriculture sector includes forestry and fishing. *Data as of 2019.
In the U.S., services make up nearly 78% of GDP. Apart from Hong Kong, it comprises the highest share of GDP across the world’s largest economies. Roughly 80% of American jobs in the private sector are in services, spanning from healthcare and entertainment to finance and logistics.
Like America, a growing share of China’s GDP is from services, contributing to almost 54% of total economic output, up from 44% in 2010. This can be attributed to rising incomes and higher productivity in the sector as the economy has grown and matured, among other factors.
In a departure from the top 10 biggest countries globally, agriculture continues to drive a large portion of India’s GDP. India is the world’s second largest producer of wheat and rice, with agriculture accounting for 44% of the country’s employment.
While the services sector has grown in India, it makes up a greater share in other emerging economies such as Brazil (58%), Mexico (59%), and the Philippines (61%).
Growth Dynamics
Services-led growth has risen faster than manufacturing across many developing nations, underpinned by productivity growth.
This structural shift is seen across economies. In many countries in Africa, for instance, jobs have increasingly moved from agriculture to services and trade, where it now accounts for 42% of jobs.
These growth patterns are supported by rising incomes in developing economies, while innovation in tech is lowering barriers to enabling service growth. As the industrial sector makes up a lower share of trade and economic activity, the service sector is projected to make up 77% of global GDP by 2035.
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