The World's Gold and Silver Coin Production vs. Money Creation
Connect with us

Gold

The World’s Gold and Silver Coin Production vs. Money Creation

Published

on

Global Gold & Silver Coin Production vs. Money Creation

Note: Data has been updated to correct a previous calculation error pertaining to Japanese Yen money supply.

Both precious metals and cash serve as safe haven assets, intended to limit losses during market turmoil. However, while modern currencies can be printed by central governments, precious metals derive value from their scarcity.

In this infographic from Texas Precious Metals, we compare the value of the world’s gold and silver coin production to global money creation.

Total Production Per Person, 2019

We calculated the value of global currency issuance in 2019 as well as precious metal coins minted, and divided by the global population to get total production per person.

Throughout, global money supply is a proxy based on the 5 largest reserve currencies: the U.S. dollar, Euro, Japanese Yen, Sterling Pound, and Chinese Renminbi.

2019 ProductionOuncesDollar ValueDollar Value Per Person
Global Gold Coins7,204,982$10.9B$1.42
Global Silver Coins97,900,000$1.8B$0.23
Global Money Supply$4.3T$556.33

All numbers are in USD according to exchange rates as of December 31 2019. Gold and silver values are based on the 2019 year close price of $1,510.60 and $17.90 respectively.

The value of new global money supply was 390 times higher than the value of gold coins minted, and 2,400 times higher than silver coins minted.

Put another way, for each ounce of minted gold coin, the global money supply increased by more than $593,000.

Change in Annual Production, 2019 vs. 2010

Compared to the start of the decade, here’s how annual production levels have changed:

 20102019% change
Global Silver Coins (oz)95,900,00097,900,0002.1%
Global Gold Coins (oz)6,298,3317,204,98214.4%
Global Money Supply (USD)$2,936,296,692,440$4,268,993,639,92645.4%

Annual increases to global money supply have increased by half, far outpacing the change in the world’s gold and silver coin production.

Even more recently, how has production changed during the COVID-19 pandemic?

The COVID-19 Effect

In response to the global pandemic, central banks have enacted numerous measures to help support economies—including issuing new currency.

The global money supply increased by more than $6.8 trillion in the first half of 2020. In fact, the value of printed currency was 930 times higher than the value of minted gold coins over the same timeframe.

Investors may want to consider which asset is more vulnerable to inflation as they look to protect their portfolios.

Want to learn more? See the U.S. version of this graphic.

Subscribe to Visual Capitalist
Click for Comments

Gold

How Gold Royalties Outperform Gold and Mining Stocks

Gold royalty companies shield investors from inflation’s rising expenses, resulting in stronger returns than gold and gold mining companies.

Published

on

gold royalty company returns compared to gold and gold mining companies
The following content is sponsored by Gold Royalty
Infographic on gold royalty company returns

How Gold Royalties Outperform Gold and Mining Stocks

Gold and gold mining companies have long provided a diverse option for investors looking for gold-backed returns, however royalty companies have quietly been outperforming both.

While inflation’s recent surge has dampened profits for gold mining companies, royalty companies have remained immune thanks to their unique structure, offering stronger returns in both the short and long term.

After Part One of this series sponsored by Gold Royalty explained exactly how gold royalties avoid rising expenses caused by inflation, Part Two showcases the resulting stronger returns royalty companies can offer.

Comparing Returns

Since the pandemic lows in mid-March of 2020, gold royalty companies have greatly outperformed both gold and gold mining companies, shining especially bright in the past year’s highly inflationary environment.

While gold is up by 9% since the lows, gold mining companies are down by almost 3% over the same time period. On the other hand, gold royalty companies have offered an impressive 33% return for investors.

In the graphic above, you can see how gold royalty and gold mining company returns were closely matched during 2020, but when inflation rose in 2021, royalty companies held strong while mining company returns fell downwards.

 Returns since the pandemic lows
(Mid-March 2020)
Returns of the past four months
(July 8-November 8, 2022)
Gold Royalty Companies33.8%1.7%
Gold9.1%-1.7%
Gold Mining Companies-3.0%-8.6%

Even over the last four months as gold’s price fell by 1.7%, royalty companies managed to squeeze out a positive 1.7% return while gold mining companies dropped by 8.6%.

Gold Royalty Dividends Compared to Gold Mining Companies

Along with more resilient returns, gold royalty companies also offer significantly more stability than gold mining companies when it comes to dividend payouts.

Gold mining companies have highly volatile dividend payouts that are significantly adjusted depending on gold’s price. While this has provided high dividend payouts when gold’s price increases, it also results in huge dividend cuts when gold’s price falls as seen in the chart below.

chart of gold royalty company dividends vs gold mining company dividends

Rather than following gold’s price, royalty companies seek to provide growing stability with their dividend payouts, adjusting them so that shareholders are consistently rewarded.

Over the last 10 years, dividend-paying royalty companies have steadily increased their payouts, offering stability even when gold prices fall.

Why Gold Royalty Companies Outperform During Inflation

Gold has provided investors with the stability of a hard monetary asset for centuries, with mining companies offering a riskier high volatility bet on gold-backed cash flows. However, when gold prices fall or inflation increases operational costs, gold mining companies fall significantly more than the precious metal.

Gold royalty companies manage to avoid inflation’s bite or falling gold prices’ crunch on profit margins as they have no exposure to rising operational expenses like wages and energy fuels while also having a much smaller headcount and lower G&A expenses as a result.

Along with avoiding rising expenses, gold royalty companies still retain exposure to mine expansions and exploration, offering just as much upside as mining companies when projects grow.

Gold Royalty offers inflation-resistant gold exposure with a portfolio of royalties on top-tier mines across the Americas. Click here to find out more about Gold Royalty.

Subscribe to Visual Capitalist
Click for Comments

You may also like

Subscribe

Continue Reading

Gold

How Gold Royalties Offer Inflation-Resistant Gold Exposure

As inflation has impacted gold mining company profits, this graphic explains how royalty companies offer inflation-resistant gold exposure.

Published

on

The following content is sponsored by Gold Royalty

How Gold Royalties Offer Inflation-Resistant Gold Exposure

As rising inflation has increased the operational expenses of gold mining companies, gold royalty companies have emerged as an inflation-resistant alternative for investors seeking exposure to the precious metal. 

Without exposure to rising wages, fuel, and energy costs, gold royalty companies are able to maintain strong profit margins that are often more than double those of gold mining companies.

This infographic sponsored by Gold Royalty is the first in a two-part series and showcases exactly how royalty companies naturally avoid inflation, along with the superior profit margins that come as a result.

Inflation’s Dampening Effect on Gold Mining Profits

Since mid-2021, inflation has become a constant risk-factor for investors to keep in mind as they manage their portfolio. Every energy fuel has risen in price over the last year alongside wage increases around the world, greatly impacting the expenses of material production and refining.

Gold mining is no exception, and while operational costs have risen, gold’s price has actually decreased slightly over the same time period, further impacting gold mines’ profitability and margins.

CommodityPrice change since the start of 2021
Coal+372%
Gasoline+72%
Diesel+53%
Electricity+24%
Gold-13%

The impact of inflation can’t be understated when it comes to mining operations, which require large amounts of machinery, electricity, and people.

Along with massive haul trucks, bulldozers, and machinery like large-scale grinding units that require diesel and other fuels to operate, refinery operations also consume large amounts of electricity.

How Gold Royalty Companies Avoid Inflation

With no large fleets of vehicles to fuel, refining plants to power, along with significantly smaller headcounts and wage bills, royalty companies barely suffer from rising inflation. Compared to gold mining companies with tens of thousands of employees across the world, gold royalty companies rarely employ more than 50 people. 

Along with this, while royalty companies’ revenue comes from royalty and streaming agreements with mining companies, these agreements are structured to ensure royalty companies face none of the operational expenses (and inflation) that miners do.

This is because royalty agreements calculate royalties (which royalty companies receive) as a percentage of the mine’s top-line revenue rather than from the mine’s final profits after expenses, meaning royalty companies get their cut before operational costs and other expenses are deducted.

The Golden Profit Margins of Royalty Companies

With gold’s price having remained stagnant while inflation has pushed expenses up, gold mining company profit margins have been crunched from both sides while royalty companies have avoided the impact. 

Over the last four quarters, gold mining giant Newmont Goldcorp’s average profit margin declined to 6.6% when compared to the 22.9% average margins of the four quarters prior. On the other hand, royalty company Franco-Nevada’s profit margins increased from 54.8% to 57.3% over the same time periods. 

Without inflation impacting their bottom line, royalty companies have been able to maintain strong financials in a chaotic period for the economy.

In part 2 of this series, we’ll take a closer look at the returns of gold royalty companies, and how exactly they’ve outperformed both gold mining companies and the precious metal itself.

Gold Royalty offers inflation-resistant gold exposure with a portfolio of royalties on top-tier mines across the Americas. Click here to find out more about Gold Royalty.

Subscribe to Visual Capitalist
Click for Comments

You may also like

Subscribe

Continue Reading

Subscribe

Popular