Gold is the key to an important part of the monetary system

In an interview with Kitco News, Minter noted that the use of the dollar as an instrument of U.S. foreign policy under the last four presidents has prompted emerging markets to diversify their foreign exchange reserves. "All four presidents have used the dollar's reserve status as an instrument or lever of U.S. foreign policy," Minter said, emphasizing the political neutrality of this trend.

This switch to gold is seen as a decisive stabilization of the currency amid the uncertainty of the global financial situation. "You stabilize your currency with gold. You don't stabilize it with cryptocurrency. So gold is key to an important part of the monetary system," Minter said, pointing to the enduring value and stability of gold compared to volatile cryptocurrencies.

Minter also pointed to the dynamics of the gold market, particularly the role of ETFs and the correlation between real returns and the gold price, as important factors influencing the development of the gold price. Despite the recent sell-off in gold by investors in ETF funds, Minter believes a recovery in the price is possible as central bank purchases continue to reach record highs as they seek to reduce the risk associated with the dollar's dominance of foreign exchange reserves.
 

Gold production in the US
In 2023, gold production in the United States fell for the sixth consecutive year. The dynamics of shares of gold mining companies is simply catastrophic, even against the background of repeated records of gold prices.

Last year, U.S. mining companies produced 168 tons of gold. That's according to the first estimate released this week by the U.S. Geological Survey (USGS). That means U.S. gold production is down for another year.

The industry will produce 173 tons of gold in 2023 - down 2.9% from a year earlier. At the same time, gold production in the U.S. has fallen for six consecutive years. Since 1991, the average annual decline in production in the U.S. gold mining industry has been 1.5%. Since the peak in 1999 (366 tons), gold production has fallen by 54%.

Last December 2023, the country's gold mines produced more than 15 tons of gold for the first time in twelve months. However, there was a year-on-year decline of 2.6%.
 

What are the reasons? Why is there less and less gold being mined in the US year after year? Recently, U.S. mines have been struggling with rising exploration and production costs. Financing for mining projects has also been difficult for many years. Overall, however, rock mineralization has also been declining for decades, with virtually no profitable gold deposits being discovered.

The stock market performance of U.S. mining companies last year was also sobering for investors. Despite repeated records of gold prices, the Dow Jones US Gold Mining Index lost about 25% over the last 12 months. And significantly: since the end of the year alone, the index has fallen by 23%. And since its interim high in April 2023, it has fallen 38%.

This means that the mining sector remains unattractive to institutional investors. This exacerbates financing problems for gold and commodity companies. However, the largest listed gold mining companies continue to pay decent, albeit declining, dividends. In the case of industry leader Newmont Mining, the yield was as recently as 3%.