Gold has been coveted since man found the first nugget in an African riverbed and thought it was a piece of the sun that had fallen to earth. All cultures associate gold with the sun and fire, symbols of God, life, purity, power and enlightenment. Given its rarity and mystical associations, gold was owned only by a privileged few and became the ultimate display of wealth and honour. It came to represent the value of goods over 6,000 years ago, making it the oldest currency in the world.
Separately, gold's beauty and brilliance have inspired artisans throughout the ages to make wonderful objects to place on altars, adorn kings, reward greatness and profess love. Hence, gold dowry jewellery, literally "pretty money", became an important use for gold and still is.
Today, jewellery is still the primary use for gold. Over 80% of all the gold ever mined is in the form of jewellery (about 15% of the world's gold is with central banks). However, the world is divided between two kinds of jewellery consumers :
- Consumers in developed markets (e.g., North America, Europe and Japan) represent roughly 30% of total gold jewellery consumption. They buy gold jewellery primarily for adornment as other forms of wealth have emerged, their economies have stabilised and hard currencies have replaced gold. The focus in these markets is on design aesthetics and self-expression, not the gold itself. Gold content has taken a backseat to design, causing low carat (9-14ct) jewellery and hollow jewellery to become popular. In addition, many Western designs require the gold to be alloyed for hardness and colour. It's difficult to maintain a fashionable mirror finish with high carat gold.
- Consumers in developing markets (the rest of the world, where populations and disposable incomes are growing fastest) represent 70% of total gold jewellery consumption. And importantly, because most of the jewellery is destined for dowries, they buy high-carat (22-24ct) gold. Here, the gold is more important than the design (which tends to be traditional and ethnic designs adapted for 22- 24ct through the ages). Gold is also used for industrial and medical uses but at significantly smaller levels than jewellery. Gold bar hoarding, or "investment gold", is concentrated again in developing markets where gold's value is stronger. However, these figures are blurred because gold bars and coins are feedstock for jewellery manufacturing.
Doesn't gold sell itself?
Historically, gold producers have relied on the fact that "gold sells itself" (i.e., demand is constant and always exceeds supply). However, today there are numerous threats to gold demand. Consumers have more products to spend their money on. Fashions and tastes change, resulting in new status symbols. The strengthening of hard currencies and the attractiveness of new investment vehicles detract from gold's appeal. The wildly fluctuating gold price has hurt its image as a long-term store of value and accessibility has eroded its mystique.
The industry needs to recognise that gold is a "brand" - arguably the oldest luxury brand in the world - that needs to be managed to maintain and enhance its value and desirability. The future of the industry is directly linked to the image and value of the brand gold. Thus, the gold industry needs to embrace classic pro-active brand management. However, presently there is no entity with the mandate, structure and/or industry support to do this.
Technologies and marketing
The marketing of any product encompasses technologies such as new product features and new ways to sell and distribute the product and new media. In the specialised discipline of commodity marketing, technologies play an even more important role in making the ordinary extraordinary. This is why my company has two divisions, technologies and marketing, which work hand in hand.
Through research and development, we seek to find new uses for gold and new treatments and processes for the metal. We both invent and buy technologies. For example, we combined a couple of state-of-the-art technologies to create a new security device for bullion products that has the added benefit of being very attractive, functional, inexpensive and versatile. In addition, we've combined and tailored some new advances in casting and jewellery manufacturing to create a new improved method to manufacture bullion. Other technology projects range from software to sell bullion to coloured gold alloys. There are many technological advances in many different industries that can be applied to the gold industry. The gold industry must embrace technologies to breathe new life into the metal.
In addition, the conservative and sleepy gold industry is waking up to marketing. Many of the world's leading mines are not only savvy when it comes to marketing themselves but also aggressively supporting gold marketing initiatives - Anglogold and JC! are probably the two most pro-active. Both are involved in a number of initiatives to stimulate the demand for gold, ranging from jewellery manufacturing efforts to outline gold buying programmes.
Branding gold is also a new marketing trend in the industry. Many commodities have been branded over the years, such as Colombian Coffee, Virgin Wool, ALCOA Aluminium - so why not gold? In fact, branded ingredients are a new trend in the jewellery industry (two examples are Tahitian Pearls and Platinum 2000). In South Africa, we recently introduced the world's first two gold brands: Ra% Pure African Gold% and Green Gold%. Jewellery manufacturers wanting to differentiate their products are now seeking out branded gold.
For example, the World War II Memorial Fund in the USA was making an object of solid gold to be auctioned to aid the charity. They wanted to be sure the gold was pure and untainted (i.e., didn't contain any Holocaust gold) so they insisted on using Ra 100% Pure African Gold for the project. Another example is when the leading jeweller in South Africa, Jenna Clifford, was commissioned to produce some elephant sculptures for Nelson Mandela and the Three Tenors in conjunction with a project for the World Wide Fund for Nature (WWF). She insisted on making the sculptures out of Green Gold.
It is marvellous to be involved in one of the world's oldest industries dealing with one of the oldest products on the cusp of the millennium. In fact, the ironic juxtaposition of gold (old) and technologies (new) is probably one of the industry's strongest marketing strategies moving forward. Gold's fundamental value is emotional. It holds a special place in the hearts and culture of mankind. In an age of that combines inconsistency and uncertainty with rational thought, hard facts and cold technologies, there is a lot of potential for gold.