Gold producers push to increase gold jewelry demand

AngloGold, Barrick Gold, and other mining companies have proposed spending as much as $200 million a year on the industry’s biggest marketing campaign ever, aimed at increasing bullion prices and demand for gold jewelry, Bloomberg News reported.

The campaign, to be initially financed with 30 cents from every ounce of gold produced, could increase annual gold demand as much as 13%, adding $12 billion to sales, based on estimates by consultants at McKinsey & Company, Bloomberg News reported. Gold prices that have lingered below $300 an ounce for four years could rise as much as $40, they said.

More advertising and promotion will eventually increase jewelry demand that probably will fall next year, before the United States emerges from a recession, mining executives said at a conference on gold in Denver, Bloomberg News reported. Jewelry accounts for 80% of gold use, and bullion prices have dropped 24% since 1996.

So far, companies that account for about 70% of world production are backing the campaign, Bloomberg News reported. Along with South Africa’s AngloGold, the largest producer, proponents of the plan include Kinross Gold of Toronto; Randgold Resources of Jersey, the Channel Islands; Sons of Gwalia of Perth, Australia; and Gympie Gold of Sydney. AngloGold is a unit of Anglo American.