Precious Metals, Gold, and Emerging Markets

Abstract

Rapidly increasing emerging-market per capita income and rising living standards are primary drivers of increasing demand for precious metals, and this trend is likely to continue. Over the period 1993–2013, the average of the per capita income of the key emerging-market countries (including Brazil, Russia, India, and China (BRIC)) increased about fourfold, from $1,600 in 1993 to $8,500 in 2013. In 1993, the average of the total demand for gold, silver, platinum, and palladium from emerging markets was about 27%. In 2013, about 57% of the total global demand for precious metals came from emerging markets. Due to the increasing dominance of demand from emerging markets in the global precious metals market, partial precious metals portfolio exposure not only can provide overall portfolio diversification, but also can be integral to augmenting emerging-market exposure.

TOPICS: Emerging, commodities, portfolio construction