Gold has potential to transform countries, communities – PwC – by Martin Creamer ( – October 8, 2013)

JOHANNESBURG ( – Gold has the potential to transform countries and to boost communities, World Gold Council (WGC) director of gold for development Terry Heymann said on Tuesday.

Heymann, who was speaking to Mining Weekly Online from London, was commenting on a 50-page study just released, which shows the colossal potential of gold to boost the macroeconomics of countries as well as play a major role in the development of communities.

Produced by PwC, the WGC-commissioned study, calculated that gold had directly contributed more than $210-billion to the world’s economy in 2012, roughly equivalent to the gross domestic product (GDP) of the Republic of Ireland, Czech Republic or Beijing.

“The size of the figures are very significant and you think of that being equivalent to a city the size of Beijing and the tens of millions of people living in it,” Heymann said.

However, the $210-billion figure was in actual fact a highly conservative number in that it dealt solely with gold’s direct contribution, without taking into account the significant multiplier effect of its many economic linkages.

The new findings pave the way for further research examining the total economic contribution gold makes, covering both the direct and indirect economic impacts such as secondary employment, additional taxation and the funding of third-party support services.

The report deals mainly with gold’s “macroeconomic magic”, highlighting its generation of vital foreign exchange earnings to a range of particularly developing countries that export gold.

For example, in 2012, gold provided 36% of all Tanzanian exports and 26% of the exports of Ghana and Papua New Guinea.

Consideration was now being given to a follow-up study that would also take into account gold’s indirect benefits, including its extremely far-reaching multiplier effects.

“We’re certainly interested indirect impacts,” Heymann told Mining Weekly Online, adding that the WGC had already done work on the wide range of indirect impacts in specific countries, one of them being Peru, where the impacts of only four large gold mines proved colossal.

Not only were the macroeconomic benefits of foreign exchange earnings and GDP contributions taken into account, but also the creation of businesses and the development of a “priceless” entrepreneurial culture.

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