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20 www.resourceworld.com O C T O B E R / N O V E M B E R 2 0 1 9 tonnes of gold have been produced throughout history and most of that gold still exists in central bank holdings, pri- vate holdings and jewelry. By contrast, only 2500-3000 tonnes of gold are pro- duced annually by mining. Looking at gold in inflation adjusted terms, gold was around US $250/oz when Nixon closed in the gold window in August of 1971. What does this mean? Gold used to be a much more important monetary instrument and countries backed their paper currencies with a set ratio of gold bullion. This anchored the currency to gold, a scarce commodity. Closing the gold window allowed the US dollar to be free of a constraining peg to gold. Inflation was a problem at that time but removing the gold peg allowed the government to pursue inflationary policies without restraint. Gold is now trading at about US $1,500/ oz and is trending upwards. Pundits say that a savings glut has driven interest rates, in some countries, into negative territory, increasing gold's attractiveness. In terms of gold's relationship to the eco- nomic cycle, gold does dip in recessions but the context of the recession is impor- tant. In the 1980-1982 recession, the US was struggling to break an inflationary cycle and its central bank raised interest rates to a level that crushed the economy. Gold's attractiveness as an inflation hedge was diminished since the US central bank's interest rate policy did break the inflation- ary trend. Gold had increased from US $250 in 1971 to US $1,800 in 1980, but following the dramatic interest rate increases, trended downwards to US $400 low in 2000, using inflation adjusted dollar terms. Looking at today's market, gold looks attractive as the current interest rate envi- ronment is the opposite of that discussed in the 1980-1982 recession. Interest rates have been trending lower, and the US cen- tral bank is poised to cut interest rates. Also, some emerging market countries have central banks which are adding gold reserves to their holdings. These con- siderations make gold appear the most attractive of the three markets at this point in the business cycle. n • Low-risk investment jurisdic on* • Wide range of early and advanced stage projects seeking investment • Modernized mining legisla on in progress to improve processes, increase certainty • Strong resident support and indigenous engagement in mining sector • New transporta on infrastructure to improve access to mineral resources *4 th of 85 jurisdic ons - Mining Journal 2018 World Risk Report NWTGEOSCIENCE.CA: E-mail: ntgs@gov.nt.ca T: 867-767-9211 Ext. 63469 NWTMINING.COM: E-mail: mining@gov.nt.ca T: 867-767-9209 Ext. 63160 World-class resources are discovered in Canada's Northwest Territories Come see for yourself.