Price of gold hitting records but likely more due to central bank stockpiling than film star's documentary

For several months a one-hour video starring charismatic film and television star Idris Elba has been heavily circulated via YouTube. Titled “Gold: A Journey with Idris Elba,” the documentary-style production never made it to the Oscars for obvious reasons. Funded by the World Gold Council, the production is a professionally-produced vehicle that clearly aims to portray the gold council’s corporate members — from Canada’s Agnico-Eagle and Barrick Resources to China’s Shandong Gold Group — as leaders of a wondrous industry producing a dazzling product that glitters around the world.

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It’s an interesting and controversial attempt by a global mining industry to boost its image and draw attention to gold’s political, social, economic and environmental impacts. Is it successful? Has the value of gold mine shares risen as a result?

The multi-talented Elba was once a contender for the role of James Bond, but his black heritage apparently stood in the way. So no Goldfinger remake for Elba; instead we will have to live with his role as Goldfather.

The gold journey begins in Canada with Elba as a passenger in a pickup heading down a snowy forest road near Val-d’Or, Que., heading for Agnico-Eagle’s LaRonde mine in one of the world’s biggest gold regions. Elba refers to Val-d’Or (located 600 kilometres north of Montreal) as “deep in the Canadian wilderness.”

I can personally vouch for the authenticity of Elba’s tour of the LaRonde mine. As a student, I worked as an apprentice miner for a summer at the Kerr-Addison gold mine in northern Ontario, a two-hour drive west of Val-d’Or. Our crew rode a rattling lift two kilometres down. At LaRonde, Elba descended 3.2 kilometres into dark underground tunnels where black walls of ore are dynamited and crushed into pieces and brought up to ground-level smelters.

Elba watched the ore pour from hot ovens and later held a heavy 21-kilo gold bar. “Wow,” says Elba, “And this is worth what?” About US$1,000,000, says his guide. That would have been the value at the time of filming. Today, with gold hitting new highs approaching US$2,200 an ounce, the 21-kilogram gold bar in Elba’s hands would be worth $1,400,000.

After Val-d’Or, Elba’s Goldfather moves to other gold stories, from the San Francisco gold rush to a gold-fixated village in Ghana.

As with all documentaries, Gold: A Journey comes with a point of view. The hour-long film’s promotion of gold and gold mining has rankled the left and environmentalists. The video also may not hit it off with monetary policy theorists. Elba visits the Bank of England’s gold vault, where 310 tonnes of gold are presented as solid backing to the British pound. No mention of the ability of central banks to produce inflation via fake paper replacements for real gold.

It is impossible to know the exact impact of Gold: A Journey. The price of gold is hitting records, thanks to central bank gold stockpiling. The real driver of gold’s value increase can be awarded to monetary policies and a modern belief in the merits of inflation.

As for the value of the shares of members of the World Gold Council, gold stocks have not kept up with the price of gold (see graph). Why? Perhaps the best overview of the gold mine investment scene was issued last July by analysts at the Sprott Gold Report. It’s complicated. Management issues and the industry’s investment and structural problems are the main factors holding back gold stock values.

But the Sprott conclusion in July was that gold could hit US$2,500 to catch up with monetary fundaments that risk the death of the U.S. dollar. At that point, “Gold mining stocks might once again bask in the sunshine of a decade ago.” Another Sprott report from January concludes that gold mining stocks currently suffer “extreme undervaluation” and offer a “clear and compelling” investment case.

If accurate, Idris Elba’s Goldfather could begin to look like it should have been contending for a 2023 Oscar.

Financial Post

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Terence Corcoran: Did Idris Elba's ‘Goldfather’ video boost gold prices?

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15.03.2024

Price of gold hitting records but likely more due to central bank stockpiling than film star's documentary

For several months a one-hour video starring charismatic film and television star Idris Elba has been heavily circulated via YouTube. Titled “Gold: A Journey with Idris Elba,” the documentary-style production never made it to the Oscars for obvious reasons. Funded by the World Gold Council, the production is a professionally-produced vehicle that clearly aims to portray the gold council’s corporate members — from Canada’s Agnico-Eagle and Barrick Resources to China’s Shandong Gold Group — as leaders of a wondrous industry producing a dazzling product that glitters around the world.

Subscribe now to read the latest news in your city and across Canada.

Subscribe now to read the latest news in your city and across Canada.

Create an account or sign in to continue with your reading experience.

It’s an interesting and controversial attempt by a global mining industry to boost its image and draw attention to gold’s political, social, economic and environmental impacts. Is it successful? Has the value of gold mine shares risen as a result?

The multi-talented Elba was once a contender for the role of James Bond, but his black heritage apparently stood in the way. So no Goldfinger remake for Elba; instead we will have to live with his role as Goldfather.

........

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