For thousands of years, gold has been used as currency and a primary medium of exchange among individuals and nations. As recently as the 1960s, the United States was on the gold standard, which meant that the price of gold was held steady at $35 per ounce. When the United States went off the gold standard, the price of gold fluctuated on a worldwide basis, climbing to over $900 an ounce in the 1980s, and plummeting to barely $300 an ounce in late 1997. Nonetheless, gold mining remains one of the world's more important mining sectors, and Canada has a particularly strong gold mining industry. This research considers the Canadian gold mining industry, including the industry environment, as well as the gold industry in general and factors which affect its performance.
Economic Characteristics of the Industry
Because of the nature of gold, the "gold industry" is an international market. Since gold is traded on international exchanges, the price of gold in Tokyo has a direct effect on how much gold is extracted in South Afria, or any other gold producing countries. Mining as an industry is heavily capital intensive, and few companies specialize in only one metal. Companies which extract gold are also likely to extract other types of metal (such as copper), and strategic alliances among many different companies can be formed across international borders. There is thus no "Canadian gold industry" in the same sense that there is an "American automobile industry" or a "Japanese eletronics industry." Instead, there are Canadian companies (many privately held and thus not required to release financial information) who extract gold around the world, and international companies who extract gold in Canada. Because of this, a ranking of companies in the Canadian gold industry is not possible.
In August 1971, President Nixon took the bold step of removing the American dollar from the gold standard, meaning that dollars would no long...