Selling the gold image - marketing to increase gold trading - Brief Article - Industry Overview

Business Asia, June, 2001 by James Regan

JAMES REGAN reports on a marketing move to put the sheen back on gold trading.

PICTURES OF top models, sports stars and mothers with babies are replacing dirty-faced miners and bulldozers in gold company annual reports and newsletters.

All but abandoned as an investment by a Wall Street obsessed with trading in paper currencies, big mining houses are turning to Madison Avenue to polish up their image with investors and are using jewellery as a lure.

But as bullion prices surged to a 15-month high of nearly US$300 ($582) an ounce in May, not everyone was convinced that spending money on marketing helps -- or is even necessary.

"A lot of work is now being done on it, reports are being commissioned by a series of gold producers, including us, to start to try and find out really how significant it is," said Robert Champion de Crespigny, executive chairman of Normandy Mining Ltd of Australia, one of the world's largest gold miners.

Sceptics question whether the world of advertising really has anything to offer gold -- a treasured commodity since ancient times.

But as competition for scarce resources heats up with luxury goods jostling with hi-tech toys, supporters of the idea say that the industry has little choice.

"There is definitely room for marketing to make a difference," said Hester le Roux of consultants Gold Fields Mineral Services.

With the world's jewellery makers consuming nearly eight times as much gold as investors, it is easy to see why miners see the way forward in fashion terms.

Industry research suggests that the jewellery trade more than anything else feeds the world's appetite for gold. Some promotions zero in on consumers in Asia, who are more accustomed to hoarding gold than adorning themselves with it. Others target those who want to wear gold.

Italian-styled gold jewellery is marketed to high-end buyers in Taiwan. Jewellers in South Korea advertise dozens of "personalised" pendants and chains on the internet to capture a growing market for gift-giving.

Sales people adept at selling other objects of desire, such as pearls and opals, are being sought out for their advice on how to turn gold into, well ... gold.

Chrys Carr, marketing director of the South Sea Pearl Consortium, says miners should consider marketing gold under "name brands" to build loyal customers.

The 1990s witnessed one of the longest bull markets in history, accompanied by unparalleled economic prosperity in the United States, the world's largest consumer market. Gold jewellery demand rose a modest 12 per cent.

The challenge for the image makers is to make gold once again the luxury of choice -- for all pockets -- in a world of expanding choice.

The strategy is simple. Boost demand for the product and investors will sit up and take note of those producing it.

The latest annual report to shareholders of AngloGold Ltd of South Africa, the world's biggest gold mining company, introduces a stream of financial data with a picture of a golden-haired woman draped in an open-front gold shirt and blazer.

"Gold is love, beauty, liberty, everlasting, wealth, power, freedom, cool status," the caption inside the report's front cover reads.

Further on, sprinter Michael Johnson and his world-televised golden sneakers are enlisted to promote a gold-is-good image. There are also shots of a gold-adorned cleric baptising a baby and a new mother holding her infant, both sporting bracelets forged from the precious metal.

The World Gold Council lobby group says it has hired advertising agency Bartle, Bogle and Hegarty to spearhead a campaign to promote the "emotional" values of gold.

"Although consumption is already increasing around the world, this campaign will help stimulate even greater degrees of consumer demand for gold," says the council's chief executive Haruko Fukuda.

Industry figures show that gold demand from the jewellery sector rose four per cent last year while investment demand fell 21 per cent.

But the drop in investors' appetites for bullion last year followed extra hoarding in 1999 owing to millennium bug jitters. They dumped gold en masse after the scare proved groundless.

Gold Fields Mineral Services predicts that despite marketing efforts, global financial and economic changes will push down the dollar price of gold over the course of this year.