Gold is often seen as one of the world’s most secure investments, but we could go a step further and instead consider the benefits of investing in mining infrastructure related to gold. After all, if the commodity is valuable, then there’s also money to be made in material handling and processing.
Scribante is involved in open cast mining and plant hire in South Africa, and, in this article, we’ll explain why investing in gold mining is a good idea.
Gold vs. Gold Mining: The Better Investment
When you invest in gold itself, you’re investing in the actual product after it’s been mined and processed. However, investing in the process of mining instead means putting your money into the production process.
For example, this could mean investing in a company that runs plant hire and mining infrastructure, or in material handling. Alternatively, it could mean funding the company that owns or leases the mine.
Gold is a relatively stable asset, which is why it was traditionally used by countries to peg their currencies. As such, you’re pretty much always guaranteed a return on your investment, and this can even be a predictable amount.
Investing in mining, however, has a higher risk but could generate significantly higher returns. If you invest in a mine that produces a lot of gold, you could end up with a lot more profit than if you sat on a set amount of gold.
Why Choose Gold Mining in South Africa?
South Africa has a long history of gold mining. The first gold was discovered in 1870, and mining began soon after. By 1970, it was the world’s largest producer of gold; its annual output was somewhere around 1,000 tons. South Africa now sits further down the list (anywhere between 5th and 7th depending on the year).
However, this isn’t because of a lack of gold. In fact, the Witwatersrand Basin is still believed to be the largest gold deposit in the world. Current estimates state it has around 50% of the planet’s gold reserves.
So, why has gold mining and material handling dropped to around 130 tons a year? There are too many reasons to list here, but the main ones include government intervention, maturing investments, and historic political issues. It’s understandable that foreign investors would look elsewhere for an “easier” investment in gold mining infrastructure.
It's worth mentioning that with new equipment, it would be relatively easy to reopen mines in South Africa, many of which still have decent levels of gold reserves. Provided an investor can navigate the investment market (with local help), this would be a comparatively safe route into gold investment.
Investing in Mining with Scribante
Of course, no investment is without risk, so it’s vital that potential investors understand more about the market. However, if you’d like to know more about investing in open cast mining, plant hire or material handling, get in touch with Scribante. We can advise you in more detail about the process of investing in South African gold mining.