Kittila ski resort sits in the northern region of Norway, an area of Lapland known for reindeers, skiing and freezing cold temperatures much of the year.
STORY HIGHLIGHTS
- Gold has been a commodity that investors have relied on in uncertain times
- Northern Finland is the site of Europe's largest gold mine
- Central banks and consumers have kept the demand for gold strong
(CNN) -- London property and gold -- the two safest places to put your money, or so the saying goes in recent years.
For the past several years, owners of London property have watched with delight as the values of their homes have spiked annually well into double digits. With gold, as has been the case for thousands of years, it has provided a tradable commodity which investors have turned to in uncertain times. It's a safe haven, the asset of last resort.
But with quality gold ore becoming increasingly hard to find, a Canadian company has ventured 125 kilometers (78 miles) into the Arctic circle to build Europe's largest gold mine.
Otherwise known as a place for tourism and skiing, the town of Kittila, in the Lapland region of Northern Finland, is an unforgiving environment to run a mining operation. Average temperatures in winter usually only reach -23 degrees Fahrenheit. But that hasn't stopped the mining or the growth of the area.
Global demand
That growth is possible because global demand for gold is high, said Sean Boyd, president and CEO of Toronto-based Agnico Eagle Mines, which runs Kittila's gold mine.
Demand is continuing to grow in a part of the world that's growing population-wise and is growing from a wealth perspective
Sean Boyd, president and CEO of Agnico Eagle Mines
Sean Boyd, president and CEO of Agnico Eagle Mines
"Demand is continuing to grow in a part of the world that's growing population-wise and is growing from a wealth perspective," said Boyd. Recent reports from the gold industry development group World Gold Council(WGC) show that consumer demand in China has skyrocketed, and India and the United States have a big appetite for gold, too.
While it may be culturally important to own gold in parts of the world, Boyd also said central banks still feel the need to own it. "That's not going to go away. Central banks are still buying it. It trades like a currency on most days," added Boyd.
Or as a recent WGC report put it: "With many economic and geopolitical wounds still open, central banks once again sought the protection and diversification of gold."
Shanghai has built a gold exchange over the last dozen or so years, and having just opened it up to international players its goal is to make that the largest physical bullion market in the world; Boyd says "that's a sign that the market continues to move to the East."
Digging deep
Logistically, however, Boyd says it's necessary to go further afield to find quality ore deposits. "The easy stuff's been found now. You look at the industry average, gold grade is a little over one gram per ton, and so the gold reports in minute particles and as a result of that you're having to move much more rock than you used to, to get the same amount of gold," said Boyd.
It's a laborious process that uses chemicals to extract tiny particles of gold. The Kittila mine is expected to remain open until at least 2036, as Agnico Eagle has already discovered the gold reserve is in excess of 7-8 million ounces, much higher than its original estimate of 1.5 million ounces.
In order to achieve this, the company will have to take the mine down at least 900 meters (over half a mile) below the surface.
But one thing is for certain: gold's popularity has not waned. "I don't think gold's going to go away, I think it still has an important role to play," said Boyd.
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