A group of gold mining companies accounting for 70% of world production is backing plans to launch the industry’s most expensive marketing campaign ever, with spend of up to $200 million a year.

Designed to raise demand for gold jewelry and increase bullion prices, the push will at first be funded by a 30 cents levy on every ounce of gold produced. According to consultants McKinsey & Company, the campaign could raise annual demand 13%, increase sales by $12 billion and lift prices by $40 per ounce from their current level of under $300.

Demand for jewelry, which makes up 80% of gold use, will likely fall next year as the US enters recession, mining executives predicted at a conference in Denver, but would eventually increase in response to prolonged advertising and promotion.

“Why should we be deterred by short-term events?” asked Barrick Gold’s chief executive Randall Oliphant. “Now is the time to do our homework. And we all believe the world will come back and that all recessions end.”

In addition to Barrick, the world’s fourth largest gold producer, the plan has the backing of South Africa’s AngloGold (the largest), Randgold Resources of Jersey, Toronto’s Kinross Gold and two Australian producers – Gympie Gold and Sons of Gwalia.

News source: New York Times