|
In 2007 the Demand for Gold exceeded the supply. (World Gold Council) a trend that many experts predict will continue.
| 2007 World Gold Demand Source |
Tonnes |
2007 World Gold Supply Source |
Tonnes |
| Jewellery |
2,426 |
Mine Production |
2,447 |
| Industrial,electronic,dental |
465 |
Net Producer hedging |
-400 |
| Bar & Coin investment |
441 |
Total Mine supply |
2,047 |
| Other Retail Investment |
-36 |
Official Sector sales (gov'ts etc) |
485 |
| Exchange Traded Funds etc |
251 |
Old Gold scrap |
937 |
|
| Total Demand |
3,547 |
Total Supply |
3,469 |
| (Tonne = 1,000 kg or 32,151 troy oz of fine gold) |
Gold is not really 'consumed' in the sense that it doesn't get used up, but its demand increases notably faster than it is being mined.v
Gold demand is very much harder to evaluate than production, because while production is concentrated in a relatively small number of mines, demand is distributed throughout the world. This makes it difficult for anyone to build a statistically accurate picture. Some of the difficulties:v
- Many buyers of gold are deliberately secretive.
- The recycling of scrap does not lend itself well to measurement because recycling can utilize scrap supply and meet a demand without going anywhere near a statistician.
- Unallocated gold is difficult to measure because it is often notional.
So all figures which report gold supply and demand, although probably conservative, should be reviewed guardedly.
However, undeniably, by far gold's major demand comes from Jewellery manufacture. The main other demand comes from retail investment - i.e. from gold's use as a private reserve asset. The amount used in industry, e.g. in electronics and dental surgery combines to be an important factor.
The price of Gold, like other commodities, is influenced by the supply and demand statistics. The fluctuation of investment demand, although not currently the demand leader tends to have a higher impact on the price. The opinions on the influence of investment demand on the price of gold is the subject of many columns, articles, books and letters, far too numerous to expound upon here.
Suffice it to say that most pundits will agree that Gold is a hedge against inflation and the US dollar. |
