Saturday, April 23, 2005

Gold Demand / Supply

Most people do not realize that the demand for physical gold is increasing in the world. Here is an example:

Gold Price Per OunceTukish Imports

This is what is causing a problem for the attempts to control the US futures market price of gold.

Another problem is that the supply of gold being produced in the world is declining while demand is increasing. Count on higher prices for gold.

According to Frank Veneroso, back in 1998, gold demand deficit over mine and scrap supply:
2000 - 1379 tonnes
2001 - 1500 tonnes
2002 - 1627 tonnes
2003 - 1763 tonnes
Extrapolating, 2005's deficit should be about 1900 tons. This year's mine supply should be about 2500 tons. Remember, mine supply should continue to decrease for about the next 5 years or so. How can the US government and any of the other central banks that care to support the US government keep coming up with *increasing* amounts of gold to dump on the market to keep gold prices contained or moving up slowly?


SINGAPORE, April 19 (Reuters) - Premiums for gold bars doubled in Hong Kong on Tuesday and were strong in Southeast Asia as jewellers built up stocks amid tight supply … Gold bars were 50 U.S. cents an ounce higher than London spot price in Hong Kong versus 25 cents last week …Gold bars were last offered at such high premium in early 2001, said some dealers.
(JB emphasis)

"Some people who have never dealt with us before are trying to get kilobars from us because the tight supply," said one dealer with Bank of China in Hong Kong…. "Demand is there but we are running out of supply…" said Ellison Chu, a senior manager at Standard Bank London in Hong Kong.

In India, dealers said gold buying in the country's financial capital of Bombay had surged to 800 kg a day from around 250 kg in March. In the western city of Ahmedabad, daily gold demand doubled to 1,500 kg from 700 kg a month ago."

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