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Global Gold Supply and Demand Dynamics

Despite strong global gold demand and claims that a lower gold price will lead to a shut down of unprofitable gold miners, the gold supply/demand dynamic, unlike the silver supply/demand dynamic, is in surplus.

Will the Gold Supply/Demand Dynamic Remain in Balance?

Yesterday the World Gold Council issued their third quarter 2014 gold supply and demand report that showed a 2% decrease in demand year over year and a 7% drop in supply, with the volume of recycled gold continuing to shrink.

While gold supply/demand appears to be in balance, there are many changes on both sides of the equation that threaten to disrupt the seeming peaceful equilibrium.

Standard Chartered recently noted that strong Chinese gold buying puts a price floor on the yellow metal.

They should have added that strong gold demand from Russia, India, the rest of Asia and perhaps from Switzerland – if the Save Our Swiss Gold initiative passes on November 30, which would require the Swiss National Bank to purchase approximately 1,500 tons of gold to boost its gold reserves to 20% in accordance with the initiative – would also act as a floor on the price of gold.

Source Schiff Gold

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