Annual gold-mine supply is just 1.5% of total gold supply
By GCRU Gold News on Tuesday, October 28 2014, 23:07 - Permalink
The fact is that the supply of gold is NOT the annual amount of gold produced by the mining industry. Rather, the mining industry adds only about 1.5% to the total supply of gold every year. This is why changes in mine production have almost no effect on gold’s price trend and why it is illogical to compare the gold demand of some countries or regions with annual mine production.
The total supply of gold is around 170,000 tonnes, and over the next 12 months the mining industry will add about 2,500 tonnes to this total supply. Furthermore, the mining industry is no different to any other seller (an ounce of gold mined over the past year is the same as an ounce of gold that has been sitting in storage for the past 200 years), except that it is price-insensitive. The mining industry will sell its 2,500 tonnes regardless of price, whereas the actions of the holders of the existing 170,000 tonnes of aboveground gold will be influenced by changes in the gold price and changes in the perceived attractivess of gold as an investment or store of value.