donderdag 12 november 2015

Gold Supply and Demand Q3 2015

A new gold supply and demand report is out from the World Gold Council for Q3 2015.


Demand has been very high in Q3 2015 at 1120.9 tonnes. Supply has declined year over year to 1100 tonnes. This created a rise in the gold price in Q3.

Demand will be subdued in Q4 because investors already bought their share in Q3.
Supply decreased due to lower mining production and lower recycling of gold. The majority of increase in supply was due to net producer hedging, which basically means that miners sell their future production to bullion dealers in exchange for cash. Bullion dealers get their cash from central banks who sell their gold into the market. So the bullion dealer actually borrows gold from the central bank and will return it in the future, when the mine produces it.

Of course, mines selling production now or selling production in the future has no net increase in supply eventually. A mine can only sell so much gold as its capacity allows. So basically, supply is drying up if we don't take into account net producer hedging.

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