Ever since the beginning of gold’s bull market, this metal’s economic balance has come under intense scrutiny. Demand has been on the rise as more and more investors have embraced gold as a store of wealth. And the supply chain has done its best to meet this growing demand.
However considering gold’s sharply rising price over the last decade, it is clear that this market has been experiencing a major structural imbalance. And the supply side of the equation has proven to be a fascinatingly volatile realm, making it quite difficult to set the scale.
Interestingly this supply volatility is somewhat of a new phenomenon, as the major supply sources of mine production, recycling, and central-bank sales had been relatively consistent and reliable in feeding demand for many years. But for a variety of reasons, this just isn’t the case anymore.
The bottom line is growing gold demand has really tested the mettle of the global supply chain. And accordingly this chain has experienced wild volatility and radical transformations over the last 10+ years. But of all the ebbing and flowing in the major sources of supply, one constant is that mine production will continue to shoulder the majority of the burden of meeting this demand.
Though production had lagged early on as the miners fought to rebuild an infrastructure that had been woefully neglected, we are finally starting to see the fruits of 10+ years of labor via a banner 2011. And so long as higher gold prices and investors support the miners, they should be able to successfully supply what is expected to be continued demand growth.Global, gold, Supply