Will Gold Supply Be Able To Keep Up With The Growing Demand For Gold?

Could  We Be Looking At A Real Shortage Of Gold In The Future?

Gold Supply And DemandAs the world economic climate has changed, and many countries around the world have shown that their economies are in danger of recession, depression, or worse…even total collapse.  Central Banks, countries and individual investors alike have clamored towards precious metals in an effort to shed their currency based assets for tangible assets.  The central banks around the world have been dumping their currency based assets and tying up a number of their assets in physical metals.  Likewise, China and India have an enormous emerging middle class that has shown significant interest in the precious metals market.  As a result, demand has gone through the roof, but supply is continually chugging along at relatively the same slow and steady pace.  As this continues, we could see a major future shortage of gold.

Gold Mines Are Unable To Match Production To Increased Demand For Gold

There are many issues inhibiting the gold mines from keeping up with the growing demand for gold, including:  the depletion of current mines, lower grades, fewer substantial new discoveries.  Additionally, mining companies are faced with calls for nationalization, demands for pay raises from miners, and as always, environmental concerns for the discovery of new mines.  In fact, the report s show that compared to 10 years ago, it now takes twice as long to get from discovery to production, a time frame that is unacceptable for meeting current supply needs.

China’s Gold Production Does Not Count Towards Overall World’s Gold Production

Many of the statistics out there indicate that gold production has grown exponentially over the last several years, in actuality…the world’s production is actually 12.8% below the 2000 level.  The numbers are being skewed because China is rapidly increasing it’s gold production and any gold mined in China stays in China.  China’s gold production does not benefit the rest of the world’s gold supply and should be excluded from the charts.  China’s goal is to have their domestic gold production reach 14.5 million ounces by 2015, which is an increase of 25% from last year alone.  If China’s total production is excluded from the world’s supply, rather than an increase in production the world has seen a decrease in gold production since 2006.

What Can We Expect From Gold As Supplies Get Tighter

-The supply and demand crisis will not be resolved:  Even though gold is up in price by 571% since 2001, the overall exploration for new locations has not gone up.  Meaning the cost of production is so high, that even higher gold prices do not fund the gold exploration.

-China’s push for Gold will continue to put pressure on the World’s supply.

-A modern day gold rush will make it impossible to buy gold.  As people get into a buying frenzy, it’s definitely not the time to buy but the time to sell.

So What Does A Gold Supply Crisis Mean For Investors?

It means, that now is the time to get invested in gold, before the gold cupboards become bare.  If you have not yet considered diversifying your portfolio into Gold and silver, than now is the time to do so.  Speak to a redhawk advisor today about getting invested in gold.

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