Where does all the gold go?

World Gold Council demand stats ^ TOP

The World Gold Council (WGC) updates important statistics on the global gold market. Prices follow supply and demand, and as with any other commodity, gold has its own supply / demand dynamics. Because gold is both a commodity and a monetary asset, this makes it unique. Because it is virtually indestructible, all the gold that has ever been mined over the centuries still exists above the ground in some form or another. This means that in a mostly unfabricated form, above ground stocks are easily mobilised, which means that when prices spike upward, this is often met with the resale of above ground stock. This is perhaps one reason why the gold price is less volatile than the majority of other commodities. The annual demand for gold falls into 3 main categories: o The biggest is the jewellery market o Industrial demand – electronics and dentistry o Investment demand – mostly over the counter trading. The supply comes from mine production, recycling of metal mined in previous years. As the price of gold increases, it tends to have an immediate impact on jewellery and industrial demand. However investors tend to get more excited as prices rise and when combined with the impact that exchange traded funds have had on the market, investment demand increases as the price rises The official figures: So while demand from jewellery fell, this was more than made up by the 64% increase in identifiable investment, brining total demand up to 3659 tonnes in 2008. The investment demand for physical gold was up 87%, while demand via listed ETF’s was also above trend. The latter has been a growing cumulative source of demand as seen in this graph: Source: World Gold Council