Supply / Demand 101

A recent analysis of all major listed gold producers for Q1FY13, some 6m oz or 25% of world production, determined the all in cost of producing gold is $1300/oz and we’ve spoken at length previously about various large miners scaling back or halting production.  The world’s largest producer, China, does not export any of its mined gold. We spoke Monday of the large outflows this year from COMEX and ETF’s which is also supply to the market. Just one exchange (Shanghai Gold Exchange) for year to the end of June delivered a whopping 1098 tonnes of gold into China.  That is 40% of forecast global 2013 production and much more than the outflows of COMEX and ETF’s combined.  Add in the rest of what goes through Hong Kong to China together with Russia and other eastern central banks buying up big and it’s a pretty compelling supply / demand equation…And the demand is strong long term hands…