Yes, my figures on demand seem a bit out of date. This is similar to what I just posted in the post referred to above. I said an annual demand of 4,000 tonnes, this says 3,856 tonnes as it has been for many years. However it says supply was 4,480 tonnes, exceeding demand.Swinging & digging said:Yesterday the World Gold Council (WGC) released its Gold Demand Trends Q2 2018 which highlighted the following:
Overall demand was 964t, a decrease of 4% compared with 1,008t in Q2 2017
Total consumer demand fell by 1% to 758t, from 767t in the same period last year
Total investment demand was down 9% to 281t compared with 310t in Q2 2017
Global jewellery demand fell 2% to 510t, from 519t in the same period in 2017
Central bank demand decreased by 7% to 89t compared with 96t in Q2 2017
Demand in the technology sector increased 2% to 83t compared with 81t in Q2 2017
Total supply was up 3% to 1,120t, from 1,086t in the same period last year
Recycling was up 4% to 295t, compared with 283t in Q2 2017
Looking at above i would say overall falling global demand.
Two issues:
(1) figures are for the quarter and it may be inaccurate to simply multiply by x4 (as I do here) to get annual demand - eg might the jewellery demand differ at Christmas or other times (and it dominates the market), or might a change in the price of oil cause the Saudis to buy more jewellery in a quarter e.g. it only requires a small percentage change in a particular quarter for a quarterly result from changing from an apparent annual deficit in supply to an apparent annual excess.
(2) I said an annual supply FROM MINES of 3,000 tonnes, 1,000 less than the total demand of 4,000 tonnes which is made up by recycling jewellery etc (so that there is always an adequate supply, easily adjusted at any time, so that annual mine production does not affect the gold price greatly as supply soon adjusts). The gold price goes up, you sell a bit of grandma's jewellery that you inherited (jewellery still being nearly 80% of demand on these figures), and any increase in price because of that increased demand soon corrects the price. Jewellery is not the only adjustment made, but other adjustments don't require physical gold to exist to change demand from memory (e.g. futures). The quarterly figures above says total supply of 4,480 tonnes but what is meant here by "total supply" - I assume that it is not mine production but the total including from recycling 295t and from "non-physical" sources. It is probable that Russia has come on stream as a major producer in the last 5 years only, increasing supply by perhaps 200 tonnes (I think it only ranked in the top 4 countries for the first time last year). Mine production was 3, 150 tonnes in 2017, not much different to the figure that I used of 3,000 tonnes.
I would be very surprised if the demand decrease of 144 tonnes ESTIMATED for 2018 on quarterly figures, together with the increased mine production of 150 tonnes (estimated even less accurately) has any significant effect on the price of gold this year (much less than 10% change prior to adjustments being made). I still suspect changes in the $US dollar price (the only REAL estimator) relate to Korea and Iran (I think I said Iraq in error elsewhere, that one has largely gone) and Trumps expected tariff war. I don't think the tiny change has turned gold into behaving like a normal commodity after all these decades of mine production (i.e. "new" gold) always being far less than demand yet gold never recently "taking off" in real ($US) terms. Jewellery and futures will always be a strong offset, because as soon as the gold price changes significantly, so do they to offset it (why sell jewellery at a time of low price, why keep grandma's ugly jewellery at a high price when you can make a killing now and always buy new jewellery you like when it is down again). Someone contracts to buy gold from your mine, you later realise that you will only produce less gold than you promised to supply so you buy gold to make up the difference (you have to supply it to them at the price you promised or you are out of business) - but up to this time (perhaps for some time to come) no physical gold has changed hands, only promises on paper that appear as expected production and apparent demand. And no, I don't understand this side of things very well....but it does seem to keep gold prices fairly stable.
