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Katchum
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Albert Sung is the author of Correlation Economics, monitoring breaking economic news on a day to day basis. He started investing in 2008 because of the economic crisis and holds a masters degree in chemical engineering. Previously, he worked several years as a process engineer at Ashland, a... More
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  • Gold Supply And Demand Analysis 2 comments
    Nov 27, 2013 12:53 PM | about stocks: GLD

    What I like about Eric Sprott's letter to the World Gold Council is his numbers about the supply and demand in gold.

    In that letter he said that demand far exceeds supply at this moment. See second column in table below.

    Demand is 5184 tonnes and supply is 4403 tonnes. If mine supply increases by 3% it would mean nothing compared to the increased demand from China.

    (click to enlarge)

    But Eric's numbers haven't accounted for the increased demand from China and the decreased ETF outflows nowadays. If we take the current numbers I believe the Chinese gold demand could be in the 1560 tonnes and the ETF outflows could have halved based on the flattening slope in the GLD ETF.

    That would give supply of 3936 tonnes and demand of 5670 tonnes. That's a deficit of 1734 tonnes, which means the gold price should go up.

    On the supply side we need to watch what the mines produce, because that's a big part of the supply. ETF outflows are just a small part and they are declining. Gold recycling should be subdued due to low gold prices.

    (click to enlarge)

    Gold Supply

    On the demand side it is very important to watch China, India and Hong Kong as they control the whole demand picture. What central banks do are essentially meaningless compared to China and India.

    (click to enlarge)

    Gold Demand

    Stocks: GLD
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Comments (2)
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  • phdinsuntanning
    , contributor
    Comments (1200) | Send Message
     
    the weird thing of all these experts in gold supply and demand is that nobody considers what China is reporting as their gold trade: China Metals officially reported gold imports of just 4,5 tonnes and exports of 393,5 tonnes in January-October 2013... so is a matter of faith: sadly there is not one serious data provider, and of course old stocks management can put the price wherever the strong hands want. Not even Hong-KongĀ“ers can agree with main-landers on this, imagine the rest of us!
    27 Nov 2013, 01:41 PM Reply Like
  • Katchum
    , contributor
    Comments (532) | Send Message
     
    Author’s reply » Does that mean that China is selling all the gold through that hub, while it imported that same gold from Hong Kong?
    30 Nov 2013, 05:33 AM Reply Like
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