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Gold prices likely will receive only limited support from the labor unrest in South Africa (I,...

Gold prices likely will receive only limited support from the labor unrest in South Africa (I, II), as the yellow metal’s price is underpinned by other factors, metals analysts say. Though a quick end to the disputes is not expected, the country’s gold production accounts for ~10% of world supply - substantial enough to be supportive of prices but not enough to push it up sharply.
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  • ducat
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    This statement has merit, South Africa is not the gold powerhouse it was in the past. However, when this loss is viewed in light of problems putting mines into production worldwide it might be more significant than suggested. I contend that new mine supply is increasingly more important to the price of gold than it has been historically. As Warren Buffet points out, gold is primarily dug out of the ground and then put back into the ground as a hoarded store of wealth. If I read the news correctly, new vaults are being established at a record pace. The accumulated gold stores dwarf not only SA production but the total gold mine production. Up to now the old established vaults have contained this hoard. Assuming these new vaults are being driven by demand, where and at what price will the gold be found to fill them? Maybe 10% losses in production will have a profound impact if projected to last for a long time?
    27 Sep 2012, 03:46 PM Reply Like
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