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Is gold in oversupply?

Heard in the news, Li yang from China social science institute said Gold is over supplied, so China won’t reserve gold. Whoa, I’m lost, just because IMF said they’ll dump 400t gold bullions? Frankly speaking, those guys have been doing this a lot, with fancy reasons to help out third world nations, G20 meeting was a great success for the America, new proposals for reserve currencies (NSDR) was not EVEN discussed. But as every recession ends in inflation since the 1920s, I still like gold. To note, I believe UK housing probably drop another 10-15% before bottoming, more optimistic than a lot other folks, because the Labor party, desperately to win election next May doing everything to reflate the economy.
From: Metals Economic Group
The most obvious confirmation of this claim is that world gold production has been steadily declining since it peaked in 2001 in spite of a nearly US$600 rise in the gold price. This goes against basic economic theory that rising prices should bring on more production and suggests a more fundamental problem in the gold industry. To wit, we are mining more gold than we are putting into production in spite of an estimated $US18 billion in gold exploration expenditure over the past five years.