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Philip Barton
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Why changes in Gold production don’t matter

- Steve Saville - Speculative Investor

An excellent correction to some common misconceptions. I would quibble with one point though...
Allowing for a stock of 140,000 tonnes and a flow of 2,400 tonnes, and assuming a theoretical cessation of flow, does not give a remaining supply of either 7,000 days or 13,000 days. The whole reason that the stock to flow ratio is so large is that very little of the gold flow is 'consumed'. The consumption figure is currently just over 12% - 500 tonnes per year. In other words, only around 500 tonnes a year is used in manufacturing, the balance simply adds to the readily available stock. That means that a stock (no longer rising) of 140,000 tonnes will last, assuming a stable rate of usage, around 102,200 days - 280 years.
It is actually a little more than this because much of the 'consumed' gold is recycled.
Either way, the figure is so significantly larger than anything else as to not really matter. As I said, a quibble.

Commented 4548 days ago

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Beginning of the headline :Most analyses of the gold market consider the annual change in the amount of gold produced by the mining industry to be an important determinant of the gold price, with bulls regularly supporting their case by citing the mining industry's inability to ramp up production and bears sometimes claiming... Read More

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