– China gold production falls by 9% to 420.5t in 2017
– Chinese gold demand rose 4% to 953.3t in same period
– China is largest producer and accounts for 15% of global gold production
– China does not export gold. Increasing foreign gold acquisitions to meet demand
– Global gold production flat – 3,269t in ’17 from 3,263t in ’16, smallest increase since ’08
– Peak Gold is here: supply set to fall gradually while global demand remains robust
Financial markets are abuzz with how much money the global economy lost earlier this week when the Dow Jones Index had a bit of a crash – ahem – ‘correction’. Luckily it has (temporarily at least) recovered but there are many other threats to financial markets in 2018 that suggest the ‘Everything Bubble’ is set to burst.
There is also an unappreciated threat to the gold market and more particularly a threat to gold mining supply and therefore the likelihood of higher gold prices – that is the threat of ‘peak gold’.
The supply of gold increased last year by the smallest margin since 2008. Ourselves and other market experts who have looked at the data, have been contending for many months now that we are on the cusp of ‘peak gold’.
The FT has now recognised the phenomenon of peak gold or ‘plateau gold’ and covered it this week: Global gold mine supply plateaued in 2017 as China output fell 9%.
China is the world’s largest gold supplier. In 2016 the country produced 453t or 56% more than the second highest gold producing nation of Australia.In 2017 Chinese production fell 9% to just 420.5t.
It also leads global gold demand. The demand comes from not only individuals but also a central bank that is determined to no longer rely on the US dollar.
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