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First, gold is a finite resource, whose underground reserves will eventually be completely extracted. Second, world population is growing and prospering. This increases gold demand for jewellery and industrial purposes. Third, central banks have been increasing their gold reserves. All of this points towards an inescapable raise of gold’s value and its price.
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Benefits of Gold:
A Finite Resource
OrWhy the Gold Price
Can Only Go UpW W W. G O L D R AT E F O R T O D AY. O R G
22
1. First, gold is a finite resource, whose underground reserves will eventually be completely
extracted 2. Second, gold population is
growing and prospering. This increases gold demand for
jewellery and industrial purposes
3. Third, central banks have been increasing their gold reserves. All of this points
towards an inescapable raise of gold’s value and its price
GOLD IS A FINITE RESOURCE
W W W. G O L D R AT E F O R TO D AY. O R G
33
1. Natural resources can be grouped into renewable, or infinite, resources such as
coffee, wood and sugar2. These commodities can be
replenished and will never come to an end
3. On the other hand, there are finite resources which cannot
be produced4. These are plutonium, sulphur
and gold
GOLD IS A FINITE RESOURCE
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44
Gold production and underground gold reserves
1. In 2009 and 2010 world gold production stood at 2,450 and
resp. 2,500 tonnes2. It is estimated by the world still
has gold resources of 51,000 tonnes
3. Thus, with the current annual mining volume, underground
gold reserves would last for 20 years
GOLD IS A FINITE RESOURCE
W W W. G O L D R AT E F O R TO D AY. O R G
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GOLD IS A FINITE RESOURCE
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Sources of gold supply1. Not all gold supplies come from
mines2. On a five year average (Q4 2005
to Q3 2010) mine production contributed to only 59% (2,209
tonnes) of the supply3. Recycled gold is responsible for
35% of gold supply (1,323 tonnes)
4. The remaining 6% (234 tonnes) are net official sector sales
(such as from central banks)
GOLD IS A FINITE RESOURCE
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GOLD IS A FINITE RESOURCE
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Sources of gold demand1. What does the demand side
say? 2. Certainly, demand goes up in
the long term, not only because of India’s and China’s fondness
of gold jewellery and their industries’ demand for gold
3. On a five year average, gold demand was for jewellery 57% (2,151 tonnes), investment 31%
(1,182 tonnes) and industrial purposes 11% (433 tonnes)
GOLD IS A FINITE RESOURCE
W W W. G O L D R AT E F O R TO D AY. O R G
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GOLD IS A FINITE RESOURCE
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Gold demand around the world1. The Middle East, the Indian
subcontinent and East Asia were responsible for around
70% of world demand in 20092. China, Hong Kong, the US,
Turkey and Saudi Arabia accounted for half of word
demand
GOLD IS A FINITE RESOURCE
W W W. G O L D R AT E F O R TO D AY. O R G
1111
Investment demand1. Since 2003 demand for
investment purposes experienced the strongest
growth of gold demand2. From 2004 until 2009
investment demand increased by 119%
GOLD IS A FINITE RESOURCE
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1212
Industrial demand1. Industrial demand for gold
increases with the growing economies, as gold is used in
electrical components and medical applications
2. Recent research has discovered additional uses for gold, such as
in chemical processing and pollution control
GOLD IS A FINITE RESOURCE
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Industrial demand 21. On the other hand, many
products using gold are continuously redesigned to reduce the amount of gold needed (by cladding based
metals with gold), or by finding substitutes for gold. These may
be palladium, platinum and silver
GOLD IS A FINITE RESOURCE
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Three facts should be kept in mind
1. Gold is a finite resource, which underground supplies is
one-twentieth of the annual gold production
2. Word population is growing and prospering, which drives up demand for jewellery and in
the industry3. Central banks (notably from
Russia, China and India) have recently began to increase their
gold reserves
GOLD IS A FINITE RESOURCE
W W W. G O L D R AT E F O R TO D AY. O R G
1515
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