Red-Hot Resources

"Luck is not chance, it’s toil; fortune’s expensive smile is earned.”

Wednesday, April 04, 2007

GFMS Gold Survey

The GFMS Gold Survey 2007 is out. You can read the highlights at …

  • The world lost around 350 tonnes of supply from official selling last year and not only did that impact the market directly but also the implied shift in central bankers’ stance on gold was good for investor confidence. Looking at 2007, GFMS expects to see the CBGA [Central Bank Gold Agreement] countries undershooting quota and for the rest of the world to remain small net purchasers
  • Producer de-hedging last year was a big factor driving prices as this quadrupled to over 370 tonnes. GFMS expect this to be maintained at elevated levels this year.
  • Growing acceptance of higher prices and lower volatility in the second half of 2006 actually enabled jewellery demand to rebound strongly on first half levels. GFMS therefore see this as providing a higher ‘floor’ for the price
  • Mine production in 2006 fell to a 10-year low. GFMS expects 2007 to be more positive with global output forecast to stage a moderate improvement of between 1% and 2%.

One thing I can't figure out yet -- GFMS has China listed above Australia in its ranks of producers. And it's true that China's gold production went up 8% in 2006 while Australia's gold production went down 5%. But when I add up the amount of gold each country produced from other sources, Australia still comes out ahead of China ...

Barrick was only able to increase its production by buying Placer Dome. The majors are hard-pressed to keep up production.
And as I pointed out in my recent Marketwatch story, Seven Reasons Why Gold Should Surge, many countries are seeing their production fall.


Check out my new gold and energy blog at