The data on world gold supply and demand was published recently by the World Gold Council and much was made of the rising consumer demand for the precious metal.
However, it is not all it seems.
We have been tracking these trends for some time and despite some specific year-on-year rises, the trends do not signal that overall demand in rising.
Physical demand for gold on Q3 for both jewellery and for coins, bars and bullion slipped from the previous periods in volume terms.
India and China may be spending more buying gold, but in India's case at least, that is because their local currency is devaluing.
And it is hardly positive that ETF EFT holdings 'declined less'.
Even central bankers are buying less.
For the quarter, 1,146 tonnes were mined or entered the markets from reprocessed scrap, while market demand was only 775 tonnes, its lowest level since March 2004. Central banks bought 93 tonnes.
That means that world supply exceeded world demand by a massive 277 tonnes, the highest excess since our records began in March 2002.
This contrasts with the reverse peak exactly five years ago in Q3 2008 when supply was low (781 tonnes), demand was high (1,245 tonnes), and central banks were selling (76 tonnes).
High prices are drawing in more supply. New mining investment takes a long time to result in product in the market, and that is happening now.
Supply of scrap however responds much more quickly to current price signals.
These volume trends explain why recent prices in US dollars have been weakening. Econ101 has been at work.
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You can find detailed, up-to-date pricing for gold coins, bars/bullion, and gold scrap, all in both NZ$ and US$, here »
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