I was about to buy some gold and then I saw this...
Curious
do with gold investment.
From: http://www.technicalindicators.com/gold.htm#fundamentals
Some physical gold fundamentals:
For the latest available supply and demand figures for physical gold,
the Worjd Gold Council has published actual figures for the past
several years.
Supply remains at such high levels that 15 European countries had to
agree to withhold their surplus gold from the market, selling it in
smaller quantities and over a longer of period of time in order not to
flood the market (see below for more detail).
When the gold price did in fact break out and soared in 1979-1980,
there was actually a demand for physical gold and a rise in price was
justified. There were often long lines at gold dealers as many people
rushed to buy Krugerrands and other gold investments. Nothing like that
is happening now as so far the demand is mostly confined to the futures
market.
As an indication of the public's interest in gold now, following are
the figures published by the U.S. Mint showing the amount of gold sold
by the U.S. Mint in the form of "American Eagle" coins bullion sales
(in no. of ounces):
No. of
Ounces
1997 771,250
1998 1,839,500
1999 2,055,500
2000 164,500
2001 325,000
2002 315,000
2003 484,500
2004 893,000
2005 (thru Oct.) 299,550
Judging from these figures, it appears there is no rush to buy gold
coins in the U.S. - in fact it appears that more gold coins were sold
when the stock market was rising, not falling as it has been lately.
This helps to make the point that more gold is bought during good
economic times when people have more money to buy gold, not during slow
times when people have less money to spend.
The amount of known surplus gold held by central banks and institutions
throughout the world is in excess of 32,000 metric tons, enough to
supply world gold demand for almost a decade. The amount held by
signatories to the "Washington Agreement" alone, countries which are
planning to sell much of their gold, is over 15,000 tons.
This further points out the excess supply of gold on the market. In an
effort to maintain the value of their gold reserves, various European
countries agreed to withhold gold from the market so as not to drive
the price down. The fact the gold market needs this artificial support
rather than rely on free market supply and demand factors should say
something about the future of the gold price. What would have happened
to the price if these countries just sold their gold when they wanted
to instead of agreeing to withhold it from the market?
There doesn't seem any reason that anyone can worry about a shortage of
gold now or in the foreseeable future.
I get all sorts of conflicting messages from various sites: dollar in
danger of immediate collapse (Empire of Debt by Bill Bonner, etc.),
gold rising to $2000/ounce, and then some cooler heads pouring water
on the hype.
What do you reckon?