South African Gold Production Decreasing – Gold Bars in Demand
Gold Markets were closed in New York yesterday and the action centred on London where gold sold off initially and tested support at $900 prior to rallying strongly and this strength has continued in Asian trading with gold rising above $910 per ounce. Silver traded similarly, testing support just below $17 and then bouncing; in Asian trading silver has risen above $17.20 per ounce. Commodities Surge and Burgeoning Inflation With commodity markets surging internationally, gold is very well supported and looks to be consolidating prior to challenging the recent highs and targetting $1,000 in the coming weeks. Oil is back above $96, wheat is up 90% in the last 6 weeks and the entire complex of base metals and soft commodities are showing strong gains. The rise in prices of commodities will take a few weeks to feed into the supply chain, affect the already embattled consumer and be reflected in inflation statistics. This is obviously very inflationary especially with the Federal Reserve expected to continue cutting interest rates and negative real interest rates in an increasingly stagflationary environment. Money supply growth in the U.S. continues to surge and the reconstituted U.S. money supply (M3) figures show a very inflationary 18% growth. Supply of Gold Decreasing Internationally Meanwhile supply continues to decline and the situation and outlook in South Africa continues to deteriorate and is seriously affecting the supply of gold and particularly platinum. South Africa and indeed most of the major gold producing countries are experiencing a decline in gold production. Indeed China is the only major gold producer in the world to have increased production last year.
Mali, sub-Saharan Africa’s third largest gold producer, expects its gold output to fall 12 percent this year to 50.11 tonnes after a sharp decline last year. Gold output in the West African country fell 9 percent to 56.75 tonnes in 2007 as its established mines neared the end of their productive lives. Gold mines internationally are nearing the end of their productive lives and there have been no major exploration discoveries in many years. While the concept of ‘peak oil’ is now recognised as a reality by most, the concept of peak natural resources and peak gold, silver and platinum is less well known.