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It's either feast or famine.
A long and and painful five-month correction in gold prices has raised doubts over the continuation of the current gold bull market. However, a significant increase to prices over the last few weeks has gold investors looking perky again.
Gold has climbed over $100 (14%) since the beginning of November, signaling that prices may have already bottomed out and the gold bull market is far from over. And with world gold production in decline while demand is rising, we could start to see major leaps in prices.
World Gold Production and Demand
Last week we looked at world gold demand statistics. If you recall, we mentioned that world gold demand totaled 1,133.4 tonnes during the third-quarter, an increase of 170.1 tonnes (18%) from levels of a year earlier.
In dollar terms, this represented a 51% rise to $31.8 billion, an all-time record high and 45% leap from the previous record set during the second-quarter.
Gold demand—especially investment demand—is stronger than ever right now. However, world gold production is expected to hit an 11-year low. This suggests the supply and demand fundamentals may start to play a larger role in elevating gold prices.
World Gold Production Expected to Hit 11-Year Low
World gold production peaked in 2001 at 84.3 million troy ounces. Since that time global gold production has slipped significantly.
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Quarterly world gold production numbers have been at their lowest levels in years during 2008. Estimates suggest that the world will only produce 76.8 million troy ounces during 2008. This represents a 9% decline in world gold production since 2001 and provides another solid positive fundamental on which the gold bull market can stand.
Gold production has fallen the most in countries around the world, including in Australia—the world's third-largest producer—where gold production has fallen as much as 30% since 1997.
Australian Gold Production
Gold production in Australia fell 9% during the third quarter as rising mining costs curbed output from some mines. Estimates suggest that Australian gold production for the full 2008 year will fall to their lowest levels in nearly two decades.
Output from mines including those owned by Newmont Mining [NYSE: NEM, TSX: NMC, ASX: NEM] and Newcrest Mining [ASX: NCM] during the third-quarter fell to 56 metric tons. This compares with 61.7 tons in the same period a year earlier.
How to Buy Gold Under Spot Price
If you don't own physical gold, it's time to buy some. As miners around the world struggle with gold production, and demand for the seductive yellow metal continues to increase, we will see an imminent boost in gold prices and in investors' portfolios.
Gold bullion—especially gold coins—is getting harder and harder to buy as supplies are quickly being snapped up by investors concerned with the state of the global economy. However, we are currently working on a deal with a well-known gold bullion broker to get Gold World readers moved to the top of the list of motivated buyers. Plus, we've been assured that Gold World readers will also be able to buy gold lower than the actual spot price with a special discount. This will truly be a once-in-a-lifetime opportunity. We will have more details for you about how to receive this very special discount sometime next week.
Until then,
Gold World Staff
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Just like we told you back in 2001... buy gold! Since the Fed and government has intervened on the economic situation and made matters worse, this is the exact time to own gold.
A rise in junior gold stocks is just around the corner.
Gold, silver, and many other commodities are getting ready to skyrocket. It's gearing up to what could be the biggest buying opportunity for junior gold and silver stocks ever and Greg McCoach's service, the Mining Speculator can help you.
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Economic Releases for the week of Monday, November 24th, 2008:
Nov 24 - Existing Home Sales
Nov 25 - GDP
Nov 25 - Consumer Confidence
Nov 26 - Durable Orders
Nov 26 - Initial Claims
Nov 26 - Personal Income and Spending
Nov 26 - Michigan Sentiment
Nov 26 - New Home Sales
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