Gold Supply remained unchanged in 2012


On year over year basis, gold supply remained relatively unchanged in 2012 from the previous year, according to the World Gold Council. Gold supply amassed to 1,133.2 tons, which is only 2.5 tons lower. A yearly decline in recycling activities prevented a modest increase of supply from mining. The biggest effect was caused by the recycle activity in India which contracted. In respond to that event, gold prices fell in December.

However, gold supply declined by 1.4% to 4,453.3 tons on an annual basis. The main reason for this contraction was the low levels of recycling in 2012. In addition, the de-hedging return to net producers also played a major role.

Last year the upward tendency in mine output saw a stop from the 2008 lows. The overall production rose merely by 0.4% to 2,847.7 tons. That is 9% over the five year average of 2,614.0 tons, according to the data released by the World Gold Council.

The bonus output cam out of new projects developed mostly in the first quarter of 2012. Also, the increased production at a number of fresh operations also accounted for the additional output.

On the contrary, there were a lot of interruptions in the planned production. Many mines faced unpredicted delay in their production, in addition. Also the labor issues in South Africa caused uncertainty. So, the scale of negative factors was equally high. Therefore, the annual production net results were insignificant.

Countries which registered a rise in their annual output were Russia and China. At the same time, Indonesia and South Africa faced the biggest absolute edge down in gold production.

With 20 tons, 2012 came as a full year of net de-hedging. Hence de-hedging activity has outperformed hedging in Q4. Yet the margin was very small. Over the past 3 years, the hedging activity played insignificant role on the global market. That is a result of the relatively trivial volume of the outstanding global hedge book. The limited interest for fresh hedging still relates project financing. Forecasts predict net hedging activities to remain inconsequential in the coming quarters in 2013.


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