There is always a demand for gold, it just varies as to how much. It is considered the most viable asset to have when the markets are unstable. Its price continues to rise regardless of bad economic conditions. It is not sufficient to look only at gold demand and not take a look at its supply in order to understand how the market price of gold is determined. Although the demand is usually higher than the supply, it is still possible to easily meet this demand since there is a large volume of mined gold and recycled gold still making its way through the world market.
Mine production
The world has multiple productive gold mines all over the globe. The volume of mined gold differs from one place to another and ranges from small volumes to enormous payloads. New mines are also coming online over time and eventually increasing the volume of available gold.
Since gold mines take some time to produce viable output, production is unable to quickly respond to changes in price. This makes it difficult to determine if production is increasing because by the time the increase actually occurs, the demand may have doubled.
Recycled gold
The gold supply does not rely only on mine production, which takes time to come online. Scrap gold that has been recycled offers a good supply when need arises, stabilizing the price of gold. A great deal of the value of gold lies in its ability to be recovered, melted down, refined and reused under current market conditions.
Central banks
Gold reserves are also maintained by supranational organizations and central banks across the globe. These proportions may vary from country to country but they play a big role in the supply of gold and regulation of sales. For the first time in years central banks are net buyers of gold.
Gold production
This kind of supply involves finding and breaking an ore from the ground in the mining area, then treating, processing and finally refining it. This process involves both surface and underground operations. Gold refineries are typically based near the mining or metal processing areas. The refiner buys gold from the miner to start the refining process.
After refinery, the bars of bullion are sold to dealers who trade with electronics manufacturers, investors or jewelers. These types of transactions keep the cycle of supply and demand afloat.
These types of transactions are what have kept the markets stable, making sure that the value of gold is not compromised at any one time.
Mine production
The world has multiple productive gold mines all over the globe. The volume of mined gold differs from one place to another and ranges from small volumes to enormous payloads. New mines are also coming online over time and eventually increasing the volume of available gold.
Since gold mines take some time to produce viable output, production is unable to quickly respond to changes in price. This makes it difficult to determine if production is increasing because by the time the increase actually occurs, the demand may have doubled.
Recycled gold
The gold supply does not rely only on mine production, which takes time to come online. Scrap gold that has been recycled offers a good supply when need arises, stabilizing the price of gold. A great deal of the value of gold lies in its ability to be recovered, melted down, refined and reused under current market conditions.
Central banks
Gold reserves are also maintained by supranational organizations and central banks across the globe. These proportions may vary from country to country but they play a big role in the supply of gold and regulation of sales. For the first time in years central banks are net buyers of gold.
Gold production
This kind of supply involves finding and breaking an ore from the ground in the mining area, then treating, processing and finally refining it. This process involves both surface and underground operations. Gold refineries are typically based near the mining or metal processing areas. The refiner buys gold from the miner to start the refining process.
After refinery, the bars of bullion are sold to dealers who trade with electronics manufacturers, investors or jewelers. These types of transactions keep the cycle of supply and demand afloat.
These types of transactions are what have kept the markets stable, making sure that the value of gold is not compromised at any one time.
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