Gold Supply and Demand Trends

The World Gold Council sent out another report for Q2 2013 here.

As expected, we saw large ETF outflows both from GLD and other ETF's, which led to a decrease in investment demand (Chart 9). But the decrease in investment demand was countered by an increase in jewelry demand, especially from India and China. We now see that the ETF's have finally stopped selling their gold into the market, so I expect that Q3 2013 will be more positive on the demand side.

On Chart 2 you can see that ETF's have large outflows, but this is countered by growing physical demand.

On the supply side we see that mining supply has increased, but recycling of gold has decreased, due to the fact that people won't sell their gold at these low prices. I expect mining supply to come down significantly in the next quarter due to the fact that mines have been shut down, workers have been laid off, funding was subdued...

So the overall picture is that the gold price is especially dependent on the demand side, as the supply side is pretty flat. Watch out for the ETF's and the physical demand for bars and coins. Once the ETF's are done selling, we will see higher gold prices.