Stock Screener: Ep. 22: Winston Gold Corp

 

Gold Demand and Supply 2019

Both gold demand and supply have been rising in 2019 according to the WGC. Supply has been outpacing demand.

World Gold Council reports 2017 gold demand and supply numbers

The WGC reported on demand and supply. Total demand was 4072 tonnes. Total supply was 4398 tonnes. The last quarter saw a surge in demand, but it wasn't enough to have a significant effect on the gold price.

 

Q1 2017 gold demand and supply

Gold demand was down, but supply was down even more, which confirms that production will likely drop in the next decade.

WGC report

Q2 2016 Gold Demand Subdued

A bit of disappointing news from the World Gold Council today. Gold demand dropped 20% from last quarter to 1050 tonnes while gold supply was flat at 1145 tonnes. So that's why gold did so poorly in the previous months.

So we turned from a 150 tonnes deficit to a surplus of 100 tonnes. The third quarter however should be more positive due to Brexit.

WGC: Full year gold supply and demand trend

The WGC has reported the full year 2015 gold supply and demand number and I see that demand is picking up while supply is falling. The last two quarters of 2015 had a supply deficit.

Gold Supply and Demand Q3 2015

A new gold supply and demand report is out from the World Gold Council for Q3 2015.

Demand has been very high in Q3 2015 at 1120.9 tonnes. Supply has declined year over year to 1100 tonnes. This created a rise in the gold price in Q3.

Demand will be subdued in Q4 because investors already bought their share in Q3.
Supply decreased due to lower mining production and lower recycling of gold. The majority of increase in supply was due to net producer hedging, which basically means that miners sell their future production to bullion dealers in exchange for cash. Bullion dealers get their cash from central banks who sell their gold into the market. So the bullion dealer actually borrows gold from the central bank and will return it in the future, when the mine produces it.

Of course, mines selling production now or selling production in the future has no net increase in supply eventually. A mine can only sell so much gold as its capacity allows. So basically, supply is drying up if we don't take into account net producer hedging.

World Gold Council: Q2 2015 gold demand has cratered

According to the WGC, Q2 gold demand has fallen substantially.

Demand was only 915 tonnes, dropping 12% yoy.
Supply was at 1033 tonnes, down 5% yoy.

This is confirmed by gold hitting a 5 year low recently.

But it's very interesting to see that SGE withdrawals have hit multi year highs at 70 tonnes per week in July. So i'm predicting that Q3 gold demand will be much better.

World Gold Council: Q1 Gold Supply and Demand

The new report from the WGC is out.

This is the supply and demand trend of gold. We see a steady rise in demand while supply is waning off due to 'peak gold'. Mines won't be producing a lot of gold going forward, unless the gold price rises.

WGC issues Q4 2014 report

The WGC issued the Q4 report today.  

http://worldgoldcouncil.newsweaver.co.uk/l3pdxdcnyf91cba1vomvb1?email=true&a=6&p=48410515&t=23725705

Q4 demand grew from 930.0t to 987.5t (+6%).

The supply of gold in the fourth quarter shrank by 2% (from 1113.4t to 1091t).

This means that the surplus in gold is shrinking once again. And I expect supply to keep shrinking.

I still need to update the chart below for Q4 2014 when I get the chance, but at least you'll see the trend.

World Gold Council Publishes Q3 2014 Demand and Supply Gold

The WGC posted the Q3 report on gold supply and demand today.

The highlights were that gold demand fell 2% yoy to 929.3 metric tons. This was obvious because Chinese demand declined earlier, (but is now rising again). See how in July till September 2014, the demand was low, but creeping upwards. The Q4 gold demand numbers will be much better.

But the most interesting is that total supply fell 7%, more than the 2% decline in demand. Total supply was 1,047.5 tons. Mining output still went up 1% at 797 tons, but that's obviously going to go down in Q4. The decline in supply was mostly attributed to the decline in recycled gold. That's because the common investors don't sell gold at these low prices.

So the demand and supply numbers are slowly creeping towards each other until we go into deficit soon. In silver we already have a deficit.

An Analysis on the All-in Sustaining Cash Costs of Gold Mines

In June 2013, the World Gold Council (WGC) published a guidance note on the all-in sustaining cash cost metric for gold mining companies. This way, investors can have a better evaluation on the real cost of mining gold. This metric adds additional costs which reflect the varying costs of producing gold over the life-cycle of a mine. To name a few: by-product cash costs, sustaining capital, corporate general and administrative expenses, and exploration costs. We calculate all-in sustaining costs as the sum of total cash costs (net of byproduct credits), sustaining capital expense, corporate, general and administrative expense (net of stock option expense) and exploration expense.

There is one flaw in this system though. These all-in costs only include additional all-in sustaining costs and do not include CAPEX for projects. If we would include these project costs, we would get an astounding $1784/ounce in 2012 for the bigger gold mining companies. Nevertheless, it's a first step in the right direction.

It is interesting to analyze how the all-in sustaining cash costs have progressed in 2013 as compared to 2012. All-in cost data has been taken from a research report of Dundee Capital Markets for the 2012 estimate.

Chart 1: All-in costs gold miners 2012 (Dundee Securities)

We see here that many gold miners are producing just under the average gold price of $1600/ounce in 2012.

Now we fast-forward to 2013, take data from a recent Denver Gold luncheon for the 2013 AISC cost estimate.

Chart 2: AISC gold miners 2013 (Agnico Eagle)

Again we see that the all-in sustaining costs are hanging just below the current average gold price of $1300/ounce in 2013.

Now let's compare these numbers year over year. Read on here.

Central banks shifting to gold

There has been much talk about central banks becoming net buyers of gold since the start of the economic crisis in 2008. I want to elaborate on that.

The world gold council (WGC) yearly reports on the amount of central bank gold sales. As of 2010, central banks have shifted from net sellers to net buyers of gold (Figure 1). And this has only happened recently! As we look at history, during the inflationary years of 1980, central banks were buying gold. Then a period of gold selling occured from 1989 till 2009 where gold went into a bear market. Central banks only shifted to buying gold since 2010. Which means we are going straight back into a bull market of gold.

Figure 1

The WGC expected growth in gold buying from central banks to continue throughout 2012. The projected growth of central bank gold buying was projected to be 336 tonnes of gold per year in 2011 (Figure 2). Their predictions were right as central banks added 450 tonnes during 2011.

Figure 2

By far, the increase in interest in gold is the highest within the sector of central banks as opposed to investment, bars, coins and ETF's (Figure 3).

Figure 3

The top among those countries that increased their gold holdings in 2011 are: Mexico, Russia, Thailand, Bolivia, Korea (Figure 4). More recently, we see activity from Mongolia and Kazachstan.

Figure 4

Conclusion: Central banks know there is something going wrong with our fiat currency system. Otherwise they wouldn't shift to buying gold, which started coincidentally after 2008: the year of the global financial crisis where money supply exploded. I suggest that we investors follow the big guys into buying gold, you don't want to be left behind.