Veneroso spoke of the remaining demand for the WGC figures and he sees the 27 reported countries at 80% of total. He'd factor that to come up with 4100 tonnes for 2000. So the production-demand gap is closer to 1600 tonnes for WGC. Even taking the Goldfield numbers we still have at least 1000 tonnes (conservatively) to account for AFTER the 400 tonnes or so direct CB selling. I think the decade long process of hedging and loaning suggests at minimum about 10,000 tonnes loaned (accelerated)out of the vaults, probably more.
Here's what he said about the "suspect" Goldfields methodology. First a little on price elasticity in gold.:
Now, almost all commodities have an income elasticity of less than unity; in other words, they almost all have a declining intensity of use over the long run, at least in modern economies. BUT NOT GOLD. Excluding the monetary use of gold and focusing only on jewelry, on electronics, and the like, if you look at 200 years of data until 1997 what you find is that gold has an income elasticity in excess of unity. That is, demand rises more rapidly than global income over periods in which the gold price is constant in real terms.
"Now if you apply the income elasticities that we have estimated from 200 years of data and the income and price elasticities that we have estimated from 25 years of data to the last four years---1996 to 2000---demand should have risen by something like 40% - 45% over those four years. Income went up, and the real gold price went down by a lot. The World Gold Council's demand series shows that demand went up by 20%---not 45 %---but the Gold Fields data contends that demand only went up by 10%. To assume it went up by only 10% implies that gold's income elasticity and gold's price elasticity have totally changed relative to history. We don't think that's plausible. We think at a minimum that the Gold Council's data is more reasonable; it allows for a certain amount of reduction in demand versus historical trends, perhaps because gold has gone somewhat out of fashion. But the "official" Gold Fields data is almost unbelievable. Now remember, the Gold Council's data shows an increase in demand much less than history would suggest; yet, it implies much higher levels of demand and much higher levels of supply." |
