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How much new gold is injected into the economy of the world due to mining activity as a percentage of the already available gold? In other words, what is the annual increase in the amount of gold that is traded or stored?
If that fraction is really small, then the amount of gold can be thought of as relatively constant. Otherwise, mining will have a significant inflationary impact on the value of gold.
For the last few years around 2,500 metric tonnes of gold have been produced each year.
This is on top of existing supply of 160,000 metric tonnes.
Existing yearly production is around 1.5% of the existing supply.
Charts from here.
If that fraction is really small, then the amount of gold can be thought of as relatively constant.
That fraction is very small. After all, people have been mining gold for thousands of years. So the cumulative results of gold mining have been building up the supply for quite some time. Meanwhile, owners of gold rarely destroy it.
A little bit of gold is used in some industries as a consumable. This limited consumption of gold offsets some of the production that comes from mining. But truthfully this effect is minuscule. For the most part people either hoard it like its made of gold, or sell it (after all it is worth its weight in gold).
If you're interested Wikipedia lists a few more factors that affect gold prices. (If you're not interested Wikipedia lists them anyway.)
A little bit of gold is used in some industries as a consumable. Indeed, in the cooking industry as well...
Sep 5, 2011 at 1:49
Approximately 5.3 billion ounces have been mined. This puts the total value of all gold in the world at about $9.5 trillion, based on $1800/oz. Total world net worth was $125T in 2006. There's an odd thing that happens when one asset's value is suddenly such a large percent of all assets. (This reminds me of how and why the tech bubble burst. Cisco and EMC would have been worth more than all other stocks combined if they grew in the 00's like they did in the 90's.) Production (in 2005/6) ran about 80 million oz/yr. Just over 1.5% impact to total supply, so you are right in that observation. On the other hand, the limited amount out here, means that if everyone decided to put their wealth in gold, it would be done by driving the price to bubblicious levels. One can study this all day, and parse out how much is in investment form (as compared to jewelry, etc) and realize that a few trillion dollars in value pales in comparison to the wealth of the US alone, let alone the world. Half the world can't buy two oz if they tried. Of course there's pressure to reopen mines that had costs pushing $800/oz. Understand that the supply of $300 gold is long gone. As the easy gold has been mined, and cost goes up, there's a point where mines close. But as the price of gold trades at these levels, the mines that couldn't produce at $600 are now opening.
