By Staff Contributor-Michael on July 17, 2012
What is Vanadium?
Vanadium is a hard metal that is malleable and ductile.
When was Vanadium discovered?
A Mexican mineralogist, Andres Manuel del Rio, first discovered vanadium in 1801 and called it panchromium because of the array of colours exhibited by its salts. However, he was convinced by others that what he had found was no more than an impure sample of chromium, and so the discovery was lost. It wasn’t until the 1830’s that the Swede Nils Sefstrom rediscovered the metal and named it vanadium after the Norse goddess of beauty and fertility, Vanadis.
Where is Vanadium found?
Vanadium is found within about 65 different minerals, the major one being magnetite. The vast majority of the world’s vanadium is mined in China, Russia, and South Africa. It has also been found in crude oil, coal, and bauxite. When vanadium bearing oil products are burned, the vanadium present can start off corrosion in the engine or boiler used to burn the oil.
What are the uses of Vanadium?
Over 80% of vanadium produced is used as an additive in steel production. When alloyed in this way, the steel gains in strength, particularly good for axles, crankshafts, and gears in motors where such parts might be placed under high stress. Its also alloyed with aluminium and titanium to be used in jet engines, where lightness is required as well as strength.
Who are the main Vanadium Producers?
Xstrata produces the vanadium pentoxide and ferrovanadium from its South African mines, and Canada’s Energy Fuels mines for vanadium and uranium.
Vanadium and New Energy
Vanadium is gaining in popularity as a mineral in battery technology. It’s considered a green energy technology because its can be cycled again and again without damaging its lifespan. Unfortunately, to produce battery grade vanadium takes an expensive process and its energy density is low. This means that vanadium batteries are bigger and more costly than, for example, their lithium counterparts.
Posted in Rare Metals | Tagged 6 things, aluminium, china, new energy, russia, south africa, steel, vanadium, xstrata |
By Staff Contributor-Michael on July 17, 2012
What is Aluminium?
One of the most important metals in the world, perhaps second only to iron, aluminium is silver in colour, light, easily worked with durable with very good anti-corrosion qualities.
When was Aluminium discovered?
Aluminium salts were used in medical and dyeing processes by Greeks and Romans, thousands of years before any debt crisis was heard of. As a metal, it was first produced in 1825 by the Danish physicist Hans Christian Orsted, and until the Hall-Heroult extraction process was developed in the 1880’s, the metal was more expensive than gold because it was so difficult to extract from its various ores.
Where is Aluminium found?
Aluminium is the world’s most abundant metal, and constitutes around 8% of the earth’s crust by weight. It is found in over 250 minerals, and the largest deposits of the bauxite ore (the main source of aluminium) are found in Australia, China, India, Russia, and Brazil, amongst others.
What are the uses of Aluminium?
The uses for aluminium are wide and varied. It’s very unlikely that aluminium isn’t a part of your everyday life. From drinks cans, to vehicle bodies, to windows and doors, to cooking utensils, to electrical transmission lines, to paints, to coins…the list is almost without end.
Who are the main Aluminium Producers?
The American company, Alcoa, is one of the world’s largest aluminium producers. Other companies that produce large quantities of the metal include Rio Tinto, Rusal, though Vale sold its aluminium business to Norsk Hydro.
You say Aluminium, I say Aluminum!
Aluminium is also known as aluminum, and was once known as alumium. The International Union of Pure and Applied Chemistry selected aluminium as the official name in 1990, though accepted aluminum as a joint name when it became obvious that Americans could not get used to using the name aluminium
Posted in Base Metals | Tagged 6 things, aluminium, australia, base metal, bauxite, china, India, iron, russia |
By Staff Contributor-Michael on July 15, 2012
Metals helped by hopes for economic stimulus, but outlook remains weak
Investment markets were generally weak for much of the last five days, though sentiment turned positive on Friday as China released poor growth figures and expectations for a massive package of economic stimulus grew. With Chinese growth for the second quarter coming in at 7.6% annualised, falling sharply from the first quarter’s 8.1%, the market believes that the Chinese government will be aggressive in its response, cutting rates further and increasing liquidity.
In Europe, Spain has struck a deal that extends its time to get its budget deficit under control, and Eurozone industrial production numbers came in stronger than expected, though the OECD expects the region to weaken further and drag the rest of the World with it.
Copper prices bounced this week from last week’s lows, though conflicting views may mean the rise of around 2.5% is short lived. UBS expects copper to remain bearish in the second half of 2012, while BNP expects strength in the price followed by weakness through 2013 as supply picks up.
Standard & Poor’s has lowered its 2012 forecasts for the price of nickel and aluminium, citing oversupply and an uncertain global economic outlook. It also said that it expects only moderate growth in demand for zinc and copper, and it believes that price pressures may force a number of mines to close through 2013/ 2014. It expects gold to perform well.
Echoing the S&P forecasts, Morgan Stanley expects industrial metals to remain weak through throughout the third quarter of 2012.
Despite the bearish sentiment, base metals staged a generalised rally from last week’s closing lows, though this may have been from a technically oversold position rather than because of fundamentals.
Closing Spot Prices (US$/lb)
Copper 3.4905 +2.47%
Nickel 7.3376 -0.75%
Aluminium 0.8427 +0.50%
Zinc 0.8496 +2.20%
Lead 0.8483 +1.10%
Gold $1595.50/oz +0.80%
Silver $27.48/oz +1.22%
Platinum $1424/oz -1.52%
Posted in Base Metals, Money Metals | Tagged aluminium, china, copper, gold, lead, Morgan Stanley, nickel, OECD, platinum, silver, Spain, Standard & Poor's, UBS, zinc |
By Staff Contributor-Michael on July 15, 2012
What is Neodymium?
Neodymium is a rare earth metal that is soft and silver in colour. It tarnishes in air.
When was Neodymium discovered?
It was Carl Auer von Welsbach, an Austrian chemist and inventor, who discovered neodymium in 1885.
Where is Neodymium found?
Neodymium, though classified as a rare earth element, is actually as common as cobalt, nickel, and copper ore. It is most commonly found in monazite and bastnasite ores, and in greatest quantities in China.
What are the uses of Neodymium?
It wasn’t until 1927, just a couple of years before von Welsbach died, that Neodymium was first used commercially as a dye in coloured glass manufacture (reds and violets). Nowadays neodymium is still used in coloured glass, but also as a component in high powered magnets, which are used in products like computer hard disks and hi-fi equipment such as loudspeakers and earphones. Large neodymium magnets are used in wind turbine electric generators.
Who are the main Neodymium Producers?
There are several companies that produce neodymium, though perhaps two of the best known are Avalon Rare Metals and Great Western Minerals Corp.
An odd use for Neodymium
Isotopes of neodymium are used for dating geological samples and can also be used to predict the strength of volcanic eruptions.
Posted in Rare Metals | Tagged 6 things, china, glass, magnet, neodymium, rare earth, silver, volcanic |
By Staff Contributor-Michael on July 15, 2012
What is Lanthanum?
With the chemical symbol La, and the atomic number 57, Lanthanum is a silvery metallic element that is malleable and oxidises quickly in air.
When was Lanthanum discovered?
Lanthanum was discovered in 1839 by Carl Mosander, when he isolated a new rare earth element he called lantana. It wasn’t until 1923 that lanthanum was isolated in pure form
Where is Lanthanum found?
Lanthanum is extremely common, and is included in the rare earth metals only because it is difficult to mine. It is found in bastnasite and monazite ores, in China, Australia, and USA.
What are the uses of Lanthanum?
First used in gas lantern mantles which gave a green light, lanthanum is now most commonly used in nickel-metal hydride batteries. Because these are used so heavily in hybrid cars, lanthanum is used in increasing quantities in the automobile industry. It is also used in carbon arc lamps (including camera lenses and studio lighting), some glass manufacture and can also be added to steel to improve malleability.
Who are the main Lanthanum Producers?
As with many rare earth metals, Avalon Rare Metals and Great Western Minerals Group are large lanthanum producers, though Neo Material Technologies also produce large quantities.
Handle with Care!
Lanthanum is moderately toxic, and can produce hyperglycaemia, low blood pressure, and hepatic alteration. People who have worked with lanthanum in carbon light applications have suffered with the lung disease pneumoconiosis.
Posted in Rare Metals | Tagged 6 things, bastnasite, china, hybrid fuel, lanthanum, nickel metal, toxic, USA |
By Staff Contributor-Michael on July 11, 2012
What is cerium?
A soft silvery metal, cerium oxidises in air and resembles iron. It has the chemical element number 58. It was named after the dwarf planet Ceres, which was discovered in 1801.
When was Cerium discovered?
Cerium was discovered by Jons Jakob Berzelius and Wilhelm Hisinger in Sweden in 1803, though Martin Klaproth also laid claim to its discovery in Germany in the same year.
Where is Cerium found?
The most abundant of the rare earth metals, cerium is found as an element in a number of minerals, including bastnasite and monazite. It is found in large quantities in China, though also in Australia, Canada, and the USA.
What are the uses of Cerium?
Cerium is used heavily in the production of nickel metal hybrid batteries, and within phosphor powders in fluorescent light bulbs. It is also used as a catalytic converter, particularly in diesel fuels. Most self-cleaning ovens are made with cerium oxide as a chief component within the oven walls.
Who are the main Cerium Producers?
Great Western Minerals Group and Avalon Rare Metals both produce cerium, though one of the world’s largest producers is American Elements.
Be careful of Cerium Fires!
Cerium ignites at around 70 degrees Celsius, and its fumes are toxic. More than this, though, if you try to dampen a cerium fire with water, then you make things even worse: cerium reacts with water to produce hydrogen gas.
Exposure to cerium can also produce itching, lesions, and rashes.
Posted in Rare Metals | Tagged 6 things, bastnasit, cerium, china, Germany, hydrogen, monazite, silver, Sweden, USA |
By Staff Contributor-Michael on July 11, 2012
What is Thorium?
A radioactive element with the chemical symbol Th, Thorium is naturally occurring on earth.
When was Thorium discovered?
Swedish chemist Jons Jakob Berzelius discovered Thorium in 1828 and named the element after the Norse god of thunder, Thor.
Where is Thorium found?
Thorium is almost always found as thorium-232, with a half-life of over 14 billion years. About four times more commonly found than uranium, it is a by-product of the extraction of rare earth metals from monazite. The highest reserves of thorium are to be found in the USA, Australia, and India.
What are the uses of Thorium?
First used in gas mantles, its primary use is now in the nuclear power industry. It is also used in gas tungsten welding, and can be used as a substitute for lead in radiation shield applications.
Because of its high heat resistance, thorium is also used in heat resistant ceramics and the production of glass for telephoto lenses.
Who are the main Thorium Producers?
Lightbridge Corp and W.R.Grace are two of the world’s largest thorium producers
Handle with Care!
Thorium in powdered form can spontaneously ignite, though the alpha radiation emitted cannot penetrate skin. But, thorium inhalation can cause cancers and liver disease.
Posted in Nuclear Metals | Tagged 6 things, cancer, half-life, Lightbridge, nuclear, radioactive, thorium |
By Staff Contributor-Michael on July 11, 2012
What is Europium?
With the chemical element number 63, europium is a moderately hard, malleable, silvery metal that oxidises easily in air and water. Compared to other heavy metals, europium is reasonably non-toxic.
When was Europium discovered?
It wasn’t until the 1800’s that europium was separated from other elements found in minerals. It was first discovered by Paul Emile Lecoq de Boisbaudran in 1890 but first isolated and named by the French chemist Eugene Demarcay in 1901.
Where is Europium found?
Found only within minerals such as bastnsite and monazite, europium is not found as a free element within the earth’s crust. The main deposits known at this time lay in China’s Bayan Obo region and the Mountain Pass Mine in the USA.
What are the uses of Europium?
Europium has many uses, and these include as a doping element in laser production, and in LED televisions to create a red colour. It is also used in nuclear reactors.
Who are the main Europium Producers?
Molycorp, Metall Rare Earth and Avalon Rare Metals are well known producers of europium.
Over 100 million people handle Europium every day!
Perhaps most significantly for the man in the street, Europium is used for anti-counterfeiting measures in Euro banknotes. With the Eurozone accounting for nearly two thirds of Europe’s population, it’s estimated that europium passes through the hands of over 100 million people every day.
Posted in Rare Metals | Tagged 6 things, bastnasite, bayan obo, demarcay, euro, europium, monazite, mountain pass, silver |
By Staff Contributor-Michael on July 8, 2012
Concerted Central Bank Action Fails to Fuel Metals Markets
This week saw broadly weakening economic numbers from around the world, and concerted action from the Central Banks of Europe and China in efforts to stimulate their economies.
On Thursday, after earlier figures had shown Eurozone unemployment hit its highest rate ever, at 11.1%, and Germany’s PMI, falling to 48.1 from the previous month’s 49.3, indicated a rapidly declining manufacturing environment, the ECB cut its key lending and deposit rates to 0.75% and 0% respectively. The clear implication is that it wants spending to increase and lending to become easier. This week also, the Bank of England confirmed that it will be pumping another $78 billion into the ailing UK economy by way of quantitative easing measures.
In China, its central bank has responded to figures showing rapidly slowing growth, along with both Taiwan’s and South Korea’s manufacturing contracting, by cutting its one year lending and deposit rates. It also pumped $22.5 billion into its economy.
Despite these measures aimed at promoting growth, metals fell away this week, with a weakening Euro causing some dollar price erosion. Adding to the poor sentiment was Friday’s US jobs report, which showed unemployment static and job growth slower than expected. Gold dropped through a technical support level as investors looked toward US treasuries and the dollar for safe haven investment.
At the Harbor Intelligence Aluminium Conference, analysts said they expected aluminium prices to remain stable to higher over the remainder of the year, as inventory build-up is overshadowed by higher energy costs in China and resulting supply side problems. In a week when banks came under scrutiny for LIBOR rate fixing, Coca Cola has alleged that Goldman Sachs has been rigging the price of aluminium through its Detroit Warehouse, which holds 25% of the LME’s total inventory. Aluminium responded with a fall of 0.80% on the week.
Closing Spot Prices (US$/lb)
Copper 3.4063 -3.10%
Nickel 7.3937 -2.30%
Aluminium 0.8385 -0.80%
Zinc 0.8316 -2.07%
Lead 0.8391 -0.23%
Gold $1582.90/oz -1.01%
Silver $27.15/oz -1.24%
Platinum $1446/oz +0.14%
Posted in Base Metals, Money Metals | Tagged aluminium, Bank of England, china, copper, deposit, ECB, Germany, gold, Harbor, lead, lending, platinum, silver, South Korea, Taiwan, unemployment, zinc |
By Staff Contributor-Michael on July 8, 2012
Slowing Growth Ignored as Europe Decides Against Austerity
Metals rallied strongly on Friday, as it emerged from the latest Eurozone crisis meeting – the nineteenth to date aiming to find a solution to the region’s problems – that EU leaders are to dump austerity measures in favour of growth.
In a week which saw Cyprus ask for up to €6 billion in bailout funds and Spain’s banks receive €100 billion funding from Europe, it emerged that the stipulations on which bailout money has been given thus far, predominantly austerity measures aimed at cutting the debt that has caused the problems in the first place, are to be relaxed in favour of growth. The EU has earmarked €120 billion to be spent on infrastructure and growth measures, and said it will give direct recapitalisation help to banks in the future.
Perhaps swaying decision making was the news that the German economy is finally showing signs of catching up with the rest of Europe and slowing down. Retail sales in Germany fell by 0.3% in May. In Italy, the consumer has disappeared from its high streets: retail sales fell by 6.8% over the year to April.
Japanese industrial production is falling, prompted by weak European sales in the auto sector (down 11% on the month), with data showing a decline of 3.1% in May.
In the United States, economic releases continue to be mixed. Economic growth was confirmed at 1.9% for the first quarter, though consumer confidence in June fell to a five month low. On the more positive side, house prices seem to be finally rising, with a major report showing prices rising in 20 major cities by 1.3% in April. However, the same report emphasises that prices have fallen by 1.9% over the last twelve months, even after the April’s rise.
However, it was the Eurropean situation that caught the eyes of the market, and metals rallied on Friday, giving some respite in a weak commodities market
Closing Spot Prices (US$/lb)
Copper 3.5155
Nickel 7.5679
Aluminum 0.8452
Zinc 0.8523
Lead 0.8410
Gold $1599.10/oz
Silver $27.49/oz
Platinum $1444/oz
Posted in Base Metals, Money Metals | Tagged aluminium, austerity, copper, Cyprus, Eurozone, Germany, gold, Italy, lead, platinum, silver, United States, zinc |
By Staff Contributor-Michael on July 8, 2012
What is Uranium?
A silvery white element, a uranium atom has 92 protons and 92 electrons. The most common uranium isotope is uranium-238. It is malleable and ductile, and weakly radioactive as a metal. It is named after the planet Uranus.
When was Uranium discovered?
Though used in its natural oxide form for thousands of years, predominantly as a yellow colorant to ceramics and glass, it wasn’t until 1789 that German chemist Martin Klaproth discovered the element while working in his laboratory. For decades, uranium was not considered dangerous, which led to many uses being developed.
Where is Uranium found?
Uranium ore is mined underground, and in borehole mining, as well as in open pit mines. Large deposits are found in Canada, Australia, Russia, Namibia, and Niger, though Kazakhstan is also a large producing country.
What are the uses of Uranium?
Best known for its use in nuclear reactors, and as a material in atomic bomb manufacture, uranium can also be used as a radioisotope in smoke detectors. It is used as a source of energy in nuclear reactors aboard nuclear ships and submarines.
Who are the main Uranium Producers?
There are dozens of companies producing uranium, including Paladin Energy, Rio Tinto, and Uranium Resources.
The first Nuclear Bomb
‘Little Boy’, the bomb dropped on Hiroshima on 6th August 1942 was the world’s first nuclear weapon used in warfare. It killed around 75,000 people and destroyed 50,000 buildings.
Posted in Nuclear Metals | Tagged 6 things, hiroshima, Little Boy, nuclear, paladin, radioactive, uranium |
By Staff Contributor-Michael on June 17, 2012
Slower Growth and Likelihood of Easier Money Help Metals
Metals were mostly higher this week, as Spain’s banks benefited from a European injection of €100 billion (amounting to a bailout of Spain’s banking system) and the UK’s banks were offered $140 billion in cheap money from the Bank of England to pass on in loan to its customers.
Adding to the positive tone was news through the week that the US economy appears to be slowing. Though this would normally lead prices to drift lower, with the global economy weakening and Europe perhaps beginning to move to a less austere political backdrop, the hope for easier money to boost output and consumption helped investment sentiment.
Spain’s banking bailout last weekend gave a good fillip to the markets early on, though strength sapped quickly in the early part of the week. Cyprus has asked for emergency funding – otherwise known as a bailout – of €4 billion, or 20% of the size of its economy, as the Greek situation washes over it.
There is concern that Spain will not be able to sustain payments on its debts, and yields on its sovereign bonds have risen to over 7%, signifying that a full bailout of Europe’s fourth largest economy may not be far off. Looking on from Spain, the markets seem to be eyeing Italy as their next target for bankruptcy and bailout. Its bonds are now yielding over 6%.
The UK has said it will pump €140 billion into its economy via cheap loans to banks. These must be forwarded as loans to customers, the aim being to help protect the economy and the banking system from any fallout from the Eurozone debacle.
US economic numbers, showing increased unemployment claims, falling consumer prices, and failing retail sales gave traders a further excuse to expect a concerted worldwide effort to boost economies.
The one weak spot in the base metals markets was aluminium, which suffered as China said it would pursue a policy of subsidies in an oversupplied market.
Closing Spot Prices (US$/lb) and weekly change – 15th June 2012
Aluminium 0.8548 -2.6%
Lead 0.8675 +1.9%
Posted in Base Metals, Money Metals | Tagged aluminium, bailout, copper, economy, Europe, gold, Italy, lead, nickel, platinum, silver, Spain, United States, weekly review, yields, zinc |
By Staff Contributor-Michael on June 13, 2012
Interest Rate Stimulus keeps Metals mixed
Mixed economic signals, a weakening Europe, and economic stimulus from both China and Australia were the main market drivers this week. In keeping with the global economy base metals ended the week mixed, with Nickel and Aluminium gaining whilst zinc, copper, and lead all retreated again.
American economic numbers came in generally weaker than expected, though the US Fed’s Beige Book pointed to a moderate rate of economic growth through April and May. It had indicated growing consumer spending, a recovering property market, and travel and tourism gaining strength. This report ran contrary to figures that showed the nonfarm labour market retracting, jobless claims rising, and factory orders dipping. Bernanke was non-committal about further monetary stimulus, though he did leave the door open for action at a later stage.
Moody’s downgraded six German Banks, though this news was lost in the fervour over the furore over Spain’s banking system, which may have been saved from collapse this weekend. Reacting to Spain’s plea for a baking system bailout, Euro leaders have agreed to shell out €100 billion + to shore up Spain’s banks.
Germany, which has so far avoided much of the fallout of a European recession, announced that its exports have fallen for the first time this year, and Italy released figures that showed its industrial production collapsing by 1.9% in April alone.
Against this backdrop, some relief came for the markets with the news that the People’s Bank of China was cutting interest rates on Thursday. Australia has also cut its rates this week – the second time in a month – and it is hoped that this may be the first part of a global concerted effort to bring growth back. These moves helped commodities in general, as well as base and precious metals.
Some analysts, such as Bay Ridge’s Rich DeFalco see gold range bound for some time to come, hovering between a low of $1520 and a high of $1600. Others, such as RJO Futures’ Daniel Pavilonis sees more downside than upside for the yellow metal, noting that the low $1400’s could be the next major support level.
Closing Spot Prices (US$/lb) and weekly change – 8th June 2012
Copper 3.3015 -1.1%
Nickel 7.5801 +3.1%
Aluminium 0.8778 +0.8%
Zinc 0.8447 -1.3%
Lead 0.8508 -0.6%
Gold $1594.70 / oz -1.80%
Silver $28.63/ oz +0.52%
Platinum $1437 / oz -0.27%
Posted in Base Metals, Money Metals | Tagged aluminium, australia, china, copper, economy, Germany, gold, interest rates, lead, nickel, platinum, silver, stimulus, United States, zinc |
By Staff Contributor-Michael on June 9, 2012
Spain, Eurozone Weakness, and US Economics Push Markets Lower
Equity markets around the world fell away again through the last week, as global economic concerns spilled over to a declining outlook in the United States and investors sought safe havens. Base metals prices declined across the board, though there was respite for precious metals investors as the rush away from equities and a technically oversold position pushed gold, silver, and platinum sharply higher on Friday.
This push on Friday coincided with a dog-leg down in base metals, as the release of US jobs data came in markedly below forecasts and sent shivers through an already fragile market. Copper ended the week at multi-year lows, and nickel, after last week’s strong performance, fell away by over 5.5%.
Adding to concerns of falling demand for commodities in general (oil prices fell away again, and now sit some 25% below February’s high of $110 per barrel), was news of India’s slowest rate of economic growth in almost a decade and China’s economy slowing at a faster than desired pace. However, Chinese authorities have begun to approve infrastructure projects in attempts to add in growth. The latest of these sees hydroelectric power stations added to building plans for four new airports.
The Eurozone continues to be at the forefront of economic concerns, with attention now turning away from Greece and to Spain. The ECB this week refused to come up with €24 billion to save Bankia, Spain’s fourth largest banking group, from bankruptcy. It also said that Europe needs to find a new future, in a statement clearly designed to say “enough is enough”.
In a weak market, Friday’s release of poorer than expected jobs numbers in the United States sent investors running for cover, and looking for the safe haven of precious metals and US, UK, and German bonds. Yields of the government bonds of these three nations have fallen to historic lows. These falling yields were another factor that saw buying pressure push gold, silver, and platinum prices up by 4% to 5% on Friday, snapping a losing streak stretching back several weeks.
Closing Spot Prices (US$/lb) and weekly change – 1st June 2012
Copper 3.3405 -3.9%
Nickel 7.2654 -5.7%
Aluminium 0.8710 -2.1%
Gold $1624.8 / oz +3.2%%
Silver $28.48/ oz -0.1%
Platinum $1441 / oz +0.9%
Posted in Base Metals, Money Metals | Tagged Bankia, china, copper, economy, Eurozone, gold, India, iron, lead, nickel, platinum, safe haven, silver, United States, weekly review, zinc |
By Staff Contributor-Michael on May 30, 2012
The US Geological Survey (USGS) has recently published its Mineral Commodity Summaries 2012 (http://minerals.usgs.gov/minerals/pubs/mcs/2012/mcs2012.pdf). This is a report that looks at production of all minerals from mines, on a country by country basis. It’s required information for anyone with an interest in mining or commodity investment, and this year makes interesting reading for gold investors. It provides data that helps to explain the price action of the yellow metal through the last 18 months or more.
Last year gold production around the world rose by a little more than 5% from 2010, whilst the gold price rose by 30%. Globally, 2700 tonnes was produced, as against the previous year’s figure of 2560 tonnes. It would appear that the demand for gold, particularly from governments and investors, drove through to price, and in reaction to this price production increased. South Africa produced more gold than the previous year for the first time in a decade, and the US imported more than it exported. China is still the world’s number one producer, ahead of Australia and the United States.
With the gold price flying, high not only did gold production increase but also the recycling of new and scrap gold. In the United States, 225 tonnes of gold was recycled. This was more than the reported consumption of 200 tonnes. As this gold came to the market, the gold price started to fall away.
These facts confirm what we as consumers, and expert economists, know already: as the gold price rises, so, too, does production. Mining of lower grade reserves becomes financially viable. Supply increases, and when this reaches equilibrium with demand then the price will begin to level out. When this supply overtakes demand, the gold price will fall. This time around, the supply from mines has been augmented by the supply from recycled gold, as cash strapped individuals seek to replenish bank balances and repay loans. This has led to a glut of supply, and a falling gold price. This declining price will lead to a cut in production, as costs become counter-productive. At this point, supply will fall. As the price of gold falls, it will become more attractive to buyers. And then demand will pick up.
Predicting when these swings in supply, demand, and price, will occur is the key to the successful trading of gold. But perhaps the key to successful investing in gold is the realisation that such rises and falls in the key elements of supply and demand are as much price driven as because of other factors. The current malaise in the price could be seen as no more than a bear correction in a long-term upward trend.
Posted in Money Metals | Tagged australia, china, demand, gold, price, production, recycled, south africa, supply, United States, usgs |
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