Much of the supply of gold in the market since the 1990s has come from sales of gold bullion from the vaults of global central banks. This selling by global central banks slowed greatly in 2008. At the same time, production of new gold from mines had been declining since 2000. According to BullionVault.com, annual gold-mining output fell from 2,573 metric tons in 2000 to 2,444 metric tons in 2007 (however, according to Goldsheetlinks.com, gold saw a rebound in production with output hitting nearly 2,700 metric tons in 2011.) It can take from five to 10 years to bring a new mine into production. As a general rule, reduction in the supply of gold increases gold prices.
Gold coins seem like they are everywhere. Popular products such as the American Gold Eagle coin and the South African Krugerrand have been traded for decades. Some investors think that they only way to buy silver is in coins with numismatic value, such as silver dollars. The truth is that you can buy one-ounce silver American Eagle coins — the silver version of the gold coins — for just a small premium over the current silver spot price.
14.6 Governing Law; Arbitration. The formation of this Agreement constitutes the making of this contract within Los Angeles County, California, regardless of the manner, timing or location of delivery or receipt of acceptance of this Agreement. The parties agree that Los Angeles County, California is the exclusive venue for filing any action and hearing concerning disputes arising from or relating to the Products or this Agreement. This Agreement shall be governed by the laws of the State of California excluding conflict of law principles. CUSTOMER AGREES TO ARBITRATE ALL CONTROVERSIES BETWEEN CUSTOMER AND ROSLAND CAPITAL (INCLUDING ANY OF ROSLAND CAPITAL'S CURRENT OR FORMER OFFICERS, DIRECTORS, MANAGERS, MEMBERS, EMPLOYEES OR AGENTS) ARISING OUT OF OR RELATING IN ANY WAY TO THE PRODUCTS OR THIS AGREEMENT, INCLUDING THE DETERMINATION OF THE SCOPE OR APPLICABILITY OF THIS AGREEMENT TO ARBITRATE. THE ARBITRATION PROCEEDINGS SHALL BE KEPT IN STRICTEST CONFIDENCE. THE PARTIES AGREE THAT THE EXCLUSIVE VENUE FOR ARBITRATION PROCEEDINGS, INCLUDING ANY ARBITRATION HEARING, WILL BE LOS ANGELES, CALIFORNIA. THE PARTIES FURTHER AGREE TO THE PERSONAL JURISDICTION OF THE SUPERIOR COURT, LOS ANGELES COUNTY, STATE OF CALIFORNIA, TO ENFORCE THIS SECTION. EACH PARTY AGREES THAT IT WILL SHARE EQUALLY IN THE BASIC ARBITRATION COSTS, INCLUDING ADMINISTRATION FEES AND THE FEES OF THE ARBITRATOR(S). EACH PARTY SHALL BE RESPONSIBLE FOR ITS OWN ATTORNEYS FEES RELATED TO THE ARBITRATION PROCEEDINGS.
Though expected inflation is still low, a near-doubling is significant when compounded over 10 years. Nevertheless, gold has only barely held its own over this 2+ year period; the annualized gain of the SPDR Gold Trust GLD, -0.39% since February 2016 is 2.7%, for example. Over that same period, the SPDR S&P 500 Trust SPY, -0.55% has produced a 23.8% annualized gain.
Although governments have decided it's easier to be off the gold standard than on it, that doesn't change the central issue that backs gold's intrinsic value and safe-haven status: There's only so much gold in the world. The gold that's above ground being used in some fashion is estimated to be around 190,000 metric tons. The amount of gold in the ground that can be economically mined today is notably less, at roughly 54,000 metric tons.
Shares of Barrick surged late last week after it reported an increase in production and sales volume in the just-completed third quarter, suggesting that it will likely beat quarterly revenue forecasts when it reports results later this month. Year-to-date the stock is down more than 13% but has been on the rise since early September. Given its low costs and solid production pipeline, Barrick could be a good medium-term investment, especially if it can continue to slash debt from its balance sheet. The stock is currently trading at $12.77 versus an average 12-month price target of $14.14.