Where Is All The Gold Gone ?
A closer look at the US gold market reveals very interesting aspects about the supply source of gold. Net gold consumption (= consumption - primary and secondary production) indicates the gold demand minus the supply from gold production. In the last decade this demand has exceedingly surpassed domestic production as shown in the graph below. In economics this situation leads in most cases to increased net imports (imports - exports). Nevertheless, net imports have been turned into net exports at the end of the eighties and since then the US has been a net exporter of gold at increasingly higher amount.

This development led to an accumulated market deficit of around 8000 tons (see below chart).

As this amount did not come from increased gold production, actually it has to stem from an unknown stockpile. The deficit could not have been covered by melting coins or other recycling activities as these are included in the net consumption as secondary supply. The only explanation I could come up so far, is that this vast amount of gold must come from an official stockpile. As the gold reserve of the US Federal Reserve represents around 8000-10000 tons, is it now coincidence that the gold price rises just after the accumulated net consumption and net exports surpasses 8000 tons ? I leave it to the reader to make its own conclusions.

I look forward to receiving your comments.


Dr. Heinrich Leopold
hgleopold@yahoo.com

8 June 2002

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