The Economics of Gold

The economics of gold differs from that for base metals mainly because a large component of gold demand is investment or stock demand whereby the metal is purchased and stored for monetary or anxiety motives rather than fabricated into industrial products.The second major component of gold demand is fabrication, principally into jewellery but also, to some extent, into industrial products.Supply to the Western private- gold market comprises non-Communist mine production, Communist sales (chiefly from the USSR), and, finally, net sales by the Western Central Banks, which have total stocks of about 35,000 tonnes and which are sometimes net buyers as well as sellers.The different components of demand and supply fluctuate from year to year.