The most important concept in business, marketing, finance, and economics is also the most simple: the laws of supply and demand dictate everything. It’s that simple. We live in a world of cause and effect.
Supply and demand dictates that if the demand for a good goes up, and the supply doesn’t, then people are willing to pay more to get the supply. Shortages lead to price increases. And that’s just basic economics.
Here’s why this is important:
Demand for Gold is Rising
Demand for gold is increasing. The reasoning is simple: there are more people in the world, and they’re getting more civilized.
China and India alone have more people living in their countries than ever existed in the history of the world up until 1800.
This has led to a lot of investors investing in agriculture, energy, and other staples of human existence. But this explosion in population isn’t just an explosion in the need of food and agriculture — it’s also an explosion in the need for all metals, including jewelry metals like gold.
Even if the recession leads to a short-term decrease in the demand for specific ounces of gold, the long-term results are obvious: more people, more demand.
Supply of New Gold is Decreasing
The supply of gold has been decreasing for decades. It’s getting more and more difficult to get gold out of the dirt, quite frankly.
Because there’s less and less gold, mining for gold is becoming more expensive. The concept of “peak gold” is the most important concept a gold investor can understand: less and less gold is being produced every year. Here’s evidence, and here’s some more evidence. It’s unavoidable.
New sources of gold will become increasingly rare until there’s finally not any more left. What does this mean? It means the price of gold will be increasing much more than it is now — especially once investors realize we’re running out of gold.
My long-term gold predictions: higher and higher. It’s unavoidable, and the laws of economics agree.
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Tags: gold demand, Gold Mining, gold production, gold supply, jewelry