Find Out Why Lower Gold Production Could Cause A Gold Coin Shortage Directly At Gold-Coin.com
February 23, 2010 – With increasing demand for investment and jewelry combined with lower production, some analysts are beginning to discuss the possibility of an upcoming gold shortage. Although China and the United States continue to expand their operations, other countries are struggling to find affordable new mines, suggesting the likelihood of an impending gold coin shortage.
Historically a top producer of gold, South Africa has seen its steepest decline in production since 1901. According to BusinessInsider.com, as exploration costs there and in other countries have soared, labor costs, political risks and credit shortages have driven the breakeven cost of new gold production up to $500 per ounce.
These shortages have become apparent when last year, the US Mint ran out of gold blanks for the 2009 American Eagle gold coins; with increasing demand by exchange-traded funds, central banks and private investors, this lack of supply is likely to begin affecting spot prices. Although this is bad for producers, it has the potential to be very profitable for investors.
With so many countries experiencing economic turmoil and a large number of currencies becoming devalued, gold is a valuable resource as a hedge against financial difficulties. If a shortage of gold occurs, those holding it will realize potentially incredible profits as the prices react to the short supply; in fact, trading experts like Wells Wilder of New Zealand are predicting prices of $5,000 per ounce within the next two years due to swelling demand, although this estimate does seem a bit high to many economists.
Investors should consider the diminishing supply of the precious metal as they decide whether to purchase additional gold coins. As Jeffrey Nicholls, managing director of American Precious Metals Advisors states, "Regardless of the near-term prospects for gold, the long-term fundamentals promise substantial appreciation later this year and beyond.” The key fundamental here is demand, and lower production could send demand to unprecedented levels, helping investors make incredible profits.
Michael Williams
Senior Staff Writer - Gold-Coin.com
