I know I have a reputation (not necessarily justified) as a gold bear, so the timing of my comment on the third quarter World Gold Council: Supply and Demand survey might look "opportunistic", if I was inclined to gloat. Sorry for the bad timing, but the price action prompted me to have a look at the fundamentals.
What the data is telling us overall hasn't really changed for a few years.
More gold continues to be produced by miners and recyclers than is being bought by the jewellery industry (forgive the typo in the table), sales of ingots and coins, ETFs, central banks and technology companies.
What that means is that the supply overhang continues to be absorbed by the bullion banks and, indirectly, by COMEX gold futures traders.
The risk in these arrangement hangs on the COMEX traders and their love of mark-to-market profits, and their distaste for mark-to-market losses. They have had a good run this year being long gold during a period of uncertainty. But as the inventory continues to stack up, how much additional appetite and capacity for risk they have will decide which way gold moves from here, and how fast.
