The Round Rock Wealthbuilder's Meetup Message Board › Do Western Central Banks Have Any Gold Left?
|Dan Caldwell - Wea...||
Round Rock, TX
By Eric Sprott - March 20, 2013
Every month, the US Census Bureau releases the FT900 document, which outlines US International Trade Data. Going through this document, we were intrigued to see that in December 2012 the US exported over $4B worth of gold and imported around $1.5B worth of gold, representing a net export of $2.5B or almost 50 tonnes. This surprising number led us to look at the previous releases of US International Trade Data which go as far back as 1991 – what we found was truly shocking. Not only has the US been consistently exporting large quantities of gold on a net basis, the amount of gold the US has been exporting is above and beyond what the US should be capable of exporting.
The gold market is fairly simple to understand from a supply and demand perspective. Since you cannot fabricate gold out of thin air, supply comes from new mine production, scrap gold recycling and investor disposition of bullion. Demand comes from many sources including investment demand, electronics, dental and industrial uses to name a few. There can be short-term aberrations between supply and demand where the market can be oversupplied, or demand can outstrip supply, however, over a longer period, supply should equal demand with the price acting as the equalizer. Under this assumption, the amount of gold that the US is exporting should equate to the amount of gold that the US is not consuming over a long enough time frame.
For our analysis of supply and demand, we have very robust statistics as far as mine production, import-export data, coin sales and ETP demand from GFMS, the US Census Bureau, the US Mint and Bloomberg, respectively. We have good data on gold recycling, jewelry sales and gold use in electronics and industrial applications from the CPM Group.
We used this framework to analyze supply and demand in the US going all the way back to 1991, which is as far back as the FT900 documents go. Over the span of 22 years, the total amount of gold that the US has exported – above and beyond its supply capability – is almost 4,500 tonnes! A truly stunning figure. (See Table 3).
TABLE 3: US GOLD MARKET, CUMULATIVE SUPPLY DEMAND 1991-2012 (IN TONNES)
US Supply, Mine Production + Scrap Recycling = 7,532
US Demand, All Sources = 6,517
Surplus Available For Export = 1,014
Actual Gold Exports (1991-2012) = 11,223
Actual Gold Imports, same period = 5,719
Actual US Net Gold Exported = 5,504
US Gold Available For Export = 1,104 (Figures Above)
Unexplained Export Gap = (4,490)