The supply of gold is “sticky”, but flexible. The rising gold prices have pushed mining companies to expand exploration and mine production. The output can lag behind the exploration by about 10 years in order for the mine to get going, but we are seeing increases in mine production already.
About 2/3 of gold supply annually comes from mine production. The remaining supply comes from recycled gold and when prices are higher more people consider selling. The long term increases in supply that come with the higher prices obviously create downwards pressure on gold price.
Read the Final Blog Post in This Series: What’s Next?