Gold as an Investment Fundamentals | SD Bullion

Gold as an Investment Fundamentals | SD Bullion


Hello and welcome. This is a short video
for SD Bullion’s 21st Century Gold Rush Guide. For anyone watching on YouTube,
simply visit SDBullion.com/Book for more information. Here I will discuss
physical gold reality as well as current gold supply and gold demand factors
today. Let’s begin with gold’s supply chain. Not just from the ground, and no gold is
not a mere entry into a bookkeeping ledger or a digital liability. Physical gold is born from the most violent phenomenon we human beings have ever witnessed… exploding stars. Scientifically explained, planets
including our own here on Earth, form from epic collisions between asteroids even bigger bodies called proto-planets. Sometimes the colliding bodies are
ground to dust. And sometimes they stick together to ultimately form larger
mature planets. Here on earth in the 21st Century we’re still digging for gold. We’ve been doing this for about 5,000 years. The effort required to produce
fine gold has endured for millennia. After gold ore is dug from the ground,
it typically gets securely moved to various gold refineries throughout the world. This footage is from the Republic Metals Corporation which is located in
Miami, Florida (USA). The US Mint produces the world’s most
popular 1 oz American Eagle Gold Bullion coin. Here you can see their auto-tuber
loading 22 karat Gold Coins into protective Mint Tubes and ultimately
into a sealed US Mint Case. Each one of the the red US mint ‘monster boxes’ weighs 40 pounds with 500 ounces of Gold contained in each. Here our Royal Canadian Gold
Kilo Bars being sorted and processed into inventory. Each of these Gold Bars
contains a guaranteed 32.15 troy ounce weight, comprised of 0.9999 fine Gold. Gold bullion dealers like us here at SD Bullion, we buy and sell the physical precious metal products that gold
refineries private gold mints and government gold means create. Shipping physical gold bullion products in the mail is more common than you might think.
Products we mail are discreetly and tightly packaged. They are fully insured
with tracking information, as well adult signature is required on all large
orders. Aside from home delivery, many fully
insured non-bank secured logistics firms provide safe secure ways to hold gold
bullion outside of the financial industry. Since the industrial revolution
began in the early 20th Century, gold production and annual supplies increased thanks in large part to combustible engines and technology. Although the gold
market remains rather opaque in terms of who has exactly what amounts, experts and
geologists generally estimate the all-time above-ground gold supply level
stands at about 187,200 tonnes of gold. That is about 6 billion troy ounces. Above-ground gold supplies grow
at roughly 1.5% per year. Which coincidentally, is about the
same percentage annual growth for the world’s population of human beings.
The annual gold supply is now hovering at about 4,000 tons a year.
These annual supply numbers can be misleading as only about 70% is
coming fresh from gold miner’s extractions. With the remaining 30% of gold’s annual supply coming from recycled gold scraps. Unlike platinum or palladium, gold mining
occurs in many nations throughout the world. Today the largest gold mining
nation is China, producing about 15% of the world’s annual gold mine supply. Of
that, China consumes all of it. Not merely content with mining within her national
borders for gold… Chinese mining interests in Africa and beyond continue
to spread. This is all occurring as the output from
the world’s gold mines are projected to top out and begin to climbing into the
2020s. Many have been professing about peak gold for years, yet the following
words of a long time gold mining industry executive are worthy of consideration. Pierre Lassonde, chairman of Franco Nevada, said in
October 2017 the following: Production of gold is declining, and this is going to
put an enormous amount of pressure on” “prices down the road. If you look back to
the 1970s, 1980s, and 1990s, in every one” “of those decades, the (gold mining) industry found at
least one 50+ million ounce gold deposit.” “At least ten 30+ million ounce deposits” “and countless 5 to 10
million ounce deposits. But if you look” “at the last 15 years… we found no 50
million ounce deposit… no 30 million” “ounce deposit… and only very few 15
million ounce deposits. So where are” “those great big gold deposits we found in the
past? How are they going to be replaced?” “We don’t know. We do not have those gold ore
bodies in sight. What the gold mining” “industry has not done anywhere near
enough, is to put money back into” “exploration. They’ve not put anywhere
near enough money into research and” “development… particularly for new
technologies with respect to exploration” “and processing. The way our industry
works is, it takes around 7 years for” “a new mind to ramp up and then come to
production. So it doesn’t really matter” “what the gold price will do in the next
few years.” “gold production is coming offline, and that means
the upward pressure on the gold price” “could be very intense.” About 1/2 or 50% of all the world’s
above-ground physical gold is in the same form we found it dating back to
more than 6,000 years ago… in gold jewelry and adornment. Pure gold’s
untarnishing allure is universal and endures through time… a myriad of
cultures past and present. archaeologists have found ancient gold grave sites in
Bulgaria, to Colombian ruins, to ancient Chinese gold artifacts, used in millennia prior
to the birth of Jesus Christ. Today almost 1/2 the world’s population resides in
India and China alone. They also account for over 1/2 of the world’s physical
gold demand in total. Combined there are estimates that these 2 nations now
hold over 1/5th of the world’s entire physical gold supply. Yet if you
know historical gold mining flows neither nation has long been a large
gold-mining powerhouse like South Africa for example. Many of the current gold
buying forces at work in the East are cultural and economically driven, yet
also for the Chinese authorities especially… much of this 21st century
gold buying likely also has a future monetary aspect to. For United States and Western
citizens to understand the current 21st century gold jewelry demand segment you
must shed local currency conditioning and perhaps even some of our own
cultural memes to better understand what gold represents to other cultures. In the
USA for example gold jewelry is typically sold at exorbitant price
premiums over its melt value. Often the gold jewelry being sold is less pure
than the gold jewelry of the East. 14k and 18k or
58% to 75% gold jewelry purity is common in the west. Conversely 22k
and 24k or 91% to 999% gold jewelry purity is common in the East. We
Westerners often pay double or more the melt value of the gold in the jewelry
that we buy. Easterners typically pay about 10% to 15% above the gold
melt value for their gold jewelry. Modern-day Eastern gold jewelry designs are often more intricate and artistic than our own. Many Easterners consider gold jewelry as
a long-term savings. In China for example when the world gold spot price fell sharply in 2013… many middle and upper-class Chinese
housewives swarmed both Hong Kong and Shanghai Gold districts effectively
looking to acquire their gold savings on the price dip Much of the same occurs in India. This Bloomberg footage was taken at a common gold shop in India. For both countries gold gifts are common at weddings. For Indians a gold dowry is often key to
the start of a marriage. Notice as we back out into the street the gold jewelry owner has a direct competitor right next door to his shop. The next largest sector of 21st Century gold demand is physical gold bullion buying
for long-term savings and investment. This gold bullion, investment buying segment makes up about 40% of annual physical gold demand. The largest buyers in the investment-grade
gold bullion segment are governments and their central bank partners. Between all
the various government and central bank gold vaults in the world there are over
1 billion ounces of fine gold stored. The reason for this is simple… gold is money. All other non precious metal currency proxies fade away in time. Today’s ‘transparent’ gold exchange-traded inventories amount to about 90 million
ounces of gold. That may sound like a lot and yes some news headlines are made from ETF
capital flows into GLD or perhaps even withdrawals from the COMEX’s fractional reserve gold warehouses. But keep this in perspective. All this gold represented here amounts to 1.5% of the world’s gold supply. The physical
gold buyers we just witnessed in the Eastern world… the ones who make up over 1/2 the world’s demand, this chart means very little to them. What drives their
gold buying culture is the gold price in their local currency. For individuals we suggest buying and owning your physical gold bullion
outright. Either own it in hand or possibly as well in your direct non-bank
depository account, where you have authority and access to your gold
bullion directly. Getting middlemen away from your gold limits counter party risks. Owning gold bullion outright also gives investors the advantage of product and
price premiums which can occur during financial crises. For example… 1 oz American Gold Eagle Coins were selling for over $1,000 USD a piece while gold’s spot price was near $800 USD an ounce in the fall of 2008. Gold’s final demand segment driver comes
through a mix of cutting-edge aerospace, medicinal, dentistry, and industrial
applications. This all currently accounts for a bit less than 10% of annual
physical gold demand. By its natural characteristics gold is resilient to
corrosion, virtually impossible to destroy. While also offering superb
malleability, conductivity, and biocompatibility. Pure gold is non-toxic
to human beings. Nano-gold particles also have increasingly promising applications
in the fight against illness and cancer. One single troy ounce of gold can be drawn
into a wire so fine that it could stretch up to 50 miles in length. Gold is
so soft it can be hammered into leaf sheets so thin and inexpensive, that gold
can be used as decorative wallpaper or eaten in extravagant food dishes.
As modern science learns more about the exclusive characteristics of gold,
we can expect more cutting-edge gold applications to come about as the years progress. This concludes our Gold Fundamental video for SD Bullion’s free 21st Century Gold Rush guide. If you want to learn more about current gold price discovery mechanics and how the… gold price is derived, visit us at SDBullion.com/Book Where you can find more information in the gold fundamentals section Good bye for now and thanks for watching. ♥ ♥ ♥

3 Comments

  1. I hope you liked this video on physical Gold Investing supply demand fundamentals.
    Subscribe and stay tuned to this channel for more educational videos on precious metals ahead.

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