Mined gold supply still not keeping up with demand

2020 was a mixed bag for gold producers. On the one hand covid-19 forced many to temporarily halt operations, due to government-imposed lockdowns.

Yet last year also saw gold hit a record $2,034 per ounce, due mainly to pandemic-related demand shocks, including a sharp drop in the US dollar; the flight from equities to bonds, which drove yields to record lows, thus supporting investments in gold; and monetary easing across the major central banks, comprising a resumption of quantitative easing (mainly bond buying) designed to drive down interest rates and spur borrowing; and interest rate cuts to near 0%, also carried out to incent businesses and individuals to take out loans, and therefore protect national economies from falling into recession during the once in a century global health crisis.

With gold prices rising 22% in 2020, a pertinent question is whether the world can produce enough of the precious metal to meet rising demand — especially considering we are entering what could be a particularly ugly period of inflation.