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The Perth Mint's Bron Suchecki says that gold prices are determined less by demand than the withholding of supply. “If you look at the gold market, there’s quite a lot of above ground gold in stock. Mine supply is 2,800t, but the total amount of gold held above ground is 170,000t. So what matters is whether the holders of that above ground stock are going to sell or not. If they sell then that could easily overwhelm the marginal supply that’s coming out of mining companies.”
Rightly, investors are interested in the intentions of central banks towards gold. With many under pressure as a result of Europe's financial crisis, Bron summarises his views on the likely actions of central banks in this interview with The Street.