Worldwide gold production is not matching consumption, investment demand is increasing and will continue for some time, as a result the price of gold will have to continue to increase until supply meets demand, this is just basic laws of economics. Annual gold production falls short of demand by some 1500 tonnes. The production trend has been downwards since there has been no new major mines and exploration for over 20 years.

Because the US dollar became the benchmark for world currency in 1944, they also became the storage warehouse for gold which was held by the Federal Reserve. In 1974 there was an estimated 12500 tonnes of gold at the federal reserve, at the end of 2005 this figure is 8967 tonnes. That is a shortage of 3533 tonnes of gold ( or 124 622 907.567 ounces). "Central banks have 10,000-15,000 tonnes of gold less than their officially reported reserves of 31,000. If you belief in GATA’s theory of gold leases and derivative by major central banks to suppress the price of gold, especially with the sell off of more gold over the last few years, then this shortage could be much higher.