Gold: Supply Crunch? What Supply Crunch?

Your Casey Research metals team believes the supply of gold is going to tighten. Most companies have been forced to look in riskier jurisdictions and remote locations with poor infrastructure. Environmental and other regulations are multiplying and becoming more costly every year, and even in places where they are not, labor strikes and increases in taxes are taking their toll. Worldwide, mining becomes more complicated and expensive every year... and in some cases, not even worth trying. At the same time, big discoveries remain few and far between -- and even when a discovery is made, it often takes up to ten years to reach production.

... But it's the demand side that dominates the price of gold. Whether a shortage of gold supply from production occurs or not, demand for gold is more flexible than supply overall.

Gold is a monetary metal. If confidence in paper money evaporates the way we think it will, the flight to the safe haven of gold could swamp any conceivable glut in supply. We've no crystal ball to tell us when it will start, but we definitely see a mania coming.

And another question arises: Now that gold demand and supply are dispersed across the globe, where will the mania start? US? Europe? How about China, India, or Malaysia? Things could really start cooking with no immediately evident cause in the West at all.