Scarcity and a decline in gold production are factors to consider when buying gold.

There are many factors which influence the price of gold. And it can get confusing when trying to determine longer-term prices.

Throughout history, only 165,000 tonnes of gold has ever been mined. At today’s price, all this gold is valued at almost US$5.5 trillion. That is a tiny amount when compared to the value of paper currency floating around globally.One thing to consider, whatever the ups and downs in prices over any given month or year, is that gold is scarce.

Right now the supply of paper money is increasing as countries try to manage the economic depression by pumping more paper money into the economy.

This increase in money supply has a lot of people worried, as it can open the door to rising inflation, which is bad for everyone.

As more and more people turn to gold as a safe alternative to paper money, the issue of scarcity becomes an issue.

In addition, while some countries, like Russia, have been increasing the amount of gold they mine, gold production worldwide is on the decline, and has been since 2003.

In other words, as more and more people and countries try to buy gold, supplies will be stretched. And, as with all commodities, scarcity will put upward pressure on prices.

Scarcity of supply is not the only factor driving the price of gold up right now. But it is an underlying factor to consider, particularly if you are taking the long-term view.