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t decades, mainly due to ageing mines and lower flexibility.

In contrast, other developing countries have dramatically increased their mine exploitations and, as a result, since 2007 China is become the largest Gold producer in the world. Moreover, China is one of the only countries among the major Gold producers with a growing production [20] (59% growth since 2001).

According to GFMS, one of the leading precious metals consultancy firms, Gold mining production accounted for 2.554 tons in 2009, roughly 60% of 2009 Gold total supply. This amount represents just a 6% increase from 2008 quantity even if Gold price increased by more than 25% during 2009. Therefore, these values confirm Gold mining supply inelasticity.

In fact, Gold mining activities are very time and money consuming and, even in case of strong appreciations, Gold mining offer could respond just few years later.

As it is for most of all the other metals, Gold is recoverable. For this reason, its demand is partially satisfied by recycled Gold, mined within the previous years. Gold recycling can be considered as the second main source of demand satisfaction, accounting around 40% of 2009 total supply. In fact, on the contrary of Gold mining activities, Gold recycling is strongly price sensitive and 2009 Gold appreciation greatly enhanced recycling activities. As a matter of facts, old Gold scrap supply increased by 27% during 2009, in line with Gold price movement within the same year.

The third component of Gold supply derives from Official sector stocks’ sales. The Official sector is mainly represented by Central Banks reserves but many other government bodies and international organizations keep holding Gold in their coffers as a store of value or collateral for international trades.

Even if it is estimated that around 20% of all the above ground Gold stocks are held by the Official sector members, and Central Banks reserves has strongly increased within the last decade, on average the Official sector has contributed to increase Gold supply with more than 500 tons of Gold on a yearly basis from 2002 to 2006. This huge amount has sharply decreased since 2007 market turmoil signs and, during 2009, the Official sector sales has accounted for just 1% of Gold total supply [21] .

From 1999, European Central Banks sales are formally discussed and agreed thanks to the “Central Bank Agreement on Gold” (CBGA [22] ). With this agreement, the European Central Bank and the national banks of the countries adopting Euro, arranged a five-year concerted programme establishing annual sales maximum amount and total sales level over the period. The signatory central banks control Gold stocks for roughly half of the total Gold reserve.

Moreover it is fundamental to remind that Central Banks don’t influence the market just through their buying and sales activities but also borrowing Gold at their lease rates or stipulating derivatives agreements concerning the precious metal, with different kinds of counterparty.

While Gold supply can be considered as quite stable, due to the relative inelasticity shown by Gold majors sources and the huge difficulty related to Gold extraction, Gold demand has rapidly changed during time.

Gold demand can be sum-up in three main categories: Jewelry, Industrial and Dental and Investments. It is relevant to anticipate