The effect of the price of gold on its production: a time-series analysis

Production of gold in Australia has grown strongly in recent years. Australia is ranked the world's third largest gold producer, only South Africa and the US produce more than Australia. Most of the Australian gold production comes from one of its states, Western Australia. In this paper, we use recent developments in econometric time series analysis to present an analysis of gold production and prices during the period 1948–1994. The results show that if the price of gold (relative to costs) increases by 10% and the price (in levels) remain the same for the next 5 years, then in the first year gold production will rise by 0.3%; in the second year by 2.2%; in the third year by 7.4%; in the fourth year by 8.9% and in the fifth year by 10.7%.