In a recent Economist Magazine video, World Gold Council CEO Aram Shishmanian took some time away from his busy schedule to help explain gold's purpose as a preservation of wealth as well as to discuss the supply and demand for the yellow metal over the next few decades.  His bullish attitude toward gold echoes many of the gold bugs that exist around the world, especially in China and India.

Mr. Shishmanian's insight into the Indian gold market was most interesting.  He describes the cultural and religious connections to the metal that many in that country have.  He also talks about how "no one ultimately sells their gold" in that country, and instead they actually have their gold jewelry melted down and cast into new, more fashionable pieces from year to year.  He expects India to be a long term net buyer of gold and holds a very optimistic view of where the market is heading in the next ten years and in the longer term.

Shishmanian also sheds light on the gold market in China, which has become the world's largest consumer of gold, creating a huge demand world wide.  China has only been able to buy gold for the past 10 years, according to Shishmanian, and the country has a long way to go to catch up to the other world super powers in terms of acquiring gold and other precious metals.  Even the Chinese citizens are quickly buying up gold reserves and the demand for gold is rising higher and higher.  China is home to literally hundreds of new gold mines.  As the price of gold rises, so does the profit margin for mining it.  Another major consideration pointed out in recent days by the World Gold Council is the fact that the more expensive methods of mining gold are starting to become more and more economically viable as the price of gold rises.  This will ultimately give rise to a greater supply of gold, but at the cost of lower metals prices.

Another major consideration relative to the gold market is the fact that consumers around the world have been buying the metal as both a store of wealth and as a hedge against the economic crisis that has unfolded over the past 2 years.  There is quite a bit of money in gold right now that represents people's apprehension of the global economy, and though there will likely be a significant flight away from gold after an earnst economic recovery has started, it will likely retain most of its monetary value as well as the psychological status of the world's most concrete store of wealth in good times and bad.

Certainly the World Gold Council has an interest in playing up the bullish sentiments of many investors, as many world banks have recently become net buyers of the yellow metal, but Shishmanian hits the nail on the head when he speaks about the rising cost of mining gold and the idea that as the population of developing nations which represent much of the demand for gold grow, gold will remain in focus as a major form of wealth preservation and even as a status symbol in many cultures and religions.