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governnten[ treasuries or central banks. Since 1968, the metal has become essentially a free market commodity and the How of gold to fabricators and private investors has exceeded acquisitions for monetary purposes. 2. World Gold Mirte Production South Africa produces about 50 percent of total world production (60 percent of the free-world} or 24 million ounces from around 35 large underground mines controlled by six corporations. While average ` grades are high, on the order of 0.2 oz./ton versus around 0.055 oz./ton in the U.S., mining costs are also high, an the order of $250/oz. The U.S. produces around 5 percent of total world production from approximately 200 mines. Production per mine is typically fairly small (20,000 - 50,000 ouncesl especially compared to the South African producers. Most U.S. mines today appear to be economical given that the operators are generally well capitalized. The major producers in the U.S. are Homestake Muting Co., the Utah Capper Division of Kennecott Copper, :tnd Freeport McMoRan Gold Company. Domestic mine output for the past decade has ranged from a low of around one million ounces in 1979 to almost 2.5 million ounces in 1985. World gold mine production peaked at 47.5 million ounces in 1970 and declined to about 39 rnillion ounces in 1980. Production then rose to 45 million ounces in the 1984-1985 period- The decline in production during the 1970 to 1980 period was attributable to a moderate gold price increase which tempered demand and conversely enabled producers to mine their leaner gold are at profitable levels. World gold production increased after 1980 due to a dramatic resurgence of demand and its resultant price increases. Stocks of refined gold total around two billion ounces, of which about half is official stocks of the market economy countries. Official U.S. government stocks total about 260 million ounces. About 900 million ounces of gold are in private hands. 3. World Gold Reserves and Reserve Base South Africa has the major share of world reserves with around 760 million ounces or 60 percent of the total world's reserves. Most of the U.S. reserve base is confined to Alaska, California, Idaho, Montana. Nevada and Washington. Nevada accounts for almost 50 percent of total industry output. 4. Supply-Demand Relationships In terms of quantity of gold used, jewelry has always been the most important end use, accounting for around 55 percent of the gold consumed in the U.S. over the past decade. Dental use has accounted for 10-1 S percent of gold consumed for the past two decades. During this period, the industrial sector consumed about 32 percent of the total with most of it in the electronics industry. Since the legalization of gold in 1975, one to six percent of gold consumed annually has gone into small bars, medallions, coins and other products purchased as investments. This does not include im~estment in bullion coins :tnd Treasury gold medallions which account for an additional Z.5 million ounces per year. The consumption patterns for fabricated gold in other market economy countries varies according to the degree of industrial development. Jewelry is the dominate use of gold (similar to the U.S.), accounting for about 60 percent of consumption. In many of the less-developed countries, it is basically the only use. The sharp decline in the demand far jewelry and investment products in the years 1974 through 1980 reflects the impact of rapid increases in the price of gold during those years.