Would you buy gold now? South African gold production has dropped 14% to 232 tonnes, down 38 tonnes from 2007 levels. This is the lowest production level since 1901! Reasons for the slump included a lack of skilled labor, severe power supply limitations and an overhaul of mine safety procedures.

China has now taken the number one spot as the world's largest gold producer, with output up 3% to 285 tonnes. U.S. gold output dropped 2% to 234 tonnes. Global production is down 3.6% to 2,385 tonnes, the lowest level since 1995.

With big increases in the cost of production to over $500 per ounce, there is little likelihood of new mine production this year. Gold prices are expected to reach $1000 per ounce in the first half of 2009. Investors are wary of the sharp drop in U.S. interest rates and the printing of new money for various stimulus packages.

Do you plan to buy gold or silver this year?

Will we have enough gold to meet demand in the near future? In 2001, gold dropped well below $300. As a result, exploration budgets plummeted in 2002. The results of that decline are being felt now -- according to GFMS Ltd., 2006 global demand for gold was pegged at 3,380 metric tons, while worldwide production fell 3% to 2,471 tons.

In 2006, the metal hit a high of $730 a troy oz. and, so, not surprisingly, 2007 exploration investment now tops $3 billion, according to the Metals Economic Group. Given the lag between exploration and production, this increase won't impact supplies for some time.

Also, as mines in stable countries play out, companies are forced toward exploration in higher-risk countries. This, along with climbing energy costs, has resulted in an increase in production cost for gold worldwide of $45 per ounce, according to GFMS Ltd. Consolidation of exploration companies has also had a dampening effect on gold exploration.