Obviously, this is very bullish for gold since prices have been steadily climbing since 2003-2004, and that they were at record levels during 2008 and yet, mining companies couldn't increase their output to cope enough with demand and take advantage of these high prices.
GMFS also announced that the average production cost of gold is about $470/oz. Sadly, this is probably not considering the huge environmental cost of mining...
GFMS is also announcing that hedging production is dropping to below 500 tonnes worldwide.
All these news are highly bullish for gold investors. Gold prices are up 2.5% today, to about $880/oz.
Here's a report from The Economist:
The output of the world’s gold mines fell by 4% last year, according to estimates in a new report from the GFMS, a consultancy. More than half the 88-tonne fall in production was accounted for by a slump in gold mining in Indonesia. Supply from South Africa, once the world’s largest producer, fell by 14%—the biggest drop since the Boer War. Last year’s fall was partly owing to new safety procedures, which helped reduce the industry’s fatality rate. Skills shortages and power cuts also affected operations. Australia’s output fell by 14%, too, amid reports that some fledgling mining firms faced closure because of scarce credit. Of the world’s six big producers, China, Russia and Peru all increased output last year.