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Gold Inflation

By Patrick   Follow   Wed, 30 May 2012, 10:21am   1,105 views   8 comments
In Menlo Park CA 94025   Watch (0)   Share   Quote   Permalink   Like   Dislike  

From the Wikipedia:

At the end of 2009, it was estimated that all the gold ever mined totaled 165,000 tonnes.... global mine production amounted to 2,471.1 tonnes

We are increasing world gold stocks at 2471.1 / 165000 = 1.5% annually.

So shouldn't the value of gold fall 1.5% each year, since there's more of it around?

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1. Dsdf4 Follow Befriend 1 threads 19 comments San Mateo, CA

   1   12:34pm Wed 30 May 2012   Share   Quote   Permalink   Like   Dislike   That's the supply side...what about the demand side?

2. Vicente Follow Befriend (8) 204 threads 4,416 comments Davis, CA

   2   4:33pm Wed 30 May 2012   Share   Quote   Permalink   Like   Dislike   Here's a nifty table of per capita holdings: http://www.prudentinvestor.com/2010/11/list-of-per-capita-official-gold.html

3. tdeloco Follow Befriend (2) 11 threads 218 comments San Jose, CA

   3   4:49pm Wed 30 May 2012   Share   Quote   Permalink   Like   Dislike   Patrick says So shouldn't the value of gold fall 1.5% each year, since there's more of it around? Only if population increase is less than 1.5% each year. Also, consider the fact that paper gold such as GLD, PHYS, and other certificates have long been funneling money away from physical gold. So, if anything, gold is recovering from a massive under-bubble.

4. KILLERJANE Follow Befriend (3) 12 threads 600 comments

   4   10:05pm Fri 1 Jun 2012   Share   Quote   Permalink   Like   Dislike   I thought gold price rises because of people not liking the green paper anymore?

5. dunnross Follow Befriend 28 threads 1,489 comments San Jose, CA Premium

   5   10:50pm Fri 1 Jun 2012   Share   Quote   Permalink   Like   Dislike   Protected   Patrick says We are increasing world gold stocks at 2471.1 / 165000 = 1.5% annually. So shouldn't the value of gold fall 1.5% each year, since there's more of it around? But the supply of dollars is growing faster than the supply of gold. So, in dollars, gold price should go up.

6. KILLERJANE Follow Befriend (3) 12 threads 600 comments

   6   10:57pm Fri 1 Jun 2012   Share   Quote   Permalink   Like   Dislike   But dollar isn't tied to gold? It is tied to, oh my #%!*, well the belief of value?

7. dunnross Follow Befriend 28 threads 1,489 comments San Jose, CA Premium

   7   11:03pm Fri 1 Jun 2012   Share   Quote   Permalink   Like   Dislike   Protected   KILLERJANE says So shouldn't the value of gold fall 1.5% each year, since there's more of it around? But when somebody says: "So shouldn't the value of gold fall 1.5% each year, since there's more of it around?" He is, in fact, tying the value of gold to the value of the dollar.

8. Robert LeRoy Parker Follow Befriend 2 comments

   8   11:13pm Fri 1 Jun 2012   Share   Quote   Permalink   Like   Dislike   Price isn't determined by the stock but by the flow. How much of the 170,000 tonnes or so just sits in vaults belonging to billionaires and central banks without ever moving? It truly is a reserve of last resort in the current system given the incredibly high stock to flow ratio. Victorthecleaner and Fofoa each have excellent new essays regarding the flow of gold between GLD and the otc bullion market. http://victorthecleaner.wordpress.com/2012/06/01/gld-the-central-bank-of-the-bullion-banks/ http://fofoa.blogspot.com/2012/06/gld-talk-continued.html