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overtheedge
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Light Thanksgiving Week Report 29 Nov, 2015 - Keith Weiner - Monetary Metals

"Every ounce of those massive stockpiles is potential supply."

Count me among those who suggest that far too much emphasis is placed upon gold in vaults aka stockpiles.
While this gold might be available at the right price, so is all the lower grade ore that producers bypass due to low prices.
Though much of this ore will need to go to the leach pile, at the right price producers will eagerly mill it (the highest cost input) and build new leach piles.
This additional mine output will dampen the requirements for dis-hoarding while making more gold available for the carry trade.

Not all gold in vaults will be available for sale.
A fair amount will remain in central banks, generational family wealth vaults, ETF vaults and speculators forever holding for some hypothetical top they are sure gold will hit.

If the price rises much, more capital will be invested in getting the mines that are close to production as well.
The demand vacuum will be filled.
Hence gold in the ground controlled by producers is little different than refined gold in deep storage.

This is why I contend that the argument that all refined gold in vaults will be available, at the right price, seriously discounts the motives of those controlling the vaulted gold.
Now couple that with the notion that a rising gold price reflects weakening of the currency and the question then becomes one of, "Why would any logical person sell an instrument of wealth for a declining asset?" Would this not be akin to offering high dollars for a house that is on fire?

Commented 3062 days ago

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Beginning of the headline :In this holiday-shortened week (Thanksgiving), the price of gold dropped $20 and silver 10 cents. Friday, when the price dropped the most, could not have had much liquidity as most Americans were out of work shopping or partying. Whatever they may have been buying, it sure wasn’t gold. We might be inclined to take the basis data this week with a grain of salt. Here’s the graph of the metals’ prices. The Prices of Gold and Silver We are interested in the changing equilibrium created when some ma... Read More

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