Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 1% and 2% on the Week
By: Chris Mullen, Gold Seeker Report

Ira Epstein's Metals Video 11 17 2017
By: Ira Epstein

Next-Generation Crazy: The Fed Plans For The Coming Recession
By: John Rubino

COT Gold, Silver and US Dollar Index Report - November 17, 2017
By: GoldSeek.com

Gold Miners’ Q3’17 Fundamentals
By: Adam Hamilton, CPA

Bonfire of the Absurdities
By: John Mauldin

The Social Security Inflation Lag Calendar - Partial Indexing Part 1
By: Daniel R. Amerman, CFA

Rob From The Middle Class Economics
By: Gary Christenson

GoldSeek Radio Nugget: John Williams and Chris Waltzek
By: radio.GoldSeek.com

The Metals Market Is A Mess And Will Likely Continue To Frustrate You
By: Avi Gilburt

 
Search

GoldSeek Web

 
Commodity Pricing is Antiquated


 -- Published: Thursday, 23 October 2014 | Print  | Disqus 

By It's a Mystery

If you read or watch business news that does not have banks as advertisers you see a lot of news about a move away from the dollar. I have no doubt the number one reason for this is commodity pricing.

 

The number one law of economics is supply and demand. Nowhere on this chart is that reflected, NOWHERE. What you see is an almost doubling in price of silver as the dollar fell 10% against a basket of currencies. Since that time the price of silver and gold have done nothing but go down because the dollar has gone up.

This is the primary reason why mining of any kind is a difficult business. To elaborate, was it clear at the time in 2011 that Abe in Japan would embark on a monetary “experiment” unprecedented in size or that Draghi would wave a magic wand over European Sovereign debts? Are mining CEO’s expected to be clairvoyant?

In the gold chart above we see the price of gold in 2013 resembling that of a ski slope. The demand for gold in 2013 was more than double annual mine supply and all the smart hedge funds and Wall St. ignored that fact, as did traditional media outlets. Gold is a dollar trade they exclaimed. Why should anything in commodity land be a dollar trade?

We touched on this in a previous piece and now we are seeing the damage. The price of mining metals or drilling for oil or farming land has not gone down since the dollar bottomed in 2011. Companies and economies dependent on natural resources for income are in trouble through no fault of their own. I believe this pricing mechanism is about to blow sky high.

The manipulation of currencies, bonds and stocks globally is in unchartered territory and it simply will not end well. These things never do because some entity always pushes back and forces the entire faux pricing mechanism to collapse (London Gold Pool anyone?). Here is an example of one country that said enough. The Swiss Central Bank told the world there was a floor against the Euro and that was the end of that. So, please anyone out there that thinks these markets are freely traded please explain how the Swissie has not violated 1.20.

It looks clear that the dollar is headed higher but at what point does the “dollar trade” implode? At what point does an industry stand up and say you will not get what I produce at the price you are setting. That day is coming and when it does the algos that control markets in the Western economies will have no idea how to react. The only question remaining is whether gold is the first to react. There are signs of that in the demand numbers.

Consider that the most popular gold etf has roughly 750 tonnes left. In 2013 more than that left to fill the unprecedented demand globally. So now what? Mine supply is static, ETF flows have slowed and while Chinese demand is not as torrid this year it has recently exploded again, as has demand in India.

At some point, price must rise to reflect this demand picture. Much like the Swiss Central Bank, someone will step in and say no more. You will never see it reported in the mainstream media but that day is coming.


| Digg This Article
 -- Published: Thursday, 23 October 2014 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.