Here's where we differ:
I'm saying 200 years of pricing history hasn't been altered by a so-so year (1998) or two. Price elasticity is well over one, plus you have worldwide population growth.
I'll go with 4100 tonnes of demand as well, and with a 5% or more annual growth rate 2001-2006.
For next twelve months:
Mine 2500, declining 2% a year unless POG clears 325, then would be stable.
CB sales 425
Disinvestment: flat, but will spike sharply higher(bandwagon effect) if gold trades up over 325 well offsetting production increases. Fair chance of becoming a bubble or mania at some point.
Scrap: 200, just don't believe much is being scrapped. If anything it is being lost, used, buried in the ground with human remains (don't know bout you, but no friggin way is anyone going to pull my gold ring and teeth crowns when I'm dead and gone), etc.
Forwards: 0, just rollovers, no new accelerated supply, possible liquidation forced or otherwise. At minimum will correspond with production declines at 50 tonnes a year.
New carry trades and shorts (has been the gap closer since WAG agreement peak in early 2000: 800 tonnes): shifts to negative 300, as specs and funds switch to covering and going outright long.
Gap: 1275 tonnes, one year out target 350 POG: at that price demand will slip some (meaning flat rather than 5% growth), and some new production and scrap with arrive with a time lag. Market would still be in considerable disequilibrium. Five year range 270-500, mania scenario: 25% probability : 800-1000. |
