> Price elasticity is well over one
Do you mean "price elasticity of demand" -OR- "income elasticity of demand"
In your original post you said you were going to talk about price elasticity, then went on to explain income elasticity.
"First a little on price elasticity in gold.: Now, almost all commodities have an income elasticity of less than unity; "
I would believe income elasticity is historically over 1 (a luxury good) One would expect people with more wealth to start buying gold, fine wines, better food, nice cars, etc...
Price elasticity is something completely different. If it were equal to 1, then a 10% drop in price would result in a 10% increase in demand. It appears to me gold price elasticity may be well under 1. I say this because the price of jewelry (80% of demand) is only indirectly connected to the gold price because of huge markups. The $250 retail item may only contain $100 worth of gold, so even it gold went up (or down) 10% the retail price would fluctuate less, if at all. It's the retail price the consumer would be sensitive to, not the wholesale (spot) price. "Retail price elasticity of demand"
I do not know what to tell you about scrap, if you do not believe the numbers. I have 13 years of data, with a low of 394mt, high of 1098mt (1998 Asian crisis), and an average of 593mt.
I guess I'm just an old fart who can not get very excited after all I have seen after all the years I have been involved in precious metals. |
