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Strategies & Market Trends : Ride the Tiger with CD
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To: Stephen O who wrote (37743)12/3/2005 7:01:17 PM
From: LLCF  Read Replies (3) of 312407
 
<Gold's renewed shine is best explained by thinking of the metal not as money but as a commodity dug out of the ground. In the past few years the price has climbed because mining companies stopped locking in prices by selling gold in advance—in effect, withdrawing a huge source of supply>

Seems pretty lame for a periodical calling itself "The Economist"! Correct me if I"m wrong, but the mining companies aren't hoarding gold, they still sell it as they get it out of the ground... so any change in "supply" is actually just short term, as I-Banks would buy options and forwards from the companies and then borrow and sell physical from the Fed, and other CB's. So as miners stop selling forward, I-Banks stop borrowing and selling reversing what they have been doing. So "withdrawing a huge souce of supply" could really be looked at as either changing the timing by a few years or even putting things back the way they used to be.

Now the CB's supposedly are selling less... but that's another story.

DAK
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