Sudden supply surge, badly managed. We could do a better job these days, if we wanted to. I thought you worried there wasn't enough gold?
Gold in commercially mineable quantities is tough to find. Of that there is little doubt. And every once in a while, like oil, a big strike is discovered that completely disarticulates a gold standard economy. But then the find dries up and the sudden spurt of growth that occurs falters and halts as the supply of gold dwindles in comparison to the ongoing demand. Iow, a sudden inflation of gold supply causes individuals to make forecasts for economic growth based upon that supply. When that supply dries up, expectations must be as drastically altered as they were when the gold was found.
And it seems to me that those hidden supply surges and deficits would require a vault full of gold stored, but not factored into available reserves in order to maintain balance in the circulated supply of gold. Then the controller of this "secret store" would add or withdraw gold to maintain an equilibrium of money supply backed by gold. (could this be called adding or substracting "liquidity"?? hmmm.... sounds pretty Fiat to me when someone control the amount of money supply out there.)
But as you stated these surges are badly managed. So just who is to have the power to govern gold supply to the open market?? Would the gold market then be "free" and unmanipulated?? Is not the fact that the CB's are currently holding gold not the equivalent of "managing" it's supply in a way that does not overly disrupt the economy.
And doesn't that type of control by necessity, dictate gov't control over gold assets?? (Read: Nationalization) Where is the freedom when the gov't controls your discovery, production, and sales of a strategic metal??
Who will make those decisions?
Btw, there is no such thing as a "free market". There are markets that are "more free", or saddled with fewer gov't regulations, and others controlled by the gov't.
If markets were completely free, I would be able to short stocks under $5 "on a downtick"... :0)
Regards,
Ron |
