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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: jrhana who wrote (15425)	6/17/2004 3:44:15 PM
From: grusum	Read Replies (1) \| Respond to of 110194

copper, nickel, tin etc., are essential to the economy. so the price is set higher (so the producers make a profit) and the product is sold to fabricators. price rationing gets the copper (for example) into the hands of the copper tube makers and wire makers, rather than a speculator who would be willing to sit on it and hold out for higher prices, no? production might fall a little in the short term because non-essential use could get squeezed out. but it is a supply disruption that is at least threatened, that makes it necessary to price ration in the first place. gold is mostly a non-essential metal (although it does have some industrial uses that has no substitute). but gold will probably not get price rationed. therefore, the sky is literally the limit for the price of gold. because base metals are essential in an industrial economy, they may need to rationed into the hands that most benefit the economy. that circumvents the speculators and keeps an artificially lower than otherwise lid on prices. true, it is only a stop gap measure and prices may have to rise even more later. however, it seems to help keep price shocks and essential supply disruptions from reverberating through the economy. (at least in theory that's how it's supposed to work). that is my guess at what happens with price rationing. if someone posts a clearer understanding of it, i can change on a dime. best regards, -gru