Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Welcome to Slider's Dugout -- Ignore unavailable to you. Want to Upgrade?

To: hubris33 who wrote (4105)	12/11/2006 11:36:54 PM
From: Fun-da-Mental#1	Read Replies (1) \| Respond to of 50716

Hubris, If the price is too high, there will be sellers who can't find a buyer. If the price is too low, there will be buyers who can't find a seller. Either way, the price will adjust until supply and demand are equal. From what you've said, you already understand this, but I think what you're missing is that this balancing happens in a matter of seconds during the trading day, not months or years. If there was an imbalance lasting months or years, that would be a waiting list situation, where there were some buyers who simply could not find a seller, or vice versa. This hardly ever happens in a free market. One case was the oil crisis in the 70s when people were lining up at the gas station. Theoretically sellers could have raised prices even higher until people in the lineup went away, but then they would have had a riot on their hands. Anyway, with regards to the gold market, there's no point looking for an imbalance between demand and supply, because there won't be one. DEMAND = SUPPLY = TRADING VOLUME. If volume goes up, and the price also goes up, that means the price is being driven by increased demand. If the price goes up but volume is declining, that means the price is being driven by scarcity. Applying this logic to the gold market, it looks like there is no scarcity. (No surprise, considering gold is not really consumed, only hoarded or recycled.) Price depends on the level of buying interest. Fun-da-Mental