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What If Everyone in the World Wanted a 1-ounce Gold Coin?
KentuckyJ
Posts: 1,871 ✭✭✭
What If Everyone in the World Wanted a 1-ounce Gold Coin?
"The panic into gold by the general public hasn’t begun yet. Available supply is scarce and will get smaller. There won’t be enough."
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for many, food and shelter take precedence.
> for many, food and shelter take precedence.
For most, not many. We forget, or don't know, how fortunate we are.
What if everyone wanted:
-a wonderfully rare Tulip bulb with the finest of genes
-a rainbow toned Morgan dollar
-an MS68 Washington quarter
-a Morgan silver dollar
-a 2009 UHR $50 AGE
-a Harley Davidson hog
-a good Cuban cigar
-a 1964 Kennedy half dollar
-a BU 1950-d Jefferson nickel
-a good used VW Beetle
-a wheat back penny
-a DC comics Superman #1
-a BU $20 Saint Gaudens
-a jar of Ragu spaghetti sauce
-a share of GE stock
-a Snuggie
-a Cabbage Patch Doll
-a beanie baby or Barbie Doll
-a Jerry Mahoney ventriloquist dummy
All these prices would explode if taken literally....and at one time some of them did. But if they do, they don't last because manias are fleeting and there are usually other options to each as well as for an ounce of gold. The 5 billion or so ounces of gold in existence is enough to get one ounce to everyone that could possibly pay the $1000 to buy one. It's just that the majority of the world cannot afford an ounce and that many others are not satisfied with just a single ounce.
roadrunner
<< <i>The panic into gold by the general public hasn’t begun yet. Available supply is scarce and will get smaller. There won’t be enough! >>
This is true. Assuming the percentage of the world population that can affort to buy gold won't change, as the population of the world continue to grow, many new buyers will surface.
At the same time, there are people who can affort to buy more than one ouce of gold, thus gain the ability to manipulate the market (we can see this is happening today: the cost to produce one ouce of gold is almost $300, but it is selling for almost $1,000, well well well, maybe another debeers just got into the business? Or maybe a rich entity/ government is buying all the gold produced? China?). As these people excircise their right to own gold, it will make gold even scarcer for new buyers.
On the other hand, gold? What's that? Oh I remember, it is the metal of the ring my great great grandpa used to wear. You don't want to sell me your gold? That's fine, I'll buy palladium or platium instead. These two metals can do almost anything gold can do, and they can do many things gold can not do. So, why should I give a darn about your gold?
<< <i>-a jar of Ragu spaghetti sauce >>
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Now you're talking! I love Italian and if you throw in a couple meatballs, it could mean calamity for the Western World!
<< <i>give it time and the senate will vote to give everyone a gold coin. >>
true.
it's one of the reasons i suppose that gold does not back the reserve currency; there's not enough of it
to house the worlds wealth. any move to get back on the gold standard for a reserve currency would have to be done fractionally.
china
<< <i>give it time and the senate will vote to give everyone a gold coin. >>
More likely the House of Representatives where spending legislation originates. The Senate which tends to be more conservative would likely kill it.
Worry is the interest you pay on a debt you may not owe.
There are very few miners working on a margin that low. Many or most are in the $350-$450 range. If you toss in derivatives, currency exhanges and other items, the "all-in" cost for the shareholder becomes much higher. In some cases the miner makes essentially no profit that quarter or a fraction of what they did in a prior quarter. Barrick's 9.5 mill ounce hedge plays a role in this as well considering they are biggest gold producer. With labor, oil and energy currently cheaper this year than last the cost of mining has dropped but ironically many of these companies have done no better with the pog higher because of other factors such as currency risks, derivatives, political risks, lack of infrastructure, environmental risks, banks not lending as easily, etc. How does the $300/oz cost look when the national govt decides to take back "their" mine or pull the operating permit? There will be much more of that coming down the road as nations compete for key natural resources in a declining business environment, especially those nations who don't value contracts or personal liberties all that highly. Higher oil and labor prices in 2007-2008 had many mines working at $600-$700 net cost per ounce.
And let's think about the ounces that miners really add. With 155,000 tons of gold already mined (5 BILL ounces) what does 1-2% per year additional supply really mean to that tennis court sized cube of gold? It's literally a drop in bucket. While the fiat presses can easily double the cash money supply in one year as happened in 2008, such is not possible with gold. +2% is all your going to get. And world production has been steadily declining since 2001. If not for central bank gold sales/leases/swaps and now pushing CASH4$GOLD scrap sales, imagine where the pog would have gone in recent times. That $300/oz cost only applies to the most current 1.5% of the world's gold supply...not the previous 98.5% that has already been mined, purchased and put away. The cost to print a US $20 bill is negligible and certainly not 30+% as with gold.
One would think that if the gold mining business was so easy and profitable that everyone would be doing it and world production would have been on the rise with the pog since 2001. Doesn't supply always rise to meet demand? Such is not the case here. While Plat and Pall are much rarer than gold and somewhat similar in properties, their own rarity tend to keep them from being effective monetary metals (i.e. 25-30 tons mined per year of each vs 2000+ tons for gold). But over time I could see both of them shadowing the gold price even if their industrial and medical demand remains constant.
roadrunner