Old News for Gold Bugs
Source: The Daily Reckoning, Mogambo Guru (2/10/09)
"In the case of gold, supply was down by 88 tonnes last year and is still going down, while demand is going up, and under which there is a rising 'floor' price as the costs of gold mining are mounting. . ."
And this is just part of the good news, as "There are many other gold bullion-holding funds in the developed world from Canada to Switzerland that are not included in this total. If they were the total would be approaching 1200+ tonnes. Clearly we are seeing a stampede of institutional fund management into gold at present!"
One of them is the Central Fund of Canada, the top-performing trust in Canada (up 117% in 3 years!) and which holds only gold and silver bullion, is selling another giant swath of shares to get the money to, as I understand it, buy another big potload of precious metals, which is not that remarkable, I guess, except for where the underwriter, according to the press release, "Exercises Its Right To Purchase Additional Class A Shares", which made a big impression on me for some reason that I don't understand, but I sense that "somebody knows something."
To keep things in perspective, Mr. Philips reminds us to "Bear in mind that at $900 an ounce, one tonne of gold costs $29 million, so far." But even he admits that gold really hasn't gotten up a good head of steam yet, as "With global pension fund assets estimated at $18.6 trillion by the end of 2005 only a tiny proportion of that amount has entered the gold Exchange Traded Fund market so far. So the 1200 tonnes held in this manner represent only $34.8 billion or 0.19% of these pension funds assets [there are many other types of funds other than Pension Funds, as well]. Quite a way to go before gold makes a dent on these portfolios."
And it is the same thing with silver, as I learn from an essay at SilverMiners.com titled "Gold Mine Production Down, but Costs Up 24% Worldwide." The article tells you everything you need to know about the future price of gold, assuming you already know that the price of everything is determined by supply and demand. In the case of gold, supply was down by 88 tonnes last year and is still going down, while demand is going up, and under which there is a rising "floor" price as the costs of gold mining are mounting, and will continue to mount as long as the corrupt socialist bastard morons running the world continue to increase deficit-spending by governments, and as long as the corrupt socialist bastard morons running the central banks continue to create the money and credit to finance the damned deficit-spending, which causes higher prices!
Last year, investors experienced shortages of the smaller wafers and coins, with premiums running as high as 10% to 40% for gold and 30% to 100% for silver", which may have been what led Citibank to predict that gold could soar to "$2,000 an ounce sometime in 2009.