{"id":11137,"date":"2015-08-17T07:24:27","date_gmt":"2015-08-17T12:24:27","guid":{"rendered":"http:\/\/olduvai.ca\/?p=11137"},"modified":"2015-08-17T07:24:27","modified_gmt":"2015-08-17T12:24:27","slug":"why-is-gold-becoming-scarcer","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=11137","title":{"rendered":"Why Is Gold Becoming Scarcer"},"content":{"rendered":"<h3 class=\"art-postheader\"><a title=\"Permanent Link to Why Is Gold Becoming Scarcer\" href=\"http:\/\/www.acting-man.com\/?p=39345\" rel=\"bookmark\">Why Is Gold Becoming Scarcer<\/a><\/h3>\n<p><strong>A Tight Market<\/strong><\/p>\n<p>For quite a while, we have been talking about scarcity in gold. The\u00a0<a href=\"http:\/\/monetary-metals.com\/?p=1974\">cobasis<\/a>\u00a0for both October and December is positive. These contracts are\u00a0<em>backwardated<\/em>. The cobasis for the February 2016 contract is not far from backwardation. The gold market is tight. Why? Let\u2019s explore.<\/p>\n<p>Part of the matter is that the price has fallen. The more the price drops, the more buyers tend to come out, and sellers go away.<\/p>\n<p>We do not refer necessarily to the mines. Once the capital is sunk, a mining company is a price-taker. Management has little choice but to extract what it can, and hope the quantity produced times the profit available at a given gold price is enough to pay the fixed expenses such as debt service (well, if they don\u2019t have a proper hedging program, which I wrote about\u00a0<a href=\"https:\/\/monetary-metals.com\/selling-low-and-buying-high-hedging-by-the-gold-miners\/\">here<\/a>\u00a0and\u00a0<a href=\"https:\/\/monetary-metals.com\/selling-low-and-buying-high-hedging-by-the-gold-miners-part-ii\/\">here<\/a>). Gold is often produced as a byproduct when mining for other metals, and this production depends on the profitability of the main metal in the ore.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-39353\" src=\"http:\/\/www.acting-man.com\/blog\/media\/2015\/08\/TUC2004-252sunnygold.jpg\" alt=\"TUC2004-252sunnygold\" width=\"640\" height=\"534\" \/>Native gold in quartz \u2013 from the Dixie Mine in Idaho Springs<br \/>\nPhoto via silvertongold.org<\/p>\n<p>For thousands of years, the market has absorbed all the output from every mine. If the quantity theory of money were true, gold would be a worthless commodity. Unlike everything else (except silver), the stocks of gold held by the people are a large multiple of annual production. There is no such thing as a\u00a0<em>glut<\/em>\u00a0in gold.<\/p>\n<p>The lower price is not the only factor. The price of silver has fallen more than the price of gold. However, while there is backwardation in the September silver contract, there\u2019s nothing even close in December much less 2016.<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Why Is Gold Becoming Scarcer A Tight Market For quite a while, we have been talking about scarcity in gold. The\u00a0cobasis\u00a0for both October and December is positive. These contracts are\u00a0backwardated. The cobasis for the February 2016 contract is not far from backwardation. The gold market is tight. Why? Let\u2019s explore. Part of the matter is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[6275,8183,374,8182,7957,8181],"class_list":["post-11137","post","type-post","status-publish","format-standard","hentry","category-economics","tag-actingman","tag-backwardation","tag-gold","tag-gold-scarcity","tag-keith-weiner","tag-tight-market"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11137","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11137"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11137\/revisions"}],"predecessor-version":[{"id":11138,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11137\/revisions\/11138"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11137"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11137"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11137"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}