Absurd Idea of the Day: "We are Running Out of Gold"

For the second time in recent memory, concerns have surfaced about the supply of gold. Let's investigate.

ZeroHedge reports Another Billionaire Warns "We're Running Out Of Gold".

The idea is ludicrous.

I do not blame ZH, he has a business model of posting controversial stories regardless of source. Who am I to argue with that business model?

The original story comes from Simon Black at Sovereign man. The "another billionaire" story also comes from Simon Black.

One does not have to read the articles to understand how absurd the headlines are.

Nearly every ounce of gold ever mined is still in existence.

Thus, the physical supply of gold increases every year. Yes, the profitably-mineable gold diminishes every year, but the actual physical supply rises every year.

Why? unlike silver and copper, gold is not used up. It accumulates.

There is no shortage of gold.

In fact, the World Gold Council says there is 190,000 tons of gold with still more in the ground.

The higher the price of gold, the more gold can be extracted. At $10,000 an ounce (not a prediction), the amount of in-ground gold will jump significantly.

The in-ground value is meaningless to the discussion actually. The significant fact is the supply of gold is $190,000 tons and rising.

Anyone who believes we are "running out of gold" is totally clueless. Moreover, spreading falsehoods to support of one's position never does any long-term good.

Mike "Mish" Shedlock

Comments (19)
No. 1-19
BornInZion
BornInZion

Nearly every ounce of gold ever mined is still in existence." // How is this not also the case for copper or silver? How is it that those minerals are "used up" in ways that lead to their destruction?

killben
killben

Copper could be used in tubes, wires etc. After some time they might be replaced. In this manner destruction could happen.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

Silver is used up in ways it is not profitable to recover. Same for copper. Gold has extremely little industrial use, next to none. It is used in jewelry but that is easily recoverable.

Tengen
Tengen

This scarcity argument is usually made for silver, since it has widespread industrial usage, especially in electronics, plus the gold/silver ratio has hovered above historical norms.

After digesting these arguments, people eventually learn to laugh at the heavily manipulated COMEX. Anyone who invests in gold/silver should take possession of physical with the idea of holding, not trading paper or speculating.

Tengen
Tengen

Mish- "I do not blame ZH, he has a business model of posting controversial stories regardless of source. Who am I to argue with that business model?"

I'm inclined to take issue with the ZH business model of late. Since Trump's inauguration they have used him as endless clickbait. Sure, everybody talks about him, but ZH delights in every Twitter fight, every Stormy Daniels/mistress story, and every celebrity diss. It's barely a financial site anymore, more like something you glance at dismissively while waiting in a supermarket checkout line.

Realist
Realist

ZH is the equivalent of the National Enquirer. Mostly fake news and sensationalism. I guess if you have a lot of time on your hands, with nothing better to do, you can have a glance. I haven't looked there for at least a year. Mish, on the other hand, tries to provide factual and relevant info. Though of course, even his business model has to have a little bit of sensationalism.

Porschephile
Porschephile

I think the point of the original article was not that above ground gold is getting scarce, but rather large discoveries are no longer commonly being made so going forward there might be less new gold available thus the price may rise.

ReadyKilowatt
ReadyKilowatt

A thought, without reading the source article. Seems to me if the case is made that industrial use of gold is driving the drain on supply, engineers will come up with an alternative. This has happened already with lead solder being outlawed, first in California and then the EU and now pretty much everywhere. An alternative was developed that is much more environmentally friendly, although it has other tradeoffs like growing "whiskers" that can eventually lead to short circuits. If gold becomes scarce enough to drive up the cost to unsustainable levels, someone will start to use an alternative, one that might be a compromise in other ways but still useful. Less use of gold in electronics means more gold available for other uses. Which means stable supplies.

thimk
thimk

trust but verify.

Escierto
Escierto

I used to read ZH for an alternative POV but it's become a complete garbage site that is hardly worthy looking at. From looking at the comments the only people left there are neo-Nazis and the mentally ill.

Bam_Man
Bam_Man

Not to worry. The COMEX has an infinite supply of "paper" Gold for you to speculate with.

Ambrose_Bierce
Ambrose_Bierce

Yes gold is disappearing, and the price is going lower. The points are thus: The era of Central Bankers on speed dial is over, nations are hoarding their own gold, (Germany) and due to credit contraction the rate at which gold is rehypothecated is also dropping. If money can disappear and gold is moneygso can gold . A central banker is a businessman with a product to sell, if the customers want gilded fiat notes, then the CB will make them. If gold is worth anything and central bankers can print money and buy gold, why wouldn't they? Price discovery in gold is notoriously flimsy. In simple terms there is a lot of exchanging of assets and it all goes through a very tiny window. Like the lens of a camera reality is distorted. It's well worth the effort for Central Bankers to enter the paper market and drive gold prices lower and pick up the physical when the price falls. End game gold is dirt cheap and there is none to buy. Once the majority of the worlds gold supply is closely held as they say, all that remains is the consumer market. The CBs aren't interested in small amounts, so the price can start back up, but here you finally get some supply demand, and after the next financial blowup two realities come into play, one is that no one has any money to invest, and secondly if they do they will want to buy stocks while the FED reflates the markets with new monetary stimulus. 2008 redux, it worked so well, they want to do it again (worried about a crash? that is just ammunition for the bulls) Gold is in short supply which denigrates any economy of scale, the global fiat masters are already reduced to backing their fiat with micrograms of the PM. At the bottom you want to own the miners and the bull market climbs a wall of worry for a long while.

KidHorn
KidHorn

Gold has a few industrial uses. Off the top of my head, polished gold is the best reflector of electromagnetic waves known. That's why satellite heat shields are covered with it. It's also an excellent conductor and very malleable. It has some uses in electronics.

umdesch4
umdesch4

This is true, but except in cases where it's shot off into space, it can also be recovered from such devices, once they've reached an "end of life." Recovering gold from old electronics is a bit of an industry. Of course, the same could be said of silver, but it's usually not a viable return on investment.

shamrock
shamrock

Silver and copper do not get "used up". They may get put into products more than gold but the metals still exist.

Pater_Tenebrarum
Pater_Tenebrarum

Of course - acting man. Unfortunately my deteriorating health doesn't permit me to post as often as I used to, and I have confined myself mainly to market commentary lately (I also publish other authors). In the past I posted on history, economic theory and politics as well, and I intend to get back to broadening the scope again. Anyway, you might want to keep an eye on it.

aaswing
aaswing

Mish, if you had bothered to read the linked article, you would have seen that it's talking about running out of easily mine-able gold, not the actual supply above ground. Your title to this article suggests you are also engaging in the same type of click-bait style language as the linked article.