We are told that every year between 3,000-5000 tons of gold are mined annually, approximating for discussion purposes around 100 million ounces. How can this not have a big impact on gold's price, even if just subtly and under the radar? The gold bug folks never discuss this and many of them appear to think gold is finite. I guess one could say the purchasing power of the dollar fades faster than the increase in gold production but I never see this discussed. Do you consider this annual production reality (as a fundamental, not chart aspect) a factor or a no big deal thing?
It's a big deal if the money supply is under control. Gold went from $875 to $250 from 1980 to 1999 because annual inflation rates were reduced over time. If gold supply is the yardstick for inflation and the dollar is similar, then the dollar is behaving "like gold" and therefore we'd expect people to dump gold and hold dollars instead.
Annual mine supply is small next to investment demand/supply though. As a share of physical trading, it might only be about 5% of total trading in a year. That's not counting futures markets. As a share of paper gold, mine supply is a rounding error. I'd have to double-check, but Grok estimates annual gold turnover is about 2.5x the total worldwide physical stock. A change in investment demand in either direction will swamp mine supply.
We are told that every year between 3,000-5000 tons of gold are mined annually, approximating for discussion purposes around 100 million ounces. How can this not have a big impact on gold's price, even if just subtly and under the radar? The gold bug folks never discuss this and many of them appear to think gold is finite. I guess one could say the purchasing power of the dollar fades faster than the increase in gold production but I never see this discussed. Do you consider this annual production reality (as a fundamental, not chart aspect) a factor or a no big deal thing?
It's a big deal if the money supply is under control. Gold went from $875 to $250 from 1980 to 1999 because annual inflation rates were reduced over time. If gold supply is the yardstick for inflation and the dollar is similar, then the dollar is behaving "like gold" and therefore we'd expect people to dump gold and hold dollars instead.
Annual mine supply is small next to investment demand/supply though. As a share of physical trading, it might only be about 5% of total trading in a year. That's not counting futures markets. As a share of paper gold, mine supply is a rounding error. I'd have to double-check, but Grok estimates annual gold turnover is about 2.5x the total worldwide physical stock. A change in investment demand in either direction will swamp mine supply.
Very interesting-thanks!