I again agree with Ivan. Your quoting lengthy passages when you do not give the source, and you "think it is from XYZ" is making you look like an amateur duffer. THIS IS TRUE! ERR, I THINK. I BELIEVE I READ IT SOMEWHERE is a pretty annoying posting style.
I believe almost everything related to gold as money or the Gold Standard have been debated (confronted) and now worn bored. Maybe everything could be found somewhere at mises.org (I seldom visit the site). 1) "limited quantity of gold" - I gave it a little thought and found it is not a problem at all. It is implicit to the simple model I posted in my thread "A Fixed Money Supply Full Gold Standard" http://www.elitetrader.com/vb/showthread.php?s=&threadid=161660 2) "the unequal distribution of gold mines throughout the world" - inequality is the norm with most aspects of human society. Gold is rare which means only a little mined every year. Man's innate ingenuity and creativity is far far greater than that of a little advantage in gold. 3) "that annual commercial consumption of gold outstrips the amount produced each year" - I have read a fair number of gold articles and this is the first time I come across this. Lets say your data is correct and there is an annual shortfall that gradually depletes the above-ground stock. The few factors I consider that may ameliorate the "great damage" : a) the shortfall may be trivial. b) Gold is very expensive and this would limit commercial usage or will encourage inferior, but acceptable, substitutes. c) The problem is similar to every other natural resources we use like crude oil, coal, natural gas, copper, or iron. The absolute stocks are always depleting (does not matter whether above/below ground), but the global economy is still running.
Bullshit. Seriously, do you really want a blow by blow review of how badly you and your model got bitch-slapped? The U.S.and U.K. have already proved that gold standards can be completely subverted by manipulation from external forces. The conclusion that logically follows from that is that a gold standard, to be viable must be subscribed to equally by all trading partners and the economies must be closed to non-trading partners to prevent external manipulation. Now, aside from the fact that variability in living standards, cost of production and costs of labor (direct and indirect) kill the model, once you add an unequal distribution of gold mines to the equation you create a disturbance in the stability of the model since the sovereign entities that control those mines have the ability to "create" money. That, too, kills the model. It's true. The fact is that world banks have been selling portions of their gold stock for years to meet the annual needs of commercial gold consumption due to mining shortfalls. That means you're essentially consuming your own monetary base, ergo, creating inflation, is the penultimate nail in the goldbug's coffin.
If an industry is viable and stable in the long run, it means there is a good use of the input of resources and the contribution to economic production justify all the manner of usage of the resources. When the foundations of an economic system is right, industries that are not viable and stable in the long run will have to make fundamental changes or will die away releasing the allocation of relevant resources. If there is a sector of an economy which cannot in any way be adapted and yet indispensable to the very existence of the economic system, then the fundamental foundations of the economic system, as well as every other sectors, must be changed to adapt to the one sector.
None of these half-religious half-logical reasons on why gold is "a store of value for the longterm" and a "must have investment for any serious investor" will me keep from shorting it should it exhibit strong weakness. As usual, I will likely get squeezed another dozen of times before I "strike gold"
central banks are getting rid of gold as of late. see the balance sheet of the main 4 and check their holdings over the course of last decade. central banks want to hold nothing but currency reserves (all fiduciary) and foreign debt. i wonder why they're replacing gold? because it is safer and valuable when it comes to protect their future. fact is gold no longer serves the purpose it served last century. gold might continue its uptrend but it could crash n burn pretty bad any day soon as there is nothing that justifies its price other than conspiracy theories orchestrated by those that profit from the current price levels.
There was a full page Gold advert in a London morning freesheet today, with multiple references to US government and inflation and wars and anaemic growth, suspect is time to start checking IVs and loading up on puts