Learn to write first so I dont have to insert my own nouns into your sentences to figure out what the hell you wrote. And what is "all else being equal" mean? Equal to what? Is that a dumbass clause that you wrote hoping it would clear you later? You didnt clarify anything. Equal to population staying the same? Equal to everything else increasing at the same time at the same rate? You are right...there is a dumbass alert and you must hear it going off all the time since you are standing right next to it.
The value of gold is usually expressed in dollars. If the federal reserve throws into the system a bigger percentage of existing money than the percentage of extracted gold, the price of gold expressed in DOLLARS will go up, all other things equal. If, on the other hand, you express the value of gold in something else, like how much gold you need to buy a new suit, a nice shirt, and a nice belt, you will see that the value of gold has not increased much since roman times (see Murray Rothbard's books on mises.org), just keeping up with the increase in stockpiles. This is one of the characteristics of a commodity suitable to be a medium of exchange - it has to be scarce. If it wasn't, people would not use gold as money.
Mined gold is finite, unless you have some of that Chinese tungsten , money can be created electronically quite easily. Besides if there was a surplus in physical gold they could easily keep supply off the market like DeBeers with diamonds. As mentioned in the last few months I don't believe there is enough physical gold to satisfy all of the traded gold related instruments, GLD, etc.
Tungsten is actually quite rare as well if not more rare then gold itself. Any good tips on tungsten miners would be much apreciated.
Thanks for the FYI. I didn't know that. The first chart came up looks quite correlated to the other metals, makes sense. http://www.infomine.com/investment/historicalcharts/showcharts.asp?c=tungsten
In your post there are a math and a data problem. I will correct both: 1. Data: The actual size of the new gold is more, about 2500 tons. That would make it 1.5% inflation as I quoted earlier. 2. Even if we use your data, 1.21% is actually MORE than 1.13%, so more new gold were created than humans, thus gold worths LESS, compared to the population. For extra credit: http://en.wikipedia.org/wiki/Gold_standard#Disadvantages
thus we can assume part of the rise in gold is speculative. Too many news stories about gold. If they start increasing get out of gold. As John Doe will start buying gold, like in '80
Not necesserily. The above math is just when everything is being equal. The price takes into account demand too, and demand isn't always linear with population. Let's say there is a new battery technology that uses gold as conductor, then we could expect more demand. Or in times of social unrest/wars. The opposite is true in good times when the market does well. (in the late 90s gold went from $400 to $250) In this thread I was just arguing against gold backed money, because of the reasons listed in the link of my previous post...