Turk – Blumen, on Gold Supply and Demand
James Turk talks with Robert Blumen on gold supply and demand. Blumen says that mine supply is a non-issue due to the amount of gold already above ground.
He says that gold functions as a “shadow money” as insurance if the current monetary system fails, because anything that would replace it would involve gold as money.
The introduction to this podcast reads: “Gold supply and demand dynamic have been analysed by countless people over the years, but according to Robert Blumen -- a software developer and a popular writer and speaker on Austrian economics whose writing has appeared at the Mises Institute, LewRockwell.com, and Financial Sense -- too many people focus on annual mine supply as an important factor in the gold price discovery process. As Blumen notes, annual gold mine supply is equivalent to just 12 trading days of LBMA transactions. This is reduced to just a few days when counting all the major gold trading venues around the world.
Turk and Blumen discuss how gold is not just another commodity, because -- in contrast to the likes of oil, corn and copper -- the total aboveground stock of gold is being added to all the time. Gold is not used up or destroyed. This is why annual mine supply (at just 1.8% of total aboveground gold) exerts so little influence on the gold price. James Turk argues that gold should not be considered as an "investment", as it does not generate a cash flow. Both men differ slightly on the question of whether or not gold can be considered "money".
This podcast was recorded on 2 July 2012.” (About 20 mins.)