I feel a bit like a student disagreeing with the teacher and giving his reasons, knowing all the while that the teacher is aware of the arguments the student will bring, has already considered and discarded them, and will now explain why they are invalid.
Nonetheless, the above are my thoughts on this topic.
I appreciate your kind words, but you are too humble. I find your advice here very worthwhile. If mine is also seen as helpful, then that only makes this a better discussion, since we have opposing viewpoints.
I disagree. If you look back at 2007-2008 you will see what was possibly the greatest amount of speculation in any market ever. Michael Master’s testimony convinced – if not proved – to members of Congress that the $120/bb price tag was the result of speculation. The sheer number of uncovered contracts at the time made obvious the scale of the speculators’ influence in the market. As a result, they sought to enact reforms that prevented speculation. Gold has seen nothing quite like it.
I don’t wish. Cheap oil is not healthy and it’s not sustainable. If we artificially kept the price down somehow, what do you think would happen when (stagnant) supplies didn’t meet (growing) demand? You’d have China, India, and the US fighting for their share. The higher price encourages us to seek better (oil free) technology and limits the demand from poorer countries.
What you are describing would be the result of a very painful deflationary period.
The point is that people are not willing to shift their holdings. It’s financial suicide to park your money in any vehicle right now, as it’s been since 2000. Meanwhile the government has been printing money to pay for various stimulus programs. That causes inflation, which drives people with savings to park their money somewhere inflation proof- i.e. gold, because it’s supply doesn’t change. The logic being that even though I’m not going to gain anything, at least I don’t lose. The value of gold hasn’t gone up so much as the value of the dollar it is priced in has shrunk around it. The only way for the value of gold to come down now is if dollars start disappearing and the value of the dollar goes up – i.e. deflation. A permanent change to the money supply means a permanent change to the price at which gold will find support.
Stagflation is a sad commentary on the work ethic of our society. If our people were willing to work the way our ancestors who built the country did, such a state would not be possible. But that’s a whole other discussion.