Gold futures top $472, levels not seen since 1988

I assume by 50% you meant a 50% increase of the ~~average 2% per year increase in the overall gold supply?

Yes, sorry if that wasn't clear. Not a 50% increase in total existing supply, but a 50% increase in production over the previous year. Growing the existing world supply in absolute terms is severely limited by refinery capacity. Total official unmined reserves are currently estimated as being about the same size as all previously mined gold. Additionally, a big chunk of the world gold stock is sitting in above ground national reserves which could be used to float any sudden change in demand if need be.

Interestingly, about 20% of all the gold that has every been mined has been destroyed to date, irretrievably lost in various fashions e.g. highly diluted in industrial processes such that recovery is not economical.

Additionally, a big chunk of the world gold stock is sitting in above ground national reserves which could be used to float any sudden change in demand if need be.

Its odd to be talking supply and demand when the majority of the world's gold is just sitting around (assuming it hasn't been loaned out and sold short). Even odder is that most of the world's gold is held by institutions that have no discernible belief in monetary gold.

I think they have a lot less then they used to. The GAAT team has forced documents out into public that show lots of secret selling was going on in the last decade to keep gold's price low.

Also the banks use B.S. accounting rules that count gold in possession and gold on loan as identical.

To some extent the gold price rise may signal that the selling of gold by central banks is nearing and end. There is no more ballast to jettison to keep the balloon in the air.

I also view the proposed "sell all the gold in the IMF fund to give money to Africa" a pretty amazing ploy to get the one untapped central bank souce into play. Pathetic on its face.

You're right about the world's supply of physical gold; however the worlds' COMEX markets et al have futures positions and options equal to massively more gold than physically exists. IOW, one can't necessarily "assume" the world's gold supply isn't "loaned out or sold short". There could come a day when a large enough entity wants to exercise their calls beyond what can be delivered. Eg; a short squeeze, if you will. Likewise, a big entity could dump gold and produce the opposite effect.

You're likely thinking "Bunker Hunt"....but there are plenty of entities around that have $700 mil to burn. Some of them are Arabs. The difference though is that several oil-rich Arab nations produce 700 mil in not that much time and unlike Hunt, they have the hard cash to exercise. No margin call; only COMEX limits. Could happen. We could be late into one of those spikes right now. Or, right at the beginning of one. One could say that such price spikes are "peaky", as we just saw with gasoline....and the effect fades, and sometimes dramatically so as with Au/Ag in the last runup. However, it's also possible that a large part of the expected "spike" will stick around for a while. Most of gasoline's spike is still with us. Oil. Gold. Silver, not so much yet. (I believe it will, in time) Copper, lumber. Even before Katrina.

Per this chart, http://www.goldinstitute.org/supply/prodworld.html annual gold production is about 1454 MM troy oz @ Au $470 at 15 troy oz/Kg = 97 MM Kg = $683 MM. More money than I have, but not an otherwordly amount.

I agree with most of your comments, btw.

I happen to think that gold will continue to rise, perhaps considerably more. But I am not advocating speculating in it. I too view it as a long term store of value.

"I've NEVER been able to understand how our monetary systems is based upon gold. you can't eat it, breath it, drink it, drive your car with it,..... its a freak'n hunk of metal worth nothing more than decorating yourself if you're over 50 and extremely vain, and various electrical conductor work. never got it."

Gold and silver are rare. I believe gold comes out to around 5 grams per billion in the earth's crust. And it can't be grown or printed at will (ad the greenbacks in your pocket can). That is why it will always have value, even when our government fails us.

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