Why the price of gold or silver are what they are ?
As for any commodity pricing has to do with Supply and Demand, so let's look at the supply and demand of Gold and Silver.
The apparent consumption for Gold was around 3,518 MT in 2007 and Silver was around 26,242 MT. The yearly world mine production of gold was 2,500 MT in 2007 and it was 20,500 MT for Silver.
Gold and Silver are actually showing a deficit between the Mining Production and the Demand. However, this deficit is cover by recycling old silver crap or gold recovery.
Nevertheless, some people and investors have looked at the long run situation, 15 to 20 years from now, and compared the ratio of Gold:Silver Price and the ratio Gold:Silver Available quantity.
As of today, the ratio is $833/$11 = 6.43 and the quantity to be mined is
42,000 MT/ 270,000MT = 15.6% . A huge difference that might lead to think that in the future the price of silver based on its availability or scarcity and the current price of Gold would be trading at : $833*15.6% = $130 !
Another Perspective would be to say that the price of Gold might be overvalued due to the Recession Environment and the weakness of the dollar.
As for any commodity pricing has to do with Supply and Demand, so let's look at the supply and demand of Gold and Silver.
The apparent consumption for Gold was around 3,518 MT in 2007 and Silver was around 26,242 MT. The yearly world mine production of gold was 2,500 MT in 2007 and it was 20,500 MT for Silver.
Gold and Silver are actually showing a deficit between the Mining Production and the Demand. However, this deficit is cover by recycling old silver crap or gold recovery.
Nevertheless, some people and investors have looked at the long run situation, 15 to 20 years from now, and compared the ratio of Gold:Silver Price and the ratio Gold:Silver Available quantity.
As of today, the ratio is $833/$11 = 6.43 and the quantity to be mined is
42,000 MT/ 270,000MT = 15.6% . A huge difference that might lead to think that in the future the price of silver based on its availability or scarcity and the current price of Gold would be trading at : $833*15.6% = $130 !
Another Perspective would be to say that the price of Gold might be overvalued due to the Recession Environment and the weakness of the dollar.
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