Shouldn't gold have an inflation rate?

[SiliconToad]

My understanding is that somewhere between 1-2% of the total above-ground gold supply is mined each year. The numbers can vary based on the source, but something like 3000 tonnes are mined in a given year that is added to a 190,000 tonne supply. Given that gold has less industrial use than other precious meals, what is mined is largely still available. So it seems to me there should be a downward price pressure from the addition to supply over time (say 1-2% per year), but I don't really see anyone talking about this so there must be something else at play here. Does anyone here have thoughts on this?

[Lr103]

Remember though the that global population has also increased at between 1 to 2% per year, and 1% of 7.7 billion is still a huge number.  Neither the population growth rate, nor the rate at which gold is mined, is likely to be linear over time, however it must be factored in when trying to determine an inflation (or deflation) rate for the price of gold.

https://www.worldometers.info/world-population/

 

[mr-dead]

Increasing population especially in countries like india & china that value gold.

increasing money supply, especially with QE.

Above ground supplies are not available supplies as central banks and private investors horde it away.

Supply traded massively exceeds physical metal available with comex leveraged at about 250 paper oz to 1 real oz of physical metal

[HawkHybrid]

similar to all other commodities gold has a cost to

mine which is increasing over the long term. the 1-2%

that is added to the above ground gold reserves does

not come free of charge. in this sense it's not a dilution

of the existing reserves when new reserves are added.

 

HH

[Gildeon]

21 hours ago, mr-dead said:

Increasing population especially in countries like india & china that value gold.

increasing money supply, especially with QE.

Above ground supplies are not available supplies as central banks and private investors horde it away.

Supply traded massively exceeds physical metal available with comex leveraged at about 250 paper oz to 1 real oz of physical metal

And also a rising middle class in these countries, which can afford some gold now comparing to the past.

[Avrocarr]

The world is getting richer as economic growth occurs. That wealth is either spent or saved. Part of the ‘saved’ part will go into gold. India, China & Indonesia have huge (growing) populations and high savings rates. Gold isn’t ‘consumed’ but there is a finite amount available (above or below the ground). 

[sixgun]

Price in a free market system is determined by supply and demand. 

We hear about the increased demand from central banks - there is demand which goes unspoken. All the smuggled gold, the gold that enters the Chinese system and is not declared by the banks/government - the gold that is mined in China and Russia and can in effect be discounted as it never leaves the country or enters the general circulation. 

So the supply if judged on the basis of new gold is effectively less than it would appear at first sight. There is also the issue of gold which is counted several times over. In London gold can be rehypothecated to infinity. It can be and has and is being used as collateral many, many times over. There are many who think they have gold in (unallocated) accounts but there is nothing there - the gold is an asset of the bank and that gold is long gone if it ever existed. There is in effect a gigantic deficit in gold. 

Then you are pricing your gold in fiat and of course the governments and banks have been churning out fiat like there is no tomorrow. The increasing money supply is inflation - the extra cash dilutes the value of cash in the system. There is inflation out there - the official figures tell us it is 1 and 2% but observation says otherwise. The undeclared inflation rate i believe is more than 5%. Various cost of living indices put it at north of 10% depending on where you live. The cost of mining is not immune from this - so just to keep up, the price of gold should be higher and that it isn't is reflected in the fact some miners, especially the primary silver miners are struggling.

So why isn't gold at higher prices? Well we then enter the territory of price management or shall we call it manipulation. These things always come out in the wash - there will be a catch up. There will be a reset where precious metal is revalued. The big issue is that gold and silver are money - they are traded currencies. This is why there is so much focus and comment on them. However much it might be denied or ignored - gold and silver are traded forex currencies and their price should expose how much fiat currencies have been watered down by endless printing. The banks and governments don't want that to be exposed - some don't want gold to re-enter the Western public consciousness as money b/c a lot of the West's gold is now sitting in vaults in Asia.

[Davesmedals]

The 3000 tonnes a year are comfortably being bought by World Banks, China bought 240 tonnes in 2018, and most countries are scrambling to get their Gold reserves up again, even Turkey who last year saw the value of its currency hammered bought over 50 tonnes of gold.

If anything 3000 tonnes is probably not enough to satisfy world banks, so the price should be rising, This is were the manipulation comes in. World banks want to buy Physical Gold and therefore manipulate the price by selling large amounts of paper gold on Comex which keeps the price low.

As the world banks have been printing money (QE) They can play this game as long as they can get away with it.

[vand]

Historically, on a gold standard the value of real money has risen in real terms because the real economic growth has generally been higher than the growth of the money supply. This is one of the arguments used against the gold standard; the money supply can't expand as fast as the the economy grows, therefore it introduces price deflation