The problem I have with the charts is that supply and demand don't balance, which is impossible. The difference goes someplace, either into investment inventories or some other applications not listed. Or maybe the charts are just wrong.
The way I interpret the charts is that they show the fundamental (non-Investor) Supply and Demand...so the difference is Investor demand. If Investor demand decreases, the charts suggest that prices will adjust to reflect the Supply and Demand Fundamentals. 1. One way to look at the PM market is that the slowing non-investor demand is the result of the slow economy. A weak dollar and resurgent economy may have additional upward pressure on PM prices. 2. On the other hand, if the government is forced to raise interest rates to defend the dollar, that may strengthen the dollar, further weaken the economy, and likely pull the rug out from under current PM prices. What do you think will happen to PM prices? ...or is there a third possiblitity I didn't list? encil:
I think gold and silver prices will continue to rise in an irregular manner. In a bull market, prices tend to move much higher and for much longer than people expect -- including the experts. Right now, almost no mutual funds own many gold mining stocks, and almost no pension or other institutional funds own gold bullion. All of the silver bullion available for delivery to investors probably has a total value of less than $20billion. This is a miniscule amount of money in the investment world. When money managers hold their annual client meetings this year, the clients are likely to ask them why they don't own gold/silver since it is one of the best performing asset classes. You can bet they will correct this situation to avoid client criticism. I'm not sure that industrial use or interest rates will stop the bull market in metals. Investment demand will overwhelm industrial demand and macroeconomic policy, at least for awhile.
