Podcasts

Robert Blumen debunks gold supply & demand misconceptions

Episode 94: GoldMoney’s Alasdair Macleod interviews Robert Blumen – an independent enterprise software consultant based in San Francisco. They talk about Blumen’s recent article titled Misunderstanding Gold Demand, in which he argues that supply and demand schedules are more important than yearly quantities in determining the gold price.

They talk about Blumen’s interview with James Turk regarding the high stock to flow ratio in gold, and therefore the relatively small importance of additional mine supply when looking at the overall supply-side picture for the market. Blumen points out that the demand side consists of people evaluating what price they want to swap currency for gold and vice versa. As gold is not consumed, the price is therefore a determinant of the motivation to hold gold instead of other assets.

Blumen says that his thinking has been influenced by marginal price theory. They talk about opportunity costs and the Dow/gold ratio, and also discuss whether gold is money and how it limits the power of governments.

This podcast was recorded on 22 January 2013.