Official "Science News" Thread

[xilman]

Originally Posted by Dubslow

Umm... no such thing. It was a hypothetical.


(Edit: Whoops )

Eh? Global gold production is not hypothetical

[davieddy]

Originally Posted by xilman

More probably technology and economics but I couldn't find a more appropriate location than here http://www.bbc.co.uk/news/science-environment-17827347

They appear to be realists: "We're in this for decades. But it's not a charity. And we'll make money from the beginning."

I'd call it "Rocket Science"

David

[LaurV]

Originally Posted by bcp19

There is an estimated 2.4 million tonnes in the world, 1000 tonnes would equate to .04% of the current supply, hardly a noteworthy addition.

If Playstation comes out with the PS4 and decides to produce 2.401M units instead of 2.4M units, do you really think the scalper price on ebay would be affected?

[edit: I swear I did not read the last 6 posts when I posted the following text]

In fact, if we want to be correct, what is important is the quantity in circulation, and not the one under the mattress. When you sell iron, you do not count the quantity inside of the walls armature, etc. I understood xilman's point, and theoretically he is right, dropping that ship will decrease the price, more then the 0.04% calculated (excluding the panic, which can take the prices more down then expected). But just for the sake of arguing, and for pointing the difference between theory and practice, let me be skeptical here... Let me believe that practically that ship will not make the price go down. It would not make any difference. There would be some fluctuations in the beginning, but all those gold would go into warehouses, that means not in circulation, and the price - well, you will say I am idiot - will raise in time. After the sharks (smart money) take their bite. Some of the gold could end up on the bottom of the oceans too, or back in space. In '30s people used the cow milk like fertilizer, thousands of tones of it were poured on the fields, to keep its price up, during the overproduction crisis (what you Americans call the Great Depression). The mother economy is a bitch... we are enough old, changed place around the world quite often, and saw this propaganda of supply and demand coming and going over the time many times, same as the one with global cooling/warming, which change every few years according with big sharks interests...

[cheesehead]

Originally Posted by bcp19

There is an estimated 2.4 million tonnes in the world

No way.

Here are three estimates of total gold production for all human history:

165,000 tonnes (http://en.wikipedia.org/wiki/Gold)

140,000-160,000 tonnes (http://ezinearticles.com/?How-Much-G...ld?&id=3525066)

4.25 billion ounces (132,000 tonnes) (http://www.gold-eagle.com/editorials...hen011506.html)

1000 tonnes would equate to

0.6-0.76% of the all-time total gold production.

However, it's estimated that 5-15% of all ever-produced gold is no longer available, because of loss or industrial use that irretrievably dissipated it. That would leave between (165,000-5%=157,000) and (132,000-15%=112,000) tonnes now available. 1000 tonnes would equate to 0.64-0.89% of what's currently available.

But not all of what's currently "available" is readily available to be traded on the gold markets in the short term. Many owners of gold jewelry or bullion wouldn't sell it just because another 1000 tonnes suddenly became delivered. So the liquid market is much smaller.

The United States government's official gold holdings are only a bit over 8,000 tonnes -- 1000 tonnes would be about 12% of that. (http://en.wikipedia.org/wiki/Gold_reserve) Do you really think that if the U.S. announced a sale of 12% of its holdings in the near future, the world market price for gold wouldn't drop noticeably?

- - -

BTW, I'm not claiming that 1000 tonnes of gold would crash the gold price.

In post #470, I just asked what might happen to market prices, and said that I'd seen no discussion yet.

In this post, I'm just debunking the claim of 2.4 million tonnes total production (and that all of total production could be supplied to the markets). So, I am implicitly claiming that the effect of 1000 tonnes would be greater than bcp19's dismissive ".04%" figure.

[LaurV]

Originally Posted by cheesehead

Do you really think that if the U.S. announced a sale of 12% of its holdings in the near future, the world market price for gold wouldn't drop noticeably?

That is very well put argument, and very well written post, generally. We can forget the ships with gold and stay on this (equivalent) one. What would happen if US announces selling out of 12% of gold reserves?

Paraphrasing you, this post is to stress out more then already done, my nerd opinion that not so much will happen on the gold market if that event will occur. Some small fluctuations we could witness, BEFORE the announcement (weeks), during, and after, then the price will raise OVER the price during the announcement price, and it will stay OVER.

Why?!? Because there are always smart money who know "before". They will sell at actual (higher) price.

[edit: eventually, we will witness a big propaganda few weeks before, about how good is to own gold, so a lot of dummies would buy and price will raise. US treasury people are not stupid to sell lower if they can sell higher. End of edit].

First who will jump to buy would not be the smart money, but small traders. Eventually heavy leveraged. They will be fried, by a drop. In the moment of the announcement everybody will say "wow! that is why it drooped, US is selling" and will jump to sell. In that moment I will wait few days and I will buy. The smart money will do the same, buying back at lower price, to cover what was sold at the higher price. They would make profit and have the same gold.

After a while, when the panic is gone (because if there is a buyer, the things will stabilize and the panic will be gone), the price will raise more then 13.67% and it will stay there.

People do not realize that - contrary of selling artificially created shares and paper money - you can not sell artificially created gold, or you can, but not for long. "You can fool some people sometime, but you cannot fool all the people all the time". You can not artificially maintain the panic when you talk about physical goods, as metals, oil, potatoes (commodities). If the price drop too much, people preffer to hold the goods in the warehouse. Especially gold, which does not evaporate like the gasoline, and it is not perishable like lemons or onions.

After the fluctuation pass, the US treasury would have less gold in the warehouse, but valued at exactly the same amount of money as before (100-12)*(100+13.67)=100%, some smart money would have closedin some small profit, and still hold open trades in profit in the money (it would be difficult to close them, as no one would buy there, but no one could force them to close if they won't leverage too much), small fish are fried and everybody is happy.

Nobody would like a "gold deflation", "gold crisis" whatever you wanna call it.

Of course, a gold deflation has to come, because the prices of gold are ridiculously inflated in the last years, without any fundamental reason. But this deflation will come (=it has better chances to come) without any US announcement, or with an announcement they wanna BUY. Some stupid fish have to be fried, and without a smelly bite you can fry no one.

[cheesehead]

Originally Posted by LaurV

What would happen if US announces selling out of 12% of gold reserves?

IIRC, Britain did sell a nonneglible portion of its gold a few years ago. One could look back at what happened then.

Paraphrasing you, this post is to stress out more then already done, my opinion that not so much will happened on the gold market if that event will happen.

Also, the arrival of 1000 tonnes from asteroid mining would be no surprise; the markets would have anticipated the effect (futures contracts, etc.) -- unless a meteor strikes the ship just before reentry, the ship tumbles out of control, and it dumps all the gold into an ocean.

Perhaps an analogy with 16th-17th century British/Spanish/French treasure fleets returning from the New World: some folks would bet on the ship's return -- not only when and how valuable, but also _if_. Early telescopes provided an edge to someone who'd look out for the returning ships from some high place.

Modern telescopes and the Internet could allow ordinary folks at home to keep a constant vigil on space-mining craft. Renting time on automated telescopes to get images remotely has been available for several years.

[LaurV]

Well, I totally agree with the last part of your post ("no surprise" part, onwards). I miserably missed that in my judgement of the situation.

I disagree with the part where BOE selling gold influenced the market. They didn't have any word to say. Their action followed the market, which followed Vietnamese's announcement (and legislation) about stopping gold imports. You will not find too many things on the press about that, but believe me, I was into it that time, with my few cents. [edit: you may google for "vietnam gold import" or "vietnam gold ban", at the time as well as now, they were and they are the biggest gold importers, together with Korea, but they use the gold to make bellybutton rings (jewelery) contrary to Koreans who produce the most part ow the world integrated circuits with it].

Britons always like to believe they are the alpha and omega of all the things. They are not. :P

[Dubslow]

Originally Posted by LaurV

Britons always like to believe they are the alpha and omega of all the things. They are not. :P

Americans have inherited and mastered that particular trait

[LaurV]

That was mainly a joke, I could say that about every nation (including Romanians) and it is fun to say it. I usually say it to stress the fact that the things are more complex that they appear. Sorry if I involuntary "hit" the proudness of some Britain nationals.

Edit: Here the Peter Schiff's book I mentioned before, there are nice audio versions on the torrents. Everybody should read/watch/listen to that book. There are no high prerequisite required like "doctor in finances" or "phd in economy" to understand it. It is written for my daughter (that is why I like it, it is close to my level :P)

[Brian-E]

Sometimes, when I'm trying to fit human activities and endeavours into a wider picture of what we are all trying to achieve, I like to imagine an intelligent civilisation observing us from its base elsewhere in our corner of the milky way. I ask myself what that civilisation would think of what we are doing.

Now if I think of other intelligent life watching us venture out with our robots to the nearby asteroids, gathering gold there, and returning it to be stored and added to the large quantities of the same metal, mined from our own planet, in bank vaults to be used as bartering material, I have serious difficulty imagining how they would make head or tail of what we are doing. If they captured me and asked me to explain it to them, I wouldn't be able to do that either.

[science_man_88]

Originally Posted by cheesehead

No way.

Here are three estimates of total gold production for all human history:

165,000 tonnes (http://en.wikipedia.org/wiki/Gold)

140,000-160,000 tonnes (http://ezinearticles.com/?How-Much-G...ld?&id=3525066)

4.25 billion ounces (132,000 tonnes) (http://www.gold-eagle.com/editorials...hen011506.html)

0.6-0.76% of the all-time total gold production.

However, it's estimated that 5-15% of all ever-produced gold is no longer available, because of loss or industrial use that irretrievably dissipated it. That would leave between (165,000-5%=157,000) and (132,000-15%=112,000) tonnes now available. 1000 tonnes would equate to 0.64-0.89% of what's currently available.

But not all of what's currently "available" is readily available to be traded on the gold markets in the short term. Many owners of gold jewelry or bullion wouldn't sell it just because another 1000 tonnes suddenly became delivered. So the liquid market is much smaller.

The United States government's official gold holdings are only a bit over 8,000 tonnes -- 1000 tonnes would be about 12% of that. (http://en.wikipedia.org/wiki/Gold_reserve) Do you really think that if the U.S. announced a sale of 12% of its holdings in the near future, the world market price for gold wouldn't drop noticeably?

- - -

BTW, I'm not claiming that 1000 tonnes of gold would crash the gold price.

In post #470, I just asked what might happen to market prices, and said that I'd seen no discussion yet.

In this post, I'm just debunking the claim of 2.4 million tonnes total production (and that all of total production could be supplied to the markets). So, I am implicitly claiming that the effect of 1000 tonnes would be greater than bcp19's dismissive ".04%" figure.

well using the low estimate of the availability I would expect the price to go to: about 99.1% of the current price based on the fact that 112000/113000 -> around that percentage. that means if gold is $1000 / ounce I would expect around a $90/ounce drop leading to a drop of about $1080-$1440 / pound depending on which pound is used.