The Gold Report: Since you last spoke to The Gold Report in March, the price of gold has collapsed. What happened?
Rob Cohen: Gold has collapsed when compared to the U.S. dollar, but not when compared to other hard assets. For instance, since gold was allowed to float in 1971, its average price ratio per ounce to the price of a barrel of oil has been 15:1. Right now, it's about 13:1, so it's not that far from the mean. We remain a little puzzled by what has happened. Going back to 2008, there's been a strong correlation between the expanding balance sheet of the Federal Reserve and the rising price of gold, but that link has been cut, at least for now.
We have also had some positive economic data out of the U.S.
TGR: Is this positive data really all that positive? Continue reading "Miners Must Mind Their Margins"
The Gold Report: Robert, you presented a paper at the Prospectors Developers Association of Canada conference that focused on, among other things, the uses of gold as a monetary asset. Please tell our readers about that.
Robert Cohen: Gold is quintessentially a monetary asset. Many people believe it is the most ideal monetary asset on the planet, given that the world's other monetary assets are fiat currencies that can be expanded at the whim of a government.
Every ounce of gold ever produced is still kicking around on the surface, a total of about 160,000 tons. Half of that may be in the banking system. Miners produce about 2,500 tons a year. So only a very tiny expansion of liquid gold accrues every year, especially compared to the global liquidity created by printing money. Continue reading "Rob Cohen Imagines a Gold-Centric World"