Yes, because the demand would drastically increase, where the supply is evidently gone.
Discussion
revelation? for your response. Can you explain why demand would increase on this revalation?
Because price of gold would increase which would drive demand.
I don't mean to bother you too much, and I appreciate your answers, but there is some circular logic going on here.
At first, you say price would go higher due to increased demand. Then you said demand would increase due to increase price.
I do understand that supply shocks can influence price. However, if the gold in question was revealed to be missing, then current demand is already being satisfied via other stockpiles.
So it seems more nuanced. 🤔
That’s a fair point, I’m no expert by any means.
Me neither. Haha. That's ok. Ty.
What do you think?
Well... 12.75% of the worlds gold is theoretically held in Fort Knox. If all that gold (or a significant portion) was discovered to be missing, it seems logical that a revaluation of gold higher would be necessary... but by how much and according to what market factors is a tricky question.
If demand stays the same, but the known supply is smaller, it seems gold would go higher.
But, all of current demand is satisfied by the actual stockpiles already. Knowing there is less than we thought only plays out psychologically.
So. I am going to assume that a temporary psychological shock would momentarily increase demand, rising prices by 10% or more... and then it would settle back down as market fears calmed.
The other side of the coin says that gold's stock to flow ratio would be decreased.
Current known stock would be decreased while additional gold via mining would stay the same.
That might actually influence gold's price negatively over time. 🤷♂️