ghostwriter, how much profit would a typical gold miner earn if the gold price was $3000? Think about that for a moment and then ask yourself a question. Why would professional funds and traders line the pockets of gold miners by contributing to excessive margins to own what miners produce? A corollary is: is gold an essential commodity to advance society? Another corollary is: is iron ore an essential commodity to advance society, is grain and essential commodity to advance society? And so on...
Now something that is essential to ensure the advancement of society and/or the survival of people would surely have an upper price limit only constrained by supply. People will pay what it takes (within their capacity to do so) to own something that is essential.Gold doesn't have those qualities. It is not essential. Therefore no professional fund or trading desk is going to pay what it takes to own something that is not essential. There is a theoretical limit to what professionals will pay for a non-essential and that limit is closely attached to what it costs to ensure an ongoing steady state of supply.Forget $3000, even forget $2000 in the near term.
Gold will eventually get to prices dreamed of today in decades to come. That will be driven solely by increasing mining costs in line with inflation. A reasonable margin on offer to encourage ongoing mining and exploration but nothing more than reasonable to keep an industry going to supply those who like jewelry and a tiny bit for technological use.
A game changer for gold would be if a new technology was discovered to produce something that is considered essential to society. Without that need the gold price will continue to be a speculative trade where professionals work behavioural investing to its limits inducing unsophisticated to buy and sell at the wrong time and thus profit from ill-informed.
