The dollar dropped about half a milligram gold, and 50mg silver.

But who wants to read about the universal currency falling, failing? Few people are so barbarous as to think of the dollar’s value as being priced in terms a monetary metal. As all right thinking folks know, the value of these commodities is only whatever dollar price they may fetch. In that case, it’s more exciting to report that popular betting commodities are back in a bull market.

“Gold went up $21 and silver went up $0.20.”

OK that said, what we are always interested in is the fundamentals. Every week, we say, “read on, for the only true picture gold and silver supply and demand fundamentals.” What do we mean by that?

Are Americans selling and China buying? How about Russia, India, and Turkey? We don’t know if these trends are still true (or how true the reporting was when it was fresh). We do know that often by the time the retail speculators are ready to buy based on these stories, the market price has already moved, and the opportunity is gone (or the price has even overshot).

What if we divided the total money supply by the total (known, assumed) gold stocks? Would that tell us the right gold price? The resulting numbers of $5,000 or $8,000 or $30,000 are just wishful thinking. Nothing in the economy can be determined by dividing one aggregate measure by another.

Virtually every ounce of gold ever mined in human history is still in someone’s hands. All of that metal is potential supply, at the right price and under the right conditions. However, we respectfully suggest that this is not bloody likely under current conditions.

Virtually everyone on the planet represents potential demand, at the right price and under the right conditions. This is the more likely scenario. What conditions are those? What if people fear that their counterparty (e.g. a bank) could default or impose “haircuts”? Then all bets are off, literally. You may see your heart’s desired gold price, but be careful what you wish for…