London-based Natexis Commodity Markets says that gold can not stay above US$600, citing a 4% supply increase this year. They also believe that the scrap gold market is starting to sell off their gold holdings accumulated over the years that gold was artificially low versus the dollar, increasing the supply of available gold. Should the supply outweigh demand, we would see the price drop. Fin24’s article also talks about the jewelry demand decreasing as the price goes up, but ignores one of the fundamental facts of any fiat currency market: just because prices go up doesn’t mean that real costs are higher. If the inflation of the currency base keeps growing, prices have to go up. Yet with prices going up, so does the money supply, meaning people in general should have more money to buy at the new prices. Read this entire article at the gold investment site.

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