ML-Implode News - Mainstream Gold Analysis is Fundamentally Wrong -- Here's Why

Market participants often describe the supply and demand outlook for gold as they would for oil or grains, or flow commodities. And with their marginal demand framework, it may appear that a fall in near-term demand for this `speculative commodity' presents a limitless floor to prices. Or as one trader put it, "gold has a big door in and little door out when fearful investors and gold bugs are the primary demand for this speculative asset [a `useless commodity' without income or yield], and there is always infinite ETF supply to be dumped onto markets when demand turns and the market goes `no bid'"...
We believe this consensus analytical framework is wrong and largely irrelevant and can be falsified by both data and logic. Instead, it is our view that the approximately $8 trillion dollars-worth of global gold inventory is actually being valued and demanded by its holders as an alternative yet permanent money stock with potential advantages to fiat currency-based savings depending on the outlook for real yields in one's base saving currency. Gold is simply a liquid real-asset with no time decay, no real cost of carry and no counter-party risk, yet it is scarce, has great elemental utility and an energy-intensive replacement cost.

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Mainstream Gold Analysis is Fundamentally Wrong -- Here's Why