What is the Spot Price?
No matter how much gold you own, when you need to pay your taxes, your rent, or your groceries, you still need to sell gold to buy dollars. The dollar remains the only viable means of exchange. It’s as simple as that. And this is happening in real-time, on a global scale, in multi-billion dollar transactional volume.
Gold as Safe Haven?
This begs the question: why, then, is gold perceived as a safe haven asset? Gold’s strength is popularly based on the notional price of gold in dollar terms. But price is not the same as value. Just as in 2008 following the Lehman Brothers collapse, when gold fell from a peak of $1,000/oz to $740/ounce in a liquidity squeeze, gold’s value relative to the S&P500 now (as it did then) is increasing. In other words, in this sell off, it takes less gold to purchase the same dollar amount in equities. Gold is strengthening on a relative basis. Price is not the same as value.
But What About All of the Retail Demand?
Even if all of the mints of the world could collectively output $1B of newly minted retail gold product per day, it would still represent only 1% of daily global trading volume.
The arguments about whether or not the gold price is manipulated, or whether there is enough gold backing all of the derivative contracts, or whether the gold price should really be this or that price, are all red herring arguments. They are no doubt important debates for long term consideration, but they are not directly relevant to why the gold price is not moving today because of retail gold coin demand.
The simple answer is math.