Lets talk silver. Unlike gold, silver has far more industrial uses. It is a mined product primarily, with some supply coming from recycling. But it is not a perishable market like food commodities, there is a lot sitting around in warehouses.

What ER is getting at, I think, is that the supply / demand equation is manipulated. All the time. It is not a pure equation. There are many variables. Mostly human greed.

Back to silver as an example. In the early 1980's, the oil rich Hunt brothers decided to take control of the silver market by increasing demand. They bought all the silver they could get their hands on and then started borrowing money to do it. That silver has to be stored and actually doesn't get transported all that much, because it's heavy. So just the name changed on the paperwork. Storing it costs money.

Silver prices skyrocketed. Major players who held shorts on the market were threatened with calls on their positions. Normal people stood in line to sell their grandmother's silver spoons.

Other investors found themselves in a weird place. Their silver was held by a broker in unallocated accounts. When they tried to cash in, they found that the brokers didn't actually have any silver, just a weak promise of silver. The demand was there but the supply was an illusion. Things got so weird that the commodities market changed the rules in the middle of the game. The Hunt brothers got wiped out. Silver prices crashed as fast as they had climbed.

That's a quick description of a very complicated event. I don't grok it entirely but the lesson is clear: commodities are not what they appear. A fair amount of it is illusion. Supply is manipulated. Demand is manipulated. Futures markets, shorts, and other financial techniques muddy the water. "Whatever the market will bear" is true, but the market has tricks, and it lies.

I have some investments where the company is buying back its own shares, thus keeping the price high. Sure, they are decreasing the supply of shares available. But it is because the demand isn't there. Just the illusion of demand.

Money is an illusion. Currency needs to move to exist. Supply and demand is real, but the smart folks know how to fuck with it to their advantage. Be careful out there.

That's my take.