Scarcity. It is arguably the single-biggest driver of rising price and when you combine it with strong demand, the results are nothing short of astonishing, or in the case of gold, spectacular.
"I think everything supports the fact that this is yet another buying opportunity in a string of buying opportunities," says Peter Schiff, CEO of Euro Pacific Capital, in the attached video. "In fact, I think this may be the best buying opportunity yet."
Part of his bullishness for the battered precious (GLD) metal is seeded in the fact that he has been a long-standing outspoken critic of the Fed and its unprecedented policies that he feels will trigger runaway inflation and a worthless dollar.
While lots of speculators have come and gone from this volatile market over the past two years, Schiff says real demand for physical gold has been increasing the entire time, and that's going to be his salvation for a core holding that's lost a third of its value.
"So the problem is, the physical gold is disappearing and ultimately the short sellers have to be able to deliver the commodity they are shorting and they are not going to be able to do that," he predicts.
If he's right, this will be where the 'scarcity' part comes in to play, and gold's recent rebound will seem like nothing.
"I think (the speculators and shorts) won't be able to buy it back," he says. "I don't think that gold is for sale, at any price, because I think it is in strong hands and I think there's going to be a spectacular rise when these forces try to work themselves back out."
Skeptics will dismiss Schiff as someone who can't come to terms with a losing position, but this feisty fund manager is quick to counter, saying that there have been two or three bear markets within an ongoing 13-year bull run in gold, and that this dip will likely prove to be no different.
"I don't see anything in the fundamentals that would support that," he says of claims that gold's long-running secular bull market is over.
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