I know that the value of gold is determined by the banks but what are their calculations?
Say hypothetically a meteorite with 10,000 tons of gold crashed in the middle of the US. We know the value of gold would go down, but by how much and how is that calculated?
In: Economics
Gold, like other commodities is traded on the open market by people. Its worth whatever people are willing to pay. End of story.
IF 10,000 tons of gold was magically available tomorrow, its likely the price people would be willing to pay would significantly decrease.
There is about 170,000 tons of gold in the world currently mined. So this would be an immediate increase of about 6% in world supply. This should cause a decrease in the price, especially since this would be a huge new amount available (somewhat) immediately.
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