The Fed is sending gold higher

In my opinion this article is basically saying that gold only protects the buying power of money and is rising primarily because the Fed is trapped in a cycle of easy money.  The article can be found here:

To me this is only small part of the bigger picture.  As I point out in my comment on the site, the Elephant in the room is the basic supply and demand situation.   While mining supply is flat to declining and certainly there are strong indications that we have reached peak gold mining supply, the other primary source of supply, central banks, are decreasing their output substantially and seemingly actually becoming part of the demand side of the ledger.  

One comment made on on the related Blog from a commentor, John was:

 "The gold in FED’s balance sheet is not audited since 1950’s.
Plus the gold stored in fort Knox is not pure, it was collected from the American people during great depression and it was in coins, so it was not 99% pure gold, so its value is less than it is estimated."

To take this even further; if we believe the detailed analysis of the Gold Anti Trust Action Committee, then we would be able to argue that not only are the large central bank holders of gold buying gold for purposes of valuation, but in fact may have swapped out large quantities of the gold they currently show as available in the vaults and in fact are in a short covering process of sorts.

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