Right. Investment demand has to be the main and least predictable driver particularly as prices get really high - it's well known that investors, seeing something going up, will buy at almost any price due to fear of missing out. At that point prices interestingly swamp things like cost of mining as a driver. All that stuff, and a lot of industrial use, is just in the noise at that point.
Remember, we don't make much silver based film anymore. That was a major way of making it go poof down the drain in development (and even then, big houses found ways to recover it at much lower relative-effective prices than it has now).
The stuff I (and some other tech outfits) use precious metals for only needs micro-grams at a time, and the cost of that at almost any price per ounce is still going to be less than the other costs of fabrication or deposition or materials prep.
In my case, if anything, I already have a lifetime supply for that sort of work, for most things (could use some more sheet Pt around the place if anyone wants to barter or sell me some). So I and many others wouldn't place a ceiling price on demand anyway. The integrated circuit business and PCB business uses a fair amount of gold from one standpoint - but it's avoided where possible and they've become real good at using it in mono-molecular layers over something cheaper -so while an IC fab might use an amount of gold one of us couldn't afford to buy in a month, in the grand scheme it's still diddly. A $200 CPU might have a hundred uG of gold in it...that's not a lot in the scheme of things, and of course, as we get smarter, we use less - engineers are like that.
You'd have to guess that a super high price would dampen demand for new gold jewelry at some point - or trigger a reversion to plating or low gold alloys.
But that's a monkey-psychology thing - if it ramped at the right rate, it might make new gold jewelery more in demand as a way to get two birds with one stone so to speak. She gets happy, and you both get a store of value that appears to be increasing.
Solar panels use some silver in the internal interconnects, because of the conductivity, but more for the ductility - it doesn't work-harden and break as quickly as the electrically equal amount of copper would. I have no idea what those numbers are, but they sure do make a lotta panels, and the ones I own seem to have some grams each in them. That's quite a lot, actually.
On the production side, if I can go by the Rare Metals Handbook (somewhat out of date I suspect) quite a lot of all the PM's aren't mined and refined as the principal output of a particular mine - they are byproducts of things like copper, lead, zinc, nickel, and so on that fall off as anode slimes or flue dust from some other process.
Thus, at least one major component of the supply would be driven by other metal production. It would then seem that if the world economy stalls, so no one is producing those other metals full speed ahead, that the PM byproducts supply would drop, and perhaps that would be without a loss in demand - might be something to research further.
Of course if the price rises high enough (and it's not merely fiat inflation), then it might pay large producers to go ahead and keep producing base metals and stockpile them if they could make enough out of the PM byproducts, but in many cases if I understand correctly, it would take pretty high prices to make that reasonable to do at all - tiny fractions of the PMs in a whole lot of Cu for example. Since your main business might be the copper - and you have this interesting concentrate from making that, no reason not to go ahead and smelt and refine that too. But if the PM was the only thing coming out of that, the costs of getting a tiny fraction of a percent of it out of the ore alone would be prohibitive.
That would lead to a really interesting pair type trade - as the base metal demand and production go down, if the demand for PM's doesn't also go down to match, you could short base metals and go long PM's for example, and do real well.
I really agree with PMBug's apparent premises here though. If PM's skyrocket due to inflation - then you really don't make money (value) off them as they just buy the same amount of other stuff later. If they go up due to investment/jewelry/industrial types of demands, then you have true relative appreciation. It's obvious most hardcore bugs are talking their book because they "get this" idea - I think that's where some of the nuttier price projections are coming from, because the more they can increase demand, well just like fiat, the first holders of it are the winners.
This is something even honest scientists fall prey to - you have a premise you're pretty sure of (or have a vested interest in) and then look for ways to justify it - there's a heck of a risk of confirmation bias there. I see all sorts of silly reasons gold should be 50k an ounce - but if you examine the logic closely, it falls apart and doesn't take into account what else would have to be true for that to be true at such extreme levels. Plays well to the choir but maybe needs more critical examination.
I would look to energy prices generally as a main cause of fiat-devaluing myself, it's really going to be the driver if things keep on their present course - and it's a tough course to change - I promise that science will NOT come up with a cheap box you can clip to the antenna on your toyota (or tractor trailer) that will let it run on freely available hydrogen in our lifetimes - multiple problems there with all the sub-premises.
Current energy production causes very strange mis-allocation of resources (where have I heard that one and what it results in?) because some guys just get it outa the ground (eg they don't create lasting value, just supply a wasting asset and make big holes), producing little else but a mess, and get a lot of money in exchange to mis-allocate for it - think of the middle east buying off their populations to keep in power, for one. Or big oil buying off our government for another larger one. Does that create lasting value?
Then the consumers don't use it efficiently to create new value much - it's mostly used for things that make us feel good for a little while (air conditioning, joyriding, TV), but produce no lasting value if the supply is cut off, which it will be at any given price of it.
Unlike gold, you burn oil or coal and it's truly gone after that. Even uranium has that one going for it - there's a finite amount; though if we didn't have our head up our nether regions we'd get a lot more use out of it than we do (about 100:1 is possible) - we call fuel spent when only a little bit is burned off because of the buildup of other nasty junk, and our current refusal to reprocess it to get the unused fuel back. They cite proliferation as the reason, but it's a truly nasty job to do it without killing people in the process as well.
So, I'm trying to build at least a mental model of how these major themes tie together, and certainly don't think of myself as an expert in any of the subfields. I'm here to learn like anybody, but willing to share what I think I know as well - knowing I'm about as fallible as the next guy - often better informed than most, because I love learning, but that doesn't mean I know it all, either.
