Pedro wrote:The method of analysis?
Seems a rather simplified attempt to determine scarcity.
My background is engineering so the following is a laymans thoughts.
I'm sure an economist could explain the subject much better in words nobody understands.
Same disclaimer and background on this side of the keyboard, as well.
Have asked our host of this particular thread along these same lines, with also the response of him not being an economist. However, rarely have I found those who are economists a level of understanding of even why we would be discussing this topic, let alone the application.
Would not each price set point be due to a host of factors,
political, economic, immediate demand vs immediate supply etc
with availability in the ground being only one factor and being an unquantified proportion at that?
Agree with that, as well. However that appeared to be the model of the original article. 2000 to 2008 was the time period. I was considering extending it to at least now if one wanted a valid model.
Also, the time frame of ten years seems a bit short considering how long a new mine
takes to commence production.
Isn't it the case that prices naturally keep going up while demand exceeds ability to supply
(which is not necessarily a scarcity of the material in the earth crust) until such times
that the price kills the demand or the material cannot be provided.
So a price trend line would naturally go up then flatten or drop.
Trouble is, you wouldn't know the reason for the trend change.
Did the the last of the material get scraped out of the pit, a technological change occur,
a war cut off supply?
So a price trend would seem to be a rough indicator at best.
Agreed. But you follow what I am suggesting is just trying to re-state the model being presented and make it a General Equation sort of application.
But why bother, we know materials are being exhausted, so Liebigs' law will be enacted
at some time for just about everything manufactured, but cannot know which one
will be the first or whether that will be the one that make all the others irrelevant.
See that part is not always so valid, either. Had to look up Liebig briefly to re-acquaint myself to it. As often, Wiki had a fair coverage. But the counter-point, as noted is substitution. http://en.wikipedia.org/wiki/Liebig's_l ... he_minimum
So say for example -- as an Electrical Engineer, we could reasonably see ahead to a Copper scarcity -- as may be indicated by a price rise (per the model of this thread -- not saying it is great, but let's play along on it as the thesis).
THEN we could see, well in advance, that we should substitute or minimize our requirements for Copper. We can do that numerous ways -- short, compact layouts. Higher Voltages. Use of Aluminum Conductors. In practice we have done all of those very heavily in the last three to four years -- just to meet those needs to reduce Copper use.
"If I had asked people what they wanted, they would have said faster horses." attributed to Henry Ford.