Found this PDF of retail and wholesale price pf cocaine (and heroin) prices worldwide, published by the United Nations Office of Drugs and Crime. https://www.unodc.org/unodc/secured/wdr/Cocaine_Heroin_Prices.pdf The street price of both cocaine and heroin per gram is almost double that of gold. Gold is mined at great capital expense and preserved. Nobody willingly destroys gold. It is transferred between market participants and transformed into forms as bullion bars, coins and jewelry. Except for relatively gold lost in transit at sea (i.e. sunk treasure ships) the total mount of gold hoarded by humans, as opposed to existing in unrefined ore, should only increase. Cocaine is produced at low capital cost, clandestinely transported to its intended market. Ultimately its removed from the market by consumption, up the nostrils and into the veins of its consumers. In producing regions, its value is close to non-existent. Yet somehow once it arrives in its intended market, its economic value skyrockets. The amount of cocaine available is influenced by various factors, if supply is interrupted the local market price can fluctuate explosively. What lesson in economics does these two differing commodities teach us?
It's between 5 and 10 times as expensive here in australia and average purity is less than 1/3, so it's actually between 15 and 30 times as expensive. There's no reason it should cost more than essential oils or other plant derived concentrates except for the licence to print money the war on drugs has given to the wildly violent people they're supposed to be fighting in the form of prohibition. It puts money in the hands of criminals, criminalises addicts who's non violent crimes are punished with life and family destroying prison terms, funds wars and dictators and, most pertinently, hasn't done a single damned thing with respect to reducing drug use. Oh, it also makes drugs more dangerous through impurities and substitutions, causes people to avoid medical attention and advice on safe use practices, wastes untold billions of dollars that could have been used more usefully doing almost anything else and means from a practical standpoint that it's likely easier for a 15 year old to buy drugs than a bottle of scotch.
One could argue that the drug empires began at Prohibition and so the moral of the tale could be that government intervention in markets inspires participation and ponzi schemes. Ditto gold.
The war on drugs is a disaster. I am not a big fan of hard drugs (cocaine , heroine , methamphetamine, ) but would support a change in drug policy to legalize. I have plenty of friends that use recreational and have families and hold down jobs, YET if they were to get caught using these substances their lives would be turned upside down. Pot is certainly not as looked down upon by police as it once was (thankfully) . When we had the world cup here i was out drinking with a group and in my pissed state sat down to roll a hoot and low and behold was surrounded by 5 police officers. They took my 5gms of weed and told me to stay safe and left it at that. That could of had a dramatic effect on my life if they decided to prosecute, yet they chose to leave me be. YAY.
A disaster in every possible way except one, and that is critical. The war on drugs has been an incredibly tremendous success for law enforcement budgets (and in America, the private prison industry) and hence lobbyists continue to be well funded and influential. This ensures the disaster will not end any time soon.
Many thoughtful and valid arguments have been presented so far. Annual mine supply (~2,860 tonnes/year in 2014) is a dripping tap compared to existing stock above ground(183,000 tonnes), which scales to a modest household swimming pool. The amount of refined gold above ground dwarfs to the mining supply. Thus, there is no reason the market ('spot') price of gold cannot drop below the cost of any particular mine production. With cocaine, where on-market stockpiling would be logistically difficult, counterproductive and ultimately pointless. The open market price of gold is not strongly constrained by supply, due to on-market stockpiles, the price of gold is imperfectly demand-driven.
That is quoted all of the time. I don't buy it for a second. If we got all the gold that is on fingers around the world, around necks, in museums, vaults and under mattresses I assure you that there would be more than a "household swimming pools" worth. I won't hazard a guess, but I call this as BS. Shiny.
Yes, check this infographic: http://demonocracy.info/infographics/world/gold/gold.html It's an Olympic size pool. Note also that they are talking about pure gold; all the gold around fingers and necks is mixed with something else so the volume of jewellery is obviously much larger.
I know what you are trying to say, but the price of everything is demand driven and at any point in time and location the spot price of any commodity can fall below the cost of new supply (which happens all of the time especially for perishables or goods that that experience competition via innovation). The length of time that the market price can be below the cost of supply is generally shorter for perishable items as after a period of time producers cease new production and stop adding to the stocks. Due to the nature and large stocks of gold this time period could be much longer than for something like cocaine but it could also simply go the way of an obsolete item and not be produced ever again.