Price setting mechanism for gold and silver is broken

The law of supply and demand should dictate that when a physical commodity is scarce and there is unsatisfied demand, that the price of that commodity will increase. Yet in the last few weeks, the world market price for the scarce commodities of gold and silver, which are still at least a week away from physical delivery in our local Canadian PMX,  has shrunk.  How is this lower price helping to assure that buyers and sellers are able to make transactions?  Lower supply of the physical item should result in a higher price, and instead, we see the price go down. Clearly, the price setting mechanism is broken, for if there is supply but no demand, the price goes down.  In this case, we have great demand but no supply.  So the price should go up.  The fact that the price has gone down is proof that the gold and silver markets are manipulated and not free.

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