The mining industry just finished its annual conference in Toronto (known as the PDAC). As usual, there was more drinking and promoting than substance but a good time was had by all mostly because the metals are popping, especially gold.

Now, good miners are valuable people because mining is not an easy business. But what miners understand about metals markets—especially gold—can be put in a very small place. The Toronto Globe and Mail reported on the conference and the theories discussed there as to why gold is running higher. The village idiot would make more sense.

One theory, suggested by something called Capital Economics, is that gold’s new rush is based on economic optimism. Investors expect a surge in inflation as the U.S. economy picks up steam and so they are looking for a refuge. This is nonsense. Right now, investors are overwhelmingly expecting more of what we have—deflation. Surveys prove it. The Fed is wringing its hands because inflation is too low, contrary to all their projections. And as we have frequently noted, the US economy is on its way into a serious recession.

Another theory is that gold production is peaking, creating a shortfall of product. Goldcorp CEO David Garofalo said he used to be a skeptic about the peak gold theory, but has recently grown convinced. His company’s research shows gold production by major producers could decline 8 per cent between 2015 and 2018. This is beyond idiotic. There are about 5.7 billion ounces of above ground gold supply on planet earth. The industry produces about 80 million ounces per year, about 1.4% of available supply. Garofalo’s expected decline in production amounts to just 6 million ounces annually. If the entire gold mining industry disappeared tomorrow, it would make virtually no difference to the gold price.

However, one guy seemed to get it right. The gold price is rising, said this individual, because there is a rush to safety. “There’s a bit of strength right now in precious metals because all around the world people are losing faith in central bankers,” Randy Smallwood, chief executive officer of Silver Wheaton, told The Globe. That’s right, Randy. Financial markets are no longer a safe place for wealth. Gold is the best way to preserve wealth and has been for a few thousand years. Why? Because gold cannot default. And unlike paper money, gold is not printed by a central bank.