In the Middle Ages, alchemists tried to convert various substances into gold. Barring advances in nuclear reactions, though, the amount of gold available in the world is fixed; unlike paper, producers cannot respond to changes in market conditions by creating new gold. Some gold deposits are easy to extract: For instance, the U.S. government stores a great deal of gold bullion near Fort Knox, Kentucky, and it could be "extracted" with only the effort required to pick it up. Other deposits, however, are very costly to extract. Gold mining near Yellowstone National Park, for instance, involves digging huge piles of soil and using toxic chemicals to extract the gold. What effect does government storage of gold in Fort Knox have on the market price of gold? Does it encourage or discourage gold mining, including the environmental consequences of that mining? Which deposit/depository should be "extracted" first from a cost or an environmental perspective? This question is inspired by Dale W. Henderson, Steven W. Salant, John S. Irons, and Sebastian Thomas, "The Benefits of Expediting Government Gold Sales,"
www-personal.umich.edu/~ssalant/ifdp.pdf