Countdown of Manipulated Gold Price Running Out 72 comments
-
Font Size:
-
Print
- TweetThis
So what’s wrong with gold? Why has the price not skyrocketed? Do you remember the day when Bear Stearns failed? Do you remember what happened on that day with gold? It spiked up to $1032 per ounce and marked its highest intraday price ever (in nominal price terms – remember, the inflation adjusted high would be in the $2300 per ounce range). Now in retrospect, doesn’t the Bear Stearns event look like some kindergarten party? Yes, the financial system has been under much more stress recently. What we have experienced in the last days was the biggest effort ever made to rescue the global financial system and it is still not clear if we are out of the storm. But nevertheless gold has even retreated to the $850 range. Does it looks strange or not?
In times where the entire financial system is on the edge, you would expect gold to soar because of its safe haven attributes. Obviously something is seriously wrong. Right now, we are experiencing two forces to fight with each other: the physical market and the paper market. To understand what’s going on you have to know that the paper market is the short term market and the physical market is the long term market.
The place of most attention for the paper gold market is the COMEX. The price you see in the newspaper is the price of the gold future traded on the COMEX. Unfortunately, it is a paper market which is very vulnerable for manipulation and it does not reflect the real market which takes place in physical supply and demand.
In the past, commodity producers used futures to hedge prices and in many cases physical delivery took place. Today, futures are by the majority just markets for speculators trading paper and not asking for physical delivery. Just remember what happened with oil some months ago – oil was trading at roughly $ 150/bbl and even official sources claimed that the reasons were demand and supply based – they neglected the effect from speculators and deep pocket institutional investors. Well, the high was set in July. Do you really think that demand has fallen that sharply or supply has caught up that fast since then? Maybe you remember the intraday spike in July which was responsible for the all-time-high? This was triggered by short-covering from a Texas based energy trading firm. Do you think this has something to do with demand and supply or do you think this is just a paper market movement? Yes, this is a paper market movement and for gold the price has been depressed.
Also remember, banks are not lending money to each other and they have to do whatever is possible to stay liquid. Have you ever heard of the gold carry trades? They are real and they are most likely at least responsible for a part of the paper selling pressure on gold. Central banks have loaned a portion of their gold holdings over the past years. GFMS and Virtual Metals have estimated that gold on loan position amounts to between 4000 and 5000 tons. GoldMoney believes the gold loan position is more likely to be 8000 tons to 15,000 tons, whereas Cheuvreux’s estimates central banks have lent as much as 10,000 tons to 15,000 tons of gold, which it suggests is between a third and half of the reported total of their reserves.
Banks were desperate to get cash and therefore were selling gold futures into the market – the futures were most likely covered by gold lent from central banks. I also assume that central banks were assisting in this procedure since it was another way to support the credit system. Actually, it was a very agreeable way since it was done without any public knowledge (and particularly without any media coverage) and without any immediate consequences on the monetary aggregates (at least for the short term). I can’t prove this action but there are many indications that this happened:
- Soaring gold lease rates as an indication that gold has been lent heavily and as an indication that central banks started at some point to tighten. The rising gold lease rates are also an indication that central banks weren’t willing to lend their gold at low interests any more.
- Very strong selling on the COMEX gold future particularly when risk aversion was strongest and when banks were struggling for liquidity. Last Friday, gold crashed over 7% in a day of pure panic. Would you really sell gold on such a day? Interestingly, the selling pressure started very late in the day when volume was drying-out.
- Confirmation from gold trading desks that central banks started to tighten gold lending. Obviously, they were not willing to lend their gold to a potentially insolvent counterparty at a low interest rate. Nevertheless gold lending still happened but at higher interest rates and this gold was sold into the market.
What about the long term implications of the bailout packages on gold? The possible threats are severe and will very likely lead to higher inflation. The sum of the overall bailout packages has now reached more than $4600 billion, huge isn’t it? The extremely aggressive fiscal and monetary policies now in place are ticking time bombs for inflation in the future. Right now, the world fears about deflation and inflation are not a threat. That’s true, but what happens if the official agencies now in charge are too late to tighten the monetary flood once economies are recovering? Yes, this will lead to a major inflationary backlog of potentially giant proportions.
I believe if very experienced and smart investors such as Mr Jim Rogers see inflation as a very real threat in the future, you should listen to them. You might want to watch this interview “Inflationary Holocaust” by Jim Rogers. Another interesting interview regarding the same issue and with further implications on currencies such as the dollar, euro and sterling is “Will bailouts risk hyperinflation?”
I picked up the topic of a global currency crisis in previous articles and I’m sure this will happen in the not too distant future. Remember, the value of a currency is in the long term determined by its fundamentals (and not short covering or pure safe haven buying as it happens right now in the US dollar). I expect the old economy currencies will devaluate against the currencies of the emerging countries, particularly Asian countries. They have huge amounts of money, economies with excellent long term growth potential and no hidden financial time bombs. Do you really think the US dollar is stronger or is it more likely that other currencies got weaker against the US dollar? That’s a very important difference.
The US dollar got stronger because of a giant flood of money pouring into the US treasury market. This was safe haven buying at its best. But when the storm calms, do you really think these investors feel comfortable? I don’t think so. In the mid to long term, the US dollar and the rest of the highly inflated global currencies will devalue. It’s also interesting that according to the World Gold Council, CBGA 2 signatories sold only 357 tons gold in year 4 of the agreement, well below the 500 tons ceiling. Are they running out of ammunition or did they finally understand that they'd better hold on to their gold since this is the backbone of their paper money?
So what’s going on in the gold market? Right now, we have a huge wave of paper gold coming into the market and therefore depressing the price of gold. I’m speaking about gold futures that have been sold by large unwinding transactions mainly from hedge funds which have to reduce their exposure or which are liquidated entirely. Lots of margin calls for private and institutional investors also played their part in this game.
A pretty new invention are the so called ETNs (Exchange Traded Notes) and virtually thousands of other paper products (called certificates, baskets, structured products, etc.). Do you remember the word ‘counterparty risk’? Does this ring a bell? Yes, it should. Even if you have bought an ETN or another paper based product on gold, it is not necessarily backed by physical gold, it is actually nothing else than a debenture with a payment guaranty of the issuer – a great product if the issuer is Lehman Brothers or Bear Stearns, etc. After Lehman Brothers went bankrupt, many investors found out that even their capital protected products were worthless. I strongly believe the current sell-off in commodities and also gold is a substantial part triggered by huge selling of paper products. So here we are again, the paper market vs the physical market.
The physical market is virtually exploding! Demand is so strong that you have to wait several days or even weeks before you get your physical gold (coins or bars). So how can you explain that physical demand is so incredible strong that you can’t get your coins and bars and the price of gold (remember COMEX paper market) is still falling? I can’t and this makes me think that something is seriously wrong and will eventually lead to a huge spike in the price of gold!
It is not only the physical demand that is very strong, it is also the gold ETFs which are adding up gold and just reached new record levels, but still the price of gold is falling.
There is one thing I don’t like about some of the gold ETFs. Did you know that some allow short selling? This looks like a minor issue but could have a major effect for investors who think they own a fund which is fully backed by physical gold. Maybe this is not the case: The ETF’s administrator only knows the net long position and backs this amount with physical gold.
Imagine, we have 100 long positions (from investors who want to have a fully backed gold ETF) and we have 50 short positions. Overall this means a net long position of 50 (and I guess the fund administrator only covers the net long position with physical gold). So what happens if the investors with the 100 long positions are asking for physical gold delivery? Well, there is only enough gold for 50 long positions in the ETF’s vaults. But the fund administrator has to deliver the physical gold for 100 long positions. Maybe this triggers a short squeeze in the physical gold market? I don’t like this idea and therefore I prefer holding physical gold in a vault or in an ETF which does not allow any short selling. Unfortunately, the world’s biggest gold ETF “SPDR Gold Shares” (GLD) allows short selling. I like the instrument as a vehicle to track the price of gold but I don’t like the short selling possibility.
Overall, the bull market in gold is far from over. Even though most investors don’t really understand what is going on with the price of gold. It’s like an elastic spring, the more you depress it, the higher it jumps once released. Right now, inflation is not a problem, but it might get one in the future again and this time probably even bigger than before. Besides of course other fundamental reasons to buy gold (e.g. growing jewelery demand from emerging countries, asset hedge, currency protection, etc.).
Investors should preferably buy gold stocks such as Goldcorp (GG), Barrick Gold (ABX), Newmont Mining (NEM), AngloGold Ashanti (AU) or Harmony Gold (HMY) to gain direct exposure and leverage to a rising gold price. But nevertheless, physical gold in fully backed gold ETFs or in gold coins/bars remains a core asset besides some gold equity holdings.
Disclosure: The author is fund manager for a mining & metals fund. The opinions expressed in this article are those solely of the author.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
TraderMark
-
2
Don Dion
-
3
Cliff Wachtel
-
4
Mike Havrilla
-
5
James Quinn
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 72 comments:
Do you know if the gold producers sell their gold at paper futures price or the physical bullion price?
The performance of the mining stocks and futures markets reminds us that nothing substitutes for owning physical gold.
Given the massive movement into gold, it is clear many investors are considering an integral part of their portfolio. As a bit of a curmudgeon, I wonder if we won't see a nice plunge just to test the "cojones" of new converts.
the futures markets allow for delivery at the delivery price....based on the futures price. Many have taken delivery via the closing price of their COMEX futures contracts and now have gold bars in storage. Are you suggesting that this price is undervalued? Well why dont we all simply take delivery of gold futures contracts and sell them on the open market at their "true" value? Would seem like a pretty good arb op, no?
And pls by the way show me evidence that during bull markets, mining stocks, or any commodity stocks for that matter, outperform the price of the underlying commodity? What if an eventual find turns out to be much less than what was initially estimated? What would happen to the stock price even in the underlying metal price stayed constant?
thx
ryan
While I'm pretty old school and believe that every portfolio should contain some dividend yielding gold stocks, I wouldn't go crazy and overweight in the stuff. While the current prices are attractive because of the improving dividend yields, as demand drops because of the slowing global economy, profits will suffer. Remember that a company like Barrick still spends $450/oz. to mine it and they're hedged with futures contracts to protect that margin. A lot of their sales are at prices fixed last year. That puts a cap on their potential profits and losses. Unless gold stays over $800 in the long run, profits will stay fixed or decline.
From market chosen specie worldwide, to paper money receipts FULLY redeemable in specie, to unredeemable coerced legal tender with zero intrinsic value.
How can ANYONE not see this as the banking ripoff it has always been for millenia?
Shylocks coerce, cheat and steal. 100% reserve banking, loans at market rates due dillengence accesses to the risk. Market set interest rates always self level, the environment being the best as individuals are accessing risk AND taking the financial responsibility for it. Unsocialisd, as is the Declaration's pure intent.
Five generations of Americans have been deprived large portions of their lives work to the Fedl govt.
What would that capital today be worth if it had been allowed to compound intergenerationally since the progressive era began 100 yrs ago instead? Is there even a hesitation to guess we'd all be millionaires at least?
Study these worst Americans at mises.org and get the real picture govt hopes you dont. Insanity trusts the untrustable.
Our Govt has now proven beyond all doubt it massive failure doing what free enterprise was supposed to do all along, UNTIL criminal politicians began using govt to enrich themselves at the people's expense. We are their mere hosts.
Hamilton, Lincoln, Wilson, FDR.......
The REAL truth is we have few Presidents who didn't abuse their oaths of office - every new unconstitutional precedent digging freedom a deeper grave.
Americans must not let this most massive extortion stand. 90% of Americans were against this. And BOTH parties shafted the people.
Ron Paul was the ONLY answer.
it is geared at 25 times, so a 2% drop is a 50% loss or a margin call.
I have had an E-trade account, and believe me, EVERY position is wiped out, over the long term.
BUT, I have learnt my lesson, I have bought pysical metal for my REAL money..... E-trade =CASINO.....just like the rest of wall street.
? Are you rich, shoe shineboy..?
NO mr banker... I am Honest and work for my money....!!
!
Rather than buying CREDIT SUISSE or ENGLEHARD bars of gold or silver, the gold producers could refine and "package" their gold, and you could then buy BARRICK 0.9999 PURE GOLD BULLION bars with a Barrick stamp on them. Kinross and Gammon and Yamana could do the same thing.
If this were done, the profits and share prices of gold miners would skyrocket, and gold would be trading at $2500 to $5000 an ounce during this market crisis. It would also make paper option trading in precious metals obsolete, to the advantage of the entire world economy. Eventually, a similar end to paper trades influencing the value of of other commodities, like agricultural products and housing products that we all have a real need for, to everyone's benefit.
The safe haven in precious metals would be a real safe haven, and the ultimate result would be that corporations that actually did or made somethig with intrinsic value would survive while "money-for-nothing corporations" would be weeded out.
The ultimate end that this market crisis must eventually wind up with is a contracted US economy and a contracted world economy that assigns value to resources and commodities that satisfy basic needs, and devalues things that people don't actually need. The US economy has, since the 1970's, been based on consumers spending money on shoddy foreign-produced products that satisfy no basic needs, at the same time that excessive regulations and ridiculous liability exposure chased most corporations trying to do or make anything with intinsic value overseas to escape the impossible challenges of operating in a country with too many trial lawyers and too many elected lawyer politicians. The direct sale of gold from gold producers to gold buyers would start the process of correcting the misguided path we've been on for 40 years.
Go on, get on a plane, spend some of your magnificent wealth, ($$$???) and see what I'm talking about from my own experience in reality.
regards.
Each million of bogus electronic bucks created by the Fed WEAKENS the dollar - I don't care what the $ index has been doing short-term. So today the fundamentals indicate that the dollar is considerably weaker than it was 2 weeks ago, despite the short-term propping-up activities.
This is a house of cards about to collapse, and when you consider the Trillion$ in the derivatives house of cards whose foundations are currently trembling...when that goes it will take ALL fiat currencies with it, not just the US buck.
Then the powers that be will try to usher in the Amero as replacement... their success remains to be seen...and yes, they have already printed a bunch of them.
Now, whether it might be possible to buy from the refineries is another question... I would bet that they only sell to corporations and not private individuals, and I would also bet that to pay for the minimum order you would have to have deep pockets!
Getting gold and even silver now, imho, would be a wise thing. Using all your $$$ to do it? No, of course not.
Ever hear of micro-breweries? How about micro-refineries? Sorry, those are anti-environmental. How about old-fashioned smuggling? Now you run afoul of anti-terrorism laws. The PM market is highly regulated on many levels to advantage the monetary authorities as opposed to the people. Looks like it will take a revolution to reveal the real prices of gold and silver.
I suspect something similar happens at this time with gold. Gold held about its value, but the GLD price curve looks exceedingly ugly and I would not bet it breaks to the upside. That does not take anything away from the longterm perspective of gold.
So what is it? A surge of uncovered future contracts hitting the market and depressing prices?
Yes a lot more money is being printed supporting a weaker $ , but the spending party is mostly over for the time being. Creditcards and mortgages are maxed out, house prices have not bottomed yet, consumer confidence in abysmal, lending standards and cost go up drastically. This is not about liquidity but solvency which goes to the hearth of credit worthiness of the consumer. That is deteriorating and limits spending especially for discretionaryand costly items like gold..
I dont see why a economical contraction does not affect all asset classes. Last time we came out of a recession in 2002 gold had bottomed. I would not declare the goldprice at a bottom here.
Regards,
You can't use the high premiums on retail coins and bar as proof of a "shortage" of gold - it only proves a shortage in production capacity converting wholesale gold into retail gold: goldchat.blogspot.com/...
Wholesale gold is available at the spot price - in this GATA dispatch (gata.org/node/6756), James Turk says "So far the London and Zurich markets continue to operate without problems, but I sense some strains are developing" and "we are giving retail investors the opportunity to buy alongside big institutional firms operating in these markets and to gain the advantages of these markets -- deep liquidity and transparent pricing".
If GoldMoney is not having problems obtaining wholesale gold, then there isn't a shortage. You need to dig a bit deeper.
2 US banks control 97% of the outstanding $135 billion, JP Morgan $96 billion, HSBC $34.4 and in 3rd spot Citibank - $3.5 billion.
source: www.occ.treas.gov/ftp/...
With all of this paper out there -- and JP Morgans high probability of assuming - being a market makers, as well, how can anyone preduct what happens here? Self-interest rules; these bullion banks set the rules.
Regulation is conspicuous by its absence!
Are they unwinding paper positions, and holding the prices down, even causing rather steep selloffs on minimal volume? And, does physical metal even exist for this paper? It may not, yet physical demand appears to exceed supply.
Will volatility prevail. Its likely - if these folks have to clear out their paper trades. From what Ted Butler has said, these banks have even been known to load up on options after sharp price corrections.......for now, it appears the game is "fixed."
If so, paper and physical prices may diverge until this situation is settled.
Regulators do not want to step in. If you want to email the regulators at the CFTC and CME, please open Ted Butlers archives........at the bottom of the last letter, he lists the email addresses.
When it was oil, everyone said, "Futures cannot be manipulated." Now that it is obvious that was hogwash, everyone jumps on the bandwagon.
COMEX works in cash and generally settles in cash. You can be sure that if too many longs start standing for delivery of real metal the exchange will quickly change the rules to force cash settlements only at the manipulated paper price, not the real market price, and the short sellers know that protects them regardless of what happens to real gold.
Assuming a low COMEX silver price per oz of 10.50$ and add the dealer markup per oz in the physical market of 4$ average over spot. Then add the money to be made by selling at the high end of silvers current "valuation channel" of 14.70$. So here we are with about 8 dollars over COMEX spot per oz. By these numbers your initial investment of $10500 for physical delivery of a COMEX bar realizes a gross of $18700 with market timing or only $14700 if the underlining spot price has not changed. For a net profit of $4200 or $8200.
Now that is what I call "highly profitable arbitrage".
COMEX risks being wiped out by the fact that the dealer market can and does offer a much higher price for coins and small bars. Its only a matter of time before upper middle class investors (who are at the lower income range of being able to afford the initial costs of a 1000 oz bar) begin stripping the exchanges of their silver and gold.
Gold is an inflation and interest rate hedge - that's all it is! When the price of oil and other commodities was skyrocketing, people were predicting massive inflation as a result. Then oil and other commodities tanked, along with expectations for high inflation. Turns out, demand for energy and commodities always drops during recessions!
The recent bail out money only partially replaces the wealth destroyed in the financial panic. Higher interest rates in late '09 to 2010 are visible from here.
That's why the price of gold changed. Quit pointing fingers. It's immature. You got caught on the wrong side of a trade - so what? Hopefully you documented your purchases so you can at least harvest losses for tax purposes.
Conspiracy thinking and ideological attachment to investment categories will bankrupt you. The best way to invest in gold is to start a business forging and selling collector coins to goldbugs for 10-25% over the metal price. Just be sure to keep your inventory low in case prices fall. Hey, isn't that exactly what's happening?!
PS Did anyone read his post?
I wonder if anyone would like to comment on my strategy of buying and holding physical gold (coins and bars) and at the same time buying long-term puts in GLD at my purchase price? Of course i know it is getting to be expensive to buy the GLD puts, but if you're looking for true "melt-down" insurance, isn't this the method? Welcome all comments. Thanks.
when they are Both at 3000...Can you picture it in your mind?
Gold, like real estate, will revert to its historical mean when interest rates rise from historic lows and inflation expectations fall from historic highs. For investors, gold is an inflation hedge - a bet that inflation expecations will be higher tomorrow than today. It is nothing else. Consider it a contract or a Vegas bet.
Your hedging strategy will limit your losses or your gains. My question is... why?
Given that gold's historical rate of return is around 2% (roughly = inflationary expectations) and pricing is wild and uncertain right now, wouldn't a bond yielding 6-8% from GE or JNJ fulfill your purpose a lot more safely? If you're worried about an unprecedented dollar crash, check out the yields on FXA or BZF.
It sounds like you're betting on another 15% run-up in gold, but you're willing to accept 10% when that happens in exchange for less risk. Question that assumption about gold going up 15%. Then question whether the added risk of losing 10% when gold goes down 15% is worth the couple extra points of possible return vs. bonds. Then, imagine a scenario where you roughly break even and calculate your opportunity cost from not buying the bond. Finally, consider the benefits of paying 15% taxes on your long term bond gains vs. your marginal tax rate on your short term options gains, if you have any.
Gambling is a fun, but unprofitable hobby. Take enough risk, and eventually you'll lose.
Disclosure, Long DZZ(double short)
at Floor 3000...
at Floor 3000...
They reason that futures traders can manipulate the price of oil both up and down, while somehow thinking gold is immune to this phenomenon. Guess what? Momentum traders will take the price to below ~50% of gold's high, just like they did to oil.
Imagine there are 2 shares of GLD and you own them. I 'borrow' one from you to short and sell it on the open market. I have (-1) shares and you still have 2, but somebody else now has (1). When you add it all up, they still need to back up the 2 outstanding shares with physical.
Uncle Sam can't touch it when the time comes for all American citizens to do their patriotic duty (lmao) by turning in their gold (google: Gold reserve act).
There's also GTU (Central Gold Trust) and it too is located in Canada and according to their mandate:
"The Deed of Trust of GoldTrust specifies that at least 90% of the assets of GoldTrust are to be invested in pure, refined gold bullion. However the policy of the Board of Trustees of GoldTrust specifies that at least 95% of the assets of GoldTrust shall be invested in gold at this time."
As an American living abroad, I have no intention of letting the manipulators get their hands on my gold when their house of cards comes crashing down.
2. In Swiss every second retail shop do not accept Euros. Not because they are copys, there are some other reasons connected with place of printing.
3. Relation between Gold and Euro is just a fairytale story,for little baby's. Explanation: More dollars in system , more the dollar gain. Nice but which really economics or either natural theory supporting such behavior.
In Bible was written 1oz of gold buying 32 pieces of bread, this simple formula suggesting to us that real price of gold should be approx 1150 usd.
1. India is the largest consumer and importer of Gold.
-Indians have been selling Gold as it made its bull run. With the INR falling against the USD the spot Gold Price in India is still quite high, and encouraging more sales.
-Indian economy is slowing down and the stock market has been cut in half; less discretionary demand for gold.
2. The world is in a deflationary asset mode. The hedge against inflation is not needed.
3. The fragile banking system has been effectively nationalized with national governments providing a back-stop. The safe-haven play is over.
4. Some talk of central banks selling Gold, partly to finance the backstop they have provided to the major banks. Many hedge funds de-leveraging and selling their gold holdings.
5. Dollar Strength; other commodities are also down.
6. Supply too is elastic with relation to price. With Gold prices near its highs, Gold producers have an incentive to mine more. Longer work-days, deeper mines.
I have also had a horrible experience with E-Trade . They get you for 7.99 per trade , a had very small margin , but in bad market , thet don't even give you the time to sell at a higher price + they want 7.99 to sell because of their margin call . I know I am no where near the ' margin limit ". Truth be known , I read quite a few months ago that E-trade had a " huge exposure ' to mortgages + were not safe . The well known commentator had moved his trading acct away from E trade . They are in trouble ! . This is why they are killing everyone !
Additionally, nearly every gold pusher weaves a slightly different yet unique tapestry they want us to see. And the most important thing to them is that WE see it.
Why do they need us so badly?
Can you imagine any other sector or commodity having every proponent so aggressively selling its merits in such long, involved testimonials?
Also, I question the merits of anything that goes down in price being a hedge against inflation.(Yes, I understand that if the whole thing falls off the cliff and there is no more currency, that gold is said to be the thing that will return to its historical place as the default currency.)
Additionally, nearly every gold pusher weaves a slightly different yet unique tapestry they want us to see. And the most important thing to them is that WE see it.
Why do they need us so badly?
Can you imagine any other sector or commodity having every proponent so aggressively selling its merits in such long, involved testimonials?
Also, I question the merits of anything that goes down in price being a hedge against inflation.(Yes, I understand that if the whole thing falls off the cliff and there is no more currency, that gold is said to be the thing that will return to its historical place as the default currency.)
My 90% Auction ends Monday, October 20th, Noon Eastern time, or 9AM, Pacific.
My 200 Engelhard 100 oz. bar auctions end Wednesday, October 22nd, 3PM Eastern time, or Noon Pacific. It's a series of 30 auctions that close a minute after each other, over 30 minutes. The last auction is for 50 bars.
My 90% Auction ends Monday, October 20th, Noon Eastern time, or 9AM, Pacific.
My 200 Engelhard 100 oz. bar auctions end Wednesday, October 22nd, 3PM Eastern time, or Noon Pacific. It's a series of 30 auctions that close a minute after each other, over 30 minutes. The last auction is for 50 bars.
-mmarc
Have you considered how easily gold coins can be diluted or forged?
1) In your Chinese / North Korean / US backyard workshop, glue two disks of carbon and lead together such that the average density of the combination is the same as gold.
2) Insert disks into coin mold, pour in $100 worth of molten gold for a thin cover. Deburr and polish.
3) Sell these coins to poor and middle class American conspiracy theorists at 500% over cost. They will pass density, magnetism, spectrometer, scratch, etc. tests and are untraceable. After all, who ever cuts a gold coin in half before buying it?
Sounds like counterparty risk to me!
Gold has now reached the point of no return in the way of an average person being able to purchase it. Just one and a half years ago the average Joe could afford to buy an ounce of Gold and now they cannot – They have switched to silver. Eventually they will not be able to buy silver due to the fact they must service all their debt and just pay for living expenses.
Inflation is just another way of saying it takes More of your dollars to buy what you need and Deflation means you don’t have enough dollars to buy what you need. The bottom line is the economy is screwed up and if we were on a gold standard and left to its own devises it would not matter as the price of something would be stable in the form of cost.
Gold and silver have always been money and always will be money and if you believe paper is worth something use the money from a Monopoly Game and use that if you think it is worth something. It is all in if you believe what is printed by some entity be it a government, company, town or person it will be until you lose faith in it.
I really do not understand the ones whom do not read history and can see for over 2000+ years Gold and Silver have always been money or medium of exchange and ALL paper currencies have failed over these same 2000+ years. They never hold up. One generation that knows what REAL money is dies off and as the government/country decides to print some paper money and get the public to use it for transactions it is then based on the faith of that generation until it fails as did the ones before it.
The saying goes “With one ounce of Gold you can buy a bus ticket to a town, buy a new suite, 3 meals for a day, a room for the night and if needed a ticket out of town And still have some change to spare.” This still holds true today and would be even more so if the paper gold and silver did not exist.
So go on do whatever – buy stocks, ETF’s, paper assets, bonds, or whatever, but when the dust settles don’t give me that hard luck saying “Buddy can you spare a Silver Dime?” Because Buddy I won’t be around – I will have already left you and the town behind.
Got Gold? Got Silver?
(Check out Jason Hommel’s Sales on silver and see what I am actually talking about.)
Undaunted by anything on why not to own physical on this thread..
Gold as well as most other commodities have been held down for quite a long time by the bankers. The world wide economic system is based on paper and the Central Bankers will lose power when commodities begin to rise. If the system is driven by paper and credit, it would not be in the interest of the bankers to have the public buying up tangible assets.
Gold and the rest of the precious metals have become the only real safe investment. I believe the current gold price is not anywhere near the price it should be at, based on inflation.
The following is an excellent article on how gold has decoupled from the US Dollar.... www.goldnewswire.net/g...