The oldest game in town is manipulating inventories. Commodities can be stored at many places, but only selected facilities are on the reporting list. During the famous Buffet Silver scandal of 1997-1998, to justify taking silver up in price they had to make the inventories appear to decline. The easy way to do that was simple. Buffet bought the silver but in the London market – not COMEX. Thus, the silver was moved from New York to London and then everyone touted silver was in short supply as if it had been consumed like wheat.
The advice I use to provide to Japan to help reduce the trade friction was to buy gold in New York and sell it in London. The trade numbers could care less about the product actually being exported. It will reduce the trade deficit and make it appear that the US exports are rising. It is just an accounting ploy.
Institutions NEED income – and the only way to get income is to lease it [gold] out. But then the gold promoters misunderstand that and see it [the leasing in futures markets] as oppressing gold. They cannot get their mind around other people think differently and have different needs.
There is a difference between institutional and individual investment. Institutions cannot buy gold bullion for they need regular income. Those entities in the business or cannot lend money for interest based upon religion, lease gold to generate income of a fixed asset. This is not some sinister plot.
This is the same nonsense spread about “paper gold” and futures are evil. The futures market has been around since Babylonian days. A farmer has the risk of growing a crop and then not knowing what the price the market will be. He sells his crop for FUTURE delivery. Yes, technically, it does not yet exist. That does not suppress the price. It creates a viable market by eliminate the risk to grow the crop. For a miner, they will not mine even gold unless they know they can sell it yes for paper money.
Leasing gold allows someone to own it and earn money. Otherwise, gold pays no income or interest and would be a dead asset. This is why institutions cannot buy gold for they need income. Many people lease gold to own it but have to have some income from that money. This is not “paper gold” intent upon suppressing the market. Without the futures market, gold would not be traded and it would shrink from any viable international status. It would become indistinguishable from rhodium or another untradable metal.
It is NOT fractional banking that is the problem. Listen to some of these people rant and rave about fractional banking and you see how uneducated they truly are about finance. If you ended this system, the entire world economy would end. All real estate would collapse for how can there be a mortgage? You retirement fund would vanish. Nothing would exist economically. Like paper gold they usually also want to end, you would quickly see gold would lose all value if there is no market to trade. Stocks are more LIQUID than real estate BECAUSE there is a central place to trade. Eliminate “paper gold” and you eliminate the ability to trade and then gold would lose its liquidity and thus its value.
Leasing gold allows someone to own it and earn money. Otherwise, gold pays no income or interest and would be a dead asset. This is why institutions cannot buy gold for they need income. Many people lease gold to own it but have to have some income from that money. This is not “paper gold” intent upon suppressing the market. Without the futures market, gold would not be traded and it would shrink from any viable international status. It would become indistinguishable from rhodium or another untradable metal.
It is NOT fractional banking that is the problem. Listen to some of these people rant and rave about fractional banking and you see how uneducated they truly are about finance. If you ended this system, the entire world economy would end. All real estate would collapse for how can there be a mortgage? You retirement fund would vanish. Nothing would exist economically. Like paper gold they usually also want to end, you would quickly see gold would lose all value if there is no market to trade. Stocks are more LIQUID than real estate BECAUSE there is a central place to trade. Eliminate “paper gold” and you eliminate the ability to trade and then gold would lose its liquidity and thus its value.
Now let’s talk reality. The Gold backwardation is simply nothing more than the collapse in interest rates as capital lost faith in banks and then the Sovereign Debt Crisis began with Greece in 2010. Much of the liquidity that came to gold in the early years was OPEC money. It had absolutely nothing to do with gold. The problem was OPEC was getting all this cash, but religiously they could not earn interest. Thus, I took clients and showed them if we bought gold and sold it forward we were earning the effective interest rate but it was called the “carrying cost”. Backwardation in this case is not indicative of any shortage whatsoever or a collapse in “trust” of the dollar. The dollar has been rising! Just look at German interest rates on short-term paper went negative by 0.6%. This has NOTHING to do with fiat and people losing faith in paper money –yada, yada, yada. If that were true, interest rates would not COLLAPSE, they would SOAR because people would not trust government bonds and they would have to pay up. The flight to quality would reverse into PRIVATE assets as it did even during the German Hyperinflation.
Gold is a tangible store of wealth to make the transition from the present to the future monetary system. It is not going to $30,000 creating false images of getting rich quick. It is not that “fiat” money always collapses – it does not. If you were waiting for the end of the dollar since 1971, that is more than half your lifetime. Asia has had nothing but fiat monetary systems where the emperor, the hand of God on earth, simply issued a bronze or iron coin and said this is valued at – w,y,z. Regardless of what money has been, it is ALWAYS a confidence game.
Buy gold because it is an INSURANCE policy against the transition. It is distinguished because it is MOVABLE, from classes such as real estate that are IMMOVABLE. The problem emerging with gold is government is out to track every ounce and tax any sale. They are trying to eradicate the underground economy.
Gold is a tangible store of wealth to make the transition from the present to the future monetary system. It is not going to $30,000 creating false images of getting rich quick. It is not that “fiat” money always collapses – it does not. If you were waiting for the end of the dollar since 1971, that is more than half your lifetime. Asia has had nothing but fiat monetary systems where the emperor, the hand of God on earth, simply issued a bronze or iron coin and said this is valued at – w,y,z. Regardless of what money has been, it is ALWAYS a confidence game.
Buy gold because it is an INSURANCE policy against the transition. It is distinguished because it is MOVABLE, from classes such as real estate that are IMMOVABLE. The problem emerging with gold is government is out to track every ounce and tax any sale. They are trying to eradicate the underground economy.
Gold is not in permanent backwardation. You obviously never heard of carrying costs that are related to the interest rate. Nothing is EVER permanent. Stop the idiotic explanations. You cannot point to a single relationship in history that is ever permanent except stupidity. Just like the propaganda that silver is suppress and it will soar to 16:1 because that is where it use to be. Good one.
“Isn’t the Comex just a price suppression scheme as the volume is usually 50% to 100% of open interest?” That is up there with communism. We just answered that in the Swiss press that published the Socialists who claim that commodities are higher than they should be because of speculation and therefore all futures markets should be closed to eliminate speculation. This is the pinnacle of pure stupidity. Every study shows that markets reduce volatility and the price of a commodity is stabilized by creating a market. If there was no COMEX, the price of gold would be far less because you could not sell it without a market. I was a market-maker. All the stores buying gold would not have existed if they could not have sold what the bought from the public, someone refined that jewelry, and then resold it into COMEX.
“Isn’t the Comex just a price suppression scheme as the volume is usually 50% to 100% of open interest?” That is up there with communism. We just answered that in the Swiss press that published the Socialists who claim that commodities are higher than they should be because of speculation and therefore all futures markets should be closed to eliminate speculation. This is the pinnacle of pure stupidity. Every study shows that markets reduce volatility and the price of a commodity is stabilized by creating a market. If there was no COMEX, the price of gold would be far less because you could not sell it without a market. I was a market-maker. All the stores buying gold would not have existed if they could not have sold what the bought from the public, someone refined that jewelry, and then resold it into COMEX.
Is there gold in Fort Knox? That question is completely irrelevant. Why? Will it really make a difference? The stories of no gold in the vault are just spun by people so desperate to support a gold bull market it is just crazy. I was given a tour of the NY Fed years ago and there was gold there. The US started going after the Swiss and threatening to seize their assets here in the USA for hiding Americans with assets. Without fanfare, the Swiss quietly took ALL their gold and moved it out of the USA.
The Internet enabled no decentralization whatsoever? All technology creates is socialism and communism? Nonsense.
