The Real Story of Gold

[deisik]

Gold (or any other metal) may not be a perfect monetary system, but given the nature of the elites that humanity must deal with, it may be humanity's best hope.  With the possible exception of Bitcoin, of course.

Gold and all metals are inferior to bitcoin. As you point out, gold never stands on its own, it always requires a currency that is backed by gold, and no matter how much they swear and promise they will uphold this standard, they always end up printing more notes than there is actual gold and they have to come off the gold standard and back to fiat.

Evidently, you're confusing cause and effect. It is the Gold Standard advocates that say that no currency can live long enough unless it is backed up by gold...

And surely not the other way around

[tonycamp]

i think any good digital or material its good and yers diamans and gold are rare and precisose like the BTC sometimes soo even dollars euro gold yen etc its all good to have and spend the lower part possible in order to be less nervouse as possible. not like milirtar extremes

[deisik]

The price of gold can't be suppressed for too long. It is estimated that only some 60,000 tonnes of extractable gold remains to be mined out, and at the same time, the demand is increasing very sharply year on year. The current rate of extraction (3,300 tonnes per year) is definitely not sustainable, and in 10 years or so, there will not be enough supplies to cover the demand.

As I've shown lately, the gold market cap is minuscule compared to the derivatives market, so does it make any sense for CBs to suppress gold prices? In which way is that beneficial to them, if at all?

I see no reason in doing this

[markj113]

The price of gold can't be suppressed for too long. It is estimated that only some 60,000 tonnes of extractable gold remains to be mined out, and at the same time, the demand is increasing very sharply year on year. The current rate of extraction (3,300 tonnes per year) is definitely not sustainable, and in 10 years or so, there will not be enough supplies to cover the demand.

As I've shown lately, the gold market cap is minuscule compared to the derivatives market, so does it make any sense for CBs to suppress gold prices? In which way is that beneficial to them, if at all?

I see no reason in doing this

Why would banks bother to manipulate gold prices because the derivatives market is much bigger?  The gold market is worth $20 trillion - there is a hell of a lot of money to be made!  Banks have already been found guilty of fixing LIBOR rates etc. so why would they stop there?

The price of gold could be suppressed to prevent a flight to safety from stocks/shares etc during the current economic climate.

If people are led to believe the price of gold is on a downward trend they are less likely to pull their cash from more risky investments.

The house of cards will fall sooner rather than later and the price of gold will go "to the moon" overnight.

I think it has also been proved beyond reasonable doubt that the price of gold is suppressed through paper games, the price smack down when gold price starts to take off through the dumping of millions of dollars worth of paper gold is becoming laughable.

http://www.bloomberg.com/news/videos/b/a3e3b49d-6d0d-4bfb-b12c-9cd68d597bb2



Only a matter of time until we see a disconnect between "paper gold" prices and real physical gold prices.  I think a lot of people are going to be in for a shock when they realise they paper gold claim has been leveraged 125:1  

[deisik]

The price of gold can't be suppressed for too long. It is estimated that only some 60,000 tonnes of extractable gold remains to be mined out, and at the same time, the demand is increasing very sharply year on year. The current rate of extraction (3,300 tonnes per year) is definitely not sustainable, and in 10 years or so, there will not be enough supplies to cover the demand.

As I've shown lately, the gold market cap is minuscule compared to the derivatives market, so does it make any sense for CBs to suppress gold prices? In which way is that beneficial to them, if at all?

I see no reason in doing this

The price of gold could be suppressed to prevent a flight to safety from stocks/shares etc during the current economic climate.

The last 20 years (at least) people searched cover in the US dollar in case of a financial meltdown, not in gold. If what you say were true, then in 2008 gold should have surged ("and sky is the limit"), but in reality it collapsed together with stocks...

Gold is good, but it is not liquid

[markj113]

Except now we face the demise of the USD so where do they run for safety now?

I would argue about gold been liquid,  I think you have to be very rich man to struggle to sell your entire worth in gold in one go.

[deisik]

Except now we face the demise of the USD so where do they run for safety now?

I guess the rumors of the US dollar death are greatly exaggerated. Not that it is invincible or immortal per se (or anything of the kind), but in fact it should not be. It is enough that it should be less vulnerable and more strong than other currencies...

Just being stronger than others does wonders

[deisik]

If people are led to believe the price of gold is on a downward trend they are less likely to pull their cash from more risky investments.

The house of cards will fall sooner rather than later and the price of gold will go "to the moon" overnight.

I think it has also been proved beyond reasonable doubt that the price of gold is suppressed through paper games, the price smack down when gold price starts to take off through the dumping of millions of dollars worth of paper gold is becoming laughable.

Furthermore, I don't say that the price of gold is not manipulated, but it is not manipulated somehow different or to a significantly higher degree that any other commodity which has a huge financial derivatives market (oil being the most conspicuous example as of recent)...

Only a matter of time until we see a disconnect between "paper gold" prices and real physical gold prices.  I think a lot of people are going to be in for a shock when they realise they paper gold claim has been leveraged 125:1 

I've heard such stories from gold bugs for more than 10 years already. This won't happen

[markj113]

Only a matter of time until we see a disconnect between "paper gold" prices and real physical gold prices.  I think a lot of people are going to be in for a shock when they realise they paper gold claim has been leveraged 125:1  

I've heard such stories from gold bugs for more than 10 years already. This won't happen

It is already starting to happen on a small scale as premiums are increasing to offset drops in spot price -

http://www.zerohedge.com/news/2015-08-29/despite-being-pet-rock-premium-physical-bullion-exploding


We are all very small cogs in the big machine and have no influence on how it all plays out.

All we can do is try our best to cover our asses for when it does all go tits up.

Diversification be that gold, silver, bitcoin, land etc. will help and not keeping all your wealth as cash in the bank waiting for a "bail in" as Cyprus and soon Greece has shown.

[Snorek]

The price of gold can't be suppressed for too long. It is estimated that only some 60,000 tonnes of extractable gold remains to be mined out, and at the same time, the demand is increasing very sharply year on year. The current rate of extraction (3,300 tonnes per year) is definitely not sustainable, and in 10 years or so, there will not be enough supplies to cover the demand.

And what will happen when gold deposits run dry? I am sure that there are some places on earth with unknown gold deposits, we just need to find them.
But my question is will price of gold suddenly skyrocket if gold will be so hard to get? it surely looks that way. It will like 'ultra halving' using bitcoin terminology.

[deisik]

Only a matter of time until we see a disconnect between "paper gold" prices and real physical gold prices.  I think a lot of people are going to be in for a shock when they realise they paper gold claim has been leveraged 125:1 

I've heard such stories from gold bugs for more than 10 years already. This won't happen

It is already starting to happen on a small scale as premiums are increasing to offset drops in spot price -

http://www.zerohedge.com/news/2015-08-29/despite-being-pet-rock-premium-physical-bullion-exploding

I can point you to a site which claims something to that tune (e.g. "This Shocking Event Will Change The Gold Market Forever") or even more disastrous day after day. Here it is. In short, believe none of what you hear, and only half of what you see...

And especially beware of the half-truth. You may have gotten the wrong half

[bryant.coleman]

And what will happen when gold deposits run dry? I am sure that there are some places on earth with unknown gold deposits, we just need to find them. But my question is will price of gold suddenly skyrocket if gold will be so hard to get? it surely looks that way. It will like 'ultra halving' using bitcoin terminology.

It is extremely unlikely that such hidden gold deposits will be discovered any time in the near future. Gold occurs in certain unique geological formations, and almost all of these formations have been undergoing metal extraction through mining. There are "unrecoverable gold deposits", where recovering gold is not economical. Mining one oz. of gold from these deposits can cost as much as $5,000 or $10,000. But as the gold price increases, some of these deposits will become profitable to mine. 

[OROBTC]

And what will happen when gold deposits run dry? I am sure that there are some places on earth with unknown gold deposits, we just need to find them. But my question is will price of gold suddenly skyrocket if gold will be so hard to get? it surely looks that way. It will like 'ultra halving' using bitcoin terminology.

It is extremely unlikely that such hidden gold deposits will be discovered any time in the near future. Gold occurs in certain unique geological formations, and almost all of these formations have been undergoing metal extraction through mining. There are "unrecoverable gold deposits", where recovering gold is not economical. Mining one oz. of gold from these deposits can cost as much as $5,000 or $10,000. But as the gold price increases, some of these deposits will become profitable to mine.  

Do recall, everyone, that gold is different in one very fundamental way than every other commodity: that the stock:flow ration is far higher than them all.  There are some 175,000 tonnes of gold above ground, and some 3,300 tonnes mined (plus some recycled IIRC).  No other commodity comes close to that much stock to flow.

This means that mines shutting down (etc.) do not influence gold price much in the short-term.

It is demand that will change the price of gold, and big time.  And the Big Enchilada will be when paper gold fails (when people want physical for their paper).  There are about 100 paper claims on gold vs. 1 oz physical.  What happens when the demand starts big (a worldwide currency crisis for example), and "paper gold" owners cannot get the physical they think they "own"?

Very high prices.  Think $10,000 (non-inflated price).

[RealBitcoin]

It is demand that will change the price of gold, and big time.  And the Big Enchilada will be when paper gold fails (when people want physical for their paper).  There are about 100 paper claims on gold vs. 1 oz physical.  What happens when the demand starts big (a worldwide currency crisis for example), and "paper gold" owners cannot get the physical they think they "own"?

Very high prices.  Think $10,000 (non-inflated price).

I dont think gold price will fall when people will realize that certificates are ponzi scams.

Its the certificate price that will fall to 0, but then the pressure will be uplifted from the physical price in the sense that, with printed fraudulent certificates they cannot surpress the price anymore.

Then the gold price will rise to all time highs.


However i dont think it will stay high very much, its just a speculative commodity for me, it will collapse quickly rightafter.

[deisik]

And what will happen when gold deposits run dry? I am sure that there are some places on earth with unknown gold deposits, we just need to find them. But my question is will price of gold suddenly skyrocket if gold will be so hard to get? it surely looks that way. It will like 'ultra halving' using bitcoin terminology.

It is extremely unlikely that such hidden gold deposits will be discovered any time in the near future. Gold occurs in certain unique geological formations, and almost all of these formations have been undergoing metal extraction through mining. There are "unrecoverable gold deposits", where recovering gold is not economical. Mining one oz. of gold from these deposits can cost as much as $5,000 or $10,000. But as the gold price increases, some of these deposits will become profitable to mine. 

Do recall, everyone, that gold is different in one very fundamental way than every other commodity: that the stock:flow ration is far higher than them all.  There are some 175,000 tonnes of gold above ground, and some 3,300 tonnes mined (plus some recycled IIRC).  No other commodity comes close to that much stock to flow.

This means that mines shutting down (etc.) do not influence gold price much in the short-term.

It is demand that will change the price of gold, and big time.  And the Big Enchilada will be when paper gold fails (when people want physical for their paper).  There are about 100 paper claims on gold vs. 1 oz physical. What happens when the demand starts big (a worldwide currency crisis for example), and "paper gold" owners cannot get the physical they think they "own"?

Those paper claims on gold are cash-settled futures (and the likes), so their owners neither can claim nor actually have any desire to own physical gold...

[markj113]

You do have the option of having gold futures settled in metal and delivered although at this point in time many opt to settle in cash.

However there is a clause in the contract where you can be forced to settle in cash (because most of the gold does not exist), when we get to the point where the dollar is failing and people wish to take physical delivery of the metal this is where 125:1 leverage will get messy because 124 people will just get a wad of worthless paper if they want it or not.

Paper gold is nothing but a legalised ponzi where you get a paper claim backed by nothing and should be outlawed.

[RealBitcoin]

You do have the option of having gold futures settled in metal and delivered although at this point in time many opt to settle in cash.

However there is a clause in the contract where you can be forced to settle in cash (because most of the gold does not exist), when we get to the point where the dollar is failing and people wish to take physical delivery of the metal this is where 125:1 leverage will get messy because 124 people will just get a wad of worthless paper if they want it or not.

Paper gold is nothing but a legalised ponzi where you get a paper claim backed by nothing and should be outlawed.

So you are saying that printed ponzi fraud gold certificate doesnt have enough gold backing it (3-4% maybe) and when people do a run on the banks claiming real gold for their ponzi cerficates:

The bank will give them another printed ponzi fraud IOU called fiat money in exchange for their ponzi fraud gold cerficate?


Hahaha this is just a twilight zone bullshit, I cant believe people are so idiots to fall for it.

[deisik]

You do have the option of having gold futures settled in metal and delivered although at this point in time many opt to settle in cash

There are many types of gold futures including those which can be settled only in cash (and these I referred to in my post)...

I guess they make up the majority of traded gold futures

[markj113]

You do have the option of having gold futures settled in metal and delivered although at this point in time many opt to settle in cash.

However there is a clause in the contract where you can be forced to settle in cash (because most of the gold does not exist), when we get to the point where the dollar is failing and people wish to take physical delivery of the metal this is where 125:1 leverage will get messy because 124 people will just get a wad of worthless paper if they want it or not.

Paper gold is nothing but a legalised ponzi where you get a paper claim backed by nothing and should be outlawed.

So you are saying that printed ponzi fraud gold certificate doesnt have enough gold backing it (3-4% maybe) and when people do a run on the banks claiming real gold for their ponzi cerficates:

The bank will give them another printed ponzi fraud IOU called fiat money in exchange for their ponzi fraud gold cerficate?


Hahaha this is just a twilight zone bullshit, I cant believe people are so idiots to fall for it.

http://www.zerohedge.com/news/2015-08-03/comex-edge-deliverable-gold-drops-record-low-124-ounces-paper-every-ounce-physical

[OROBTC]

...

My understanding of the COMEX gold settlement process is very scant, but IIRC, I believe they can settle in cash in extremis (that is, no physical gold for you if they don't have it or want to give it up).  It's in their rulebook I once saw quoted at Zero Hedge.

Also, there appear to be onerous delivery requirements for physical gold & silver deliveries (certain warehouses only, use of Brink's and similar, etc.).

Physical gold <> paper gold.  

Maybe that should be:

physical gold <<<>>> paper...