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Author Topic: What happens to the price of gold if 300 tons are dumped on the market?  (Read 2166 times)
Lethn
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September 04, 2015, 11:13:39 PM
 #21

If it were just dropped into the market it would definitely cause a prise dump, at least for awhile, but you have to remember that precious metals react a lot to inflation because even if there were that much gold put into the markets there would be a dramatic rise again because of both money printing and how fast people would want to buy it all up. I know if the price dropped low enough I'd want to buy a couple of 1kg Bars dirt cheap for myself but I think it's a bit of a pipe dream, you're more likely to be able to flood the precious metals market with asteroid mining than you are with anything you could find on a train.
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lahm-44
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September 05, 2015, 01:19:30 AM
 #22

300 tons of gold will just sligtly slip the price to downwards but I assume that it will soon be recover its previous position too due to the currency market demand and supply
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September 05, 2015, 05:23:48 AM
 #23

I remember at one point gold price was at 1100 level. The IMF conducted sales of 200 metric tons of Gold and the indian governent saw that as an opportunity and outright bought it. Not long after that the price shot up to 1400. That happened way back in 2009

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September 05, 2015, 05:49:16 AM
 #24

if 300tonnes are dumped, the supply increases, the people with the increased supply would sell at a bit lower price in order to sell faster. Doing that decreases the market price slightly.

300 tonnes is not enough to create such a situation in the long term. Some 600 tonnes of gold are traded legally every month. Many times that amount is traded in the informal sector. If 300 tonnes of gold is dumped all of a sudden, then the price will remain low for a month or so, but the rates will recover once the institutional investors start mopping up the cheap gold.


That would be my take as well.  300 tonnes is very little compared to the estimated 170,000 tonnes above ground.

Sure, the price of gold could likely drop "flash-crash" style, but the Central Bank of OROBTC would likely be in there buying some.  The physical would likely be taken up rather quickly, especially by those who want LARGE amounts (FOFOA's "Giants").

I also agree with other above comments that Poland would likely not dump it quickly if the 300 tonnes of "Nazi gold" does exist.
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September 05, 2015, 05:51:53 AM
 #25

I also agree with other above comments that Poland would likely not dump it quickly if the 300 tonnes does exist.

There are legal issues as well. For Poland to obtain the permission to sell those gold bullion bars and diamonds, they must prove that the treasure originally belonged to them. Already the World Jewish Congress and Russia has claimed that the treasure belongs to them. IMO, Poland will not be able to sell the bullion for the next few years at least.
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September 05, 2015, 05:57:26 AM
 #26

I also agree with other above comments that Poland would likely not dump it quickly if the 300 tonnes does exist.

There are legal issues as well. For Poland to obtain the permission to sell those gold bullion bars and diamonds, they must prove that the treasure originally belonged to them. Already the World Jewish Congress and Russia has claimed that the treasure belongs to them. IMO, Poland will not be able to sell the bullion for the next few years at least.


Yes, I would agree with your analysis.  300 tonnes is a HUGE amount of dollar volume of gold, over $10 billion (if I did my arithmetic right, feel free to check it, it's late here...).

Everybody and his mother will try to get some of that gold.  It will likely be a HUGE MESS.
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September 26, 2015, 02:46:57 PM
 #27

Let us say that the Nazi train in Poland is real, and it contains 300 tons of gold, and it is dumped.  How much would this effect the price of gold?

I think it will not be any effect. Or at least very few. A little decrease which will be temporary. The world reserves are 171,300 ton. So 300 ton are 0.175% of the total reserves. Are nothing to trouble the price.
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September 26, 2015, 02:54:56 PM
 #28

It can create short term drops because news headlines always makes people have kneejerk reactions. Like another another member has pointed out, 300 tons is not as much as it seems.
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September 26, 2015, 03:38:59 PM
 #29

It can create short term drops because news headlines always makes people have kneejerk reactions. Like another another member has pointed out, 300 tons is not as much as it seems.

300 tonnes is still a very significant amount. The total annual mine production of gold as of now is around 3,300 tonnes. So this Nazi gold represents more than one month output from all of the gold mines in the world. And another important point to note is that, before the discovery of this gold the Polish gold reserves amounted to just 102.9 tonnes.
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September 27, 2015, 01:10:34 AM
 #30

Let us say that the Nazi train in Poland is real, and it contains 300 tons of gold, and it is dumped.  How much would this effect the price of gold?

It would turn gold into a fiat currency  Grin

I would be more worried if the big banks and the IMF starts to unload its gold reserves, that would be the real shock.

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September 27, 2015, 02:13:16 PM
 #31

I think it will not give an effect to gold..
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September 27, 2015, 02:34:37 PM
 #32

The supply of gold is way bigger than a lot of suspected to be, so this means 2 things:
1) The impact on gold's price will not be that much of a catastrophe
2) Bitcoin is waaaay more scarce than Gold, there fore is hundreds of times more valuable than it (considering it's better money in every single aspect to boot).

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September 27, 2015, 05:06:48 PM
 #33

I doubt the price would even fluctuate due to that kind of amount being dumped.
More gold is mined every year, I'm guessing the amount produced every year differs a couple of hundred tons, depending on different factors.


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OROBTC
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September 27, 2015, 05:18:48 PM
 #34

It can create short term drops because news headlines always makes people have kneejerk reactions. Like another another member has pointed out, 300 tons is not as much as it seems.

300 tonnes is still a very significant amount. The total annual mine production of gold as of now is around 3,300 tonnes. So this Nazi gold represents more than one month output from all of the gold mines in the world. And another important point to note is that, before the discovery of this gold the Polish gold reserves amounted to just 102.9 tonnes.


Indeed, 300 tonnes is a large amount of gold.

But, since the FLOW of (physical) gold is eventually more relevant to price movement, my best guess is that the 300 tonnes will not affect the price much.

FLOW of gold also suggests that even a sharp drop in mine production would not affect prices much (read earlier (2009 on) posts of knowledgeable gold analyst FOFOA: fofoa.blogspot.com (very long pieces!) for more details).

IMO (and FOFOA's), the big gold price moves up will be when people want GOLD, not the paper receipts of various kinds (the GLD, gold futures, gold lending, other derivatives).  Price moves will not be dramatic when the occasional 300 tonnes of gold are found in Poland or when some mines shut down or big gold discoveries are made.

It's when people "stand for delivery" that the shock waves will hit...

*   *   *

Here is Sudan suggesting that a recent "discovery" by a Russian miner of "46,000 tonnes" of gold ("worth $1.7 TRILLION") may not be as advertised:

http://www.sudantribune.com/spip.php?article56019

That purported discovery did create some waves when first announced...
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September 27, 2015, 05:24:00 PM
 #35

2) Bitcoin is waaaay more scarce than Gold, there fore is hundreds of times more valuable than it (considering it's better money in every single aspect to boot).

Not a very intelligent argument. Rhodium is the rarest metal on earth. The amount of Rhodium, which is present on the earth's surface is just 1/100th of that of gold. But that doesn't make Rhodium more expensive than gold. The price of Rhodium is even lower than that of gold. Scarcity doesn't count, as long as the demand is not there.
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September 27, 2015, 07:08:19 PM
 #36

2) Bitcoin is waaaay more scarce than Gold, there fore is hundreds of times more valuable than it (considering it's better money in every single aspect to boot).

Not a very intelligent argument. Rhodium is the rarest metal on earth. The amount of Rhodium, which is present on the earth's surface is just 1/100th of that of gold. But that doesn't make Rhodium more expensive than gold. The price of Rhodium is even lower than that of gold. Scarcity doesn't count, as long as the demand is not there.

Rhodium is near the price of gold, but it looks like silver from the outside, yet the price of silver is way more cheaper than rhodium:

RHODIUM:   750$ / ounce


SILVER:     15$/ ounce


The valuation is totally subjective, as even they are similar outlook, the price differs 50x  (even though silver is shinyer yet still cheaper)

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September 27, 2015, 08:53:16 PM
 #37

...

bryant.coleman

I am a collector of precious metals, and in my research (not just the wikipedia links below), I am pretty sure that OSMIUM is the rarest stable element (astatine is the rarest of all, but radioactive).  See below links:

https://en.wikipedia.org/wiki/Osmium

"Osmium is the least abundant stable element in Earth's crust with an average mass fraction of 50 parts per trillion in the continental crust.[41]"

Although this chart from another article at wiki says different (Ir rarer than Os):




Wiki's article on rhodium:

https://en.wikipedia.org/wiki/Rhodium

"Rhodium is one of the rarest elements in the Earth's crust, of which it comprises an estimated 0.0002 parts per million (2 × 10−10).[24] Its rarity affects its price, and thus its usage in commercial applications."

Rhodium has fairly abundant uses, osmium almost none (just a few minor applications).
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September 27, 2015, 09:03:14 PM
 #38

Its not just rarity that counts but liquidity.

If you had a large stack of osmium or rhodium who could you sell it too?

You could shift kg's of gold with little effort.





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September 27, 2015, 09:11:02 PM
 #39

Its not just rarity that counts but liquidity.

If you had a large stack of osmium or rhodium who could you sell it too?

You could shift kg's of gold with little effort.



I bolded your initial statement, yes, you are correct. 

But, it would be rather hard to even get a large stack of osmium...

Rhodium is likely liquid even for large stacks, but gold of course is best for liquidity, no one is arguing that.

I was trying to clarify and put into context the points made above by neurotypical and bryant.coleman.
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