542 ounces paper claims for every ounce of physical gold.

[Broly46]

Is the layman terms mean banker are shorting physical gold to the rate of 542x leverage??

Imagine gold market cap is $7 trillions
A simple math would come to the facts that:

542 * $7 trillions = $ 3,794 trillions

In layman term is rounding up to a whopping $4 quadrillions worth of printed dollar goes into shorting gold??

I smell cheating at a whole new level.

To win the real life game, we need to activate cheat code, I’m gonna activate my game shark action replay code to beat the bank.

And yeah I’m playing cheat in every online game, because the feeling of winning is so irresistible.

[1715635166]

1715635166

[1715635166]

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[jackg]

They're not shorting gold, they're actually shorting you...

How are you, a retail investor, ever going to get the money to take on a multi billion dollar company? Fractional reserve banking also means a bank won't have to pay its solicitors to handle the job with actual money anyway... And they normally have a lot of assets at their disposal too.

And they've probably well segregated that part from the rest of the company and used language the common folk won't understand so they can easily cut it off and pretend they knew nothing about it. Sure you can try to make their ceo and chairman bankrupt but they'll be long gone to a country that won't deport them.

I'm pretty sure there was a report saying the bank of England's gold vault had a volume of 25x the gold it had in one day, 5x the total gold known to have been mined...

[Broly46]

They're not shorting gold, they're actually shorting you...

How are you, a retail investor, ever going to get the money to take on a multi billion dollar company? Fractional reserve banking also means a bank won't have to pay its solicitors to handle the job with actual money anyway... And they normally have a lot of assets at their disposal too.

And they've probably well segregated that part from the rest of the company and used language the common folk won't understand so they can easily cut it off and pretend they knew nothing about it. Sure you can try to make their ceo and chairman bankrupt but they'll be long gone to a country that won't deport them.

I'm pretty sure there was a report saying the bank of England's gold vault had a volume of 25x the gold it had in one day, 5x the total gold known to have been mined...

Shorting the multi billion dollar company? I think it would be fun to see which company can survive a naked short of 542x leverage. Folks are buying gold contract to beat them, I’m not sure it’s feasible, and bitcoin too seem to be the next target of naked short selling, it come back to whether they would allocate some resource to destroy bitcoin, that would give them twice the workload, since they need to take care of both gold and bitcoin, would they?

[odolvlobo]

Is the layman terms mean banker are shorting physical gold to the rate of 542x leverage??

Imagine gold market cap is $7 trillions
A simple math would come to the facts that:

542 * $7 trillions = $ 3,794 trillions

In layman term is rounding up to a whopping $4 quadrillions worth of printed dollar goes into shorting gold??
...

What is your source? I suspect that there is some misinterpretation going on here. In the last year, the price has risen 25%. If gold is really leveraged at 524x, then I think we would see borrowers going bust left and right. Also, if A loans B a ton of gold, and B loans C a ton of gold, and C loans A a ton of gold, then there is no actual leverage even though paper gold is 3x actual gold.

[Broly46]

Is the layman terms mean banker are shorting physical gold to the rate of 542x leverage??

Imagine gold market cap is $7 trillions
A simple math would come to the facts that:

542 * $7 trillions = $ 3,794 trillions

In layman term is rounding up to a whopping $4 quadrillions worth of printed dollar goes into shorting gold??
...

What is your source? I suspect that there is some misinterpretation going on here. In the last year, the price has risen 25%. If gold is really leveraged at 524x, then I think we would see borrowers going bust left and right. Also, if A loans B a ton of gold, and B loans C a ton of gold, and C loans A a ton of gold, then there is no actual leverage even though paper gold is 3x actual gold.

Just googling search: comex gold cover ratio, and you get to see the number and chart.

[odolvlobo]

I did some research and I found that there is some misinterpretation. The gold cover ratio is not a measure of leverage in any way. It is the ratio of the total value of the gold futures contracts on the exchange to the amount of deliverable physical gold held by the exchange. Without knowing how these contracts are settled and hedged it is difficult to gain any information or insight from this number.

There will almost always be more open interest outstanding contract gold then gold at COMEX warehouses simply because the vast majority of COMEX participants do not ask for delivery of gold and usually settle in cash or roll forward their contracts.

For comparison, consider CME Group's BTC futures. CME Group's Bitcoin futures open interest is 28160 BTC, yet they hold 0 deliverable BTC. The BTC cover ratio is infinity! That is not an issue or even remarkable because the contracts are settled in cash, and there is no need for the actual BTC.

Now, I agree that a ratio of 542:1 is unprecedented, but what it means going forward is not clear to anyone from what I can tell.

[Broly46]

I did some research and I found that there is some misinterpretation. The gold cover ratio is not a measure of leverage in any way. It is the ratio of the value of total value of the gold futures contracts on the exchange to the amount of deliverable physical gold held by the exchange. Without knowing how these contracts are settled and hedged it is difficult to gain any information or insight from this number.

There will almost always be more open interest outstanding contract gold then gold at COMEX warehouses simply because the vast majority of COMEX participants do not ask for delivery of gold and usually settle in cash or roll forward their contracts.

For comparison, consider CME Group's BTC futures. CME Group's Bitcoin futures open interest is 28160 BTC, yet they hold 0 deliverable BTC. The BTC cover ratio is infinity! That is not an issue or even remarkable because the contracts are settled in cash, and there is no need for the actual BTC.

Now, I agree that a ratio of 542:1 is unprecedented, but what it means going forward is not clear to anyone from what I can tell.

First they introduce fractional reserve by diluting US dollar at a ratio of 10:1, then they introduce the same “fractional reserve” on gold at a ratio of 542:1, lastly bitcoin “fractional reserve at 28160:0??

That’s absurdity! The bank run work simply due to the facts that bank has failed to secure the liquidity required by the depositor at the time of crisis, I don’t want to guess when will be the next bank run, or it would be the gold having a run or bitcoin on the run. Someone would get into the troubles, and it wouldn’t take a genius to guess who are them.

BTW the 542:1 ratio only take account into comex’s contract, who are the borrowers that going to get busted? I think the winners and losers in this investment is clearly selected and not by choice.

[el kaka22]

I guess you can always side with the bank yourself as the retail investor but know that they are on the both sides of this story so wherever you end up being you are going to lose eventually (even if you win in the short term). That is literally the reason why fractional banking has to be over, they just have too much power.

Banks could also loan out your money to the 9x point without actually having the money to back it up. All of banking industry is built upon the idea that they can do whatever they want even without proving they have the money to do the things they do and they get away with it, if anything wrong happens the worst case is they will get bailed out, the best case is they will simply ignore the trouble and continue operations by firing couple thousand people.

[Broly46]

I guess you can always side with the bank yourself as the retail investor but know that they are on the both sides of this story so wherever you end up being you are going to lose eventually (even if you win in the short term). That is literally the reason why fractional banking has to be over, they just have too much power.

Banks could also loan out your money to the 9x point without actually having the money to back it up. All of banking industry is built upon the idea that they can do whatever they want even without proving they have the money to do the things they do and they get away with it, if anything wrong happens the worst case is they will get bailed out, the best case is they will simply ignore the trouble and continue operations by firing couple thousand people.

Don’t get me wrong, everybody are telling you, to get out of rat race or to change your life or to become rich, you gotta invest. I think all the financial gurus embrace investing. Try to read some books written by Buffett, Donald Trump, Graham, and I remember reading the lines “tips for life changing experiences”, “the wonder of compound interests”.

TBH I no longer follow the rules, because cheating seem to be the better alternative, and nobody will get into the hot water for cheating in virtual world. I don’t encourage anybody to try that in real life, there is just too many eyes want to see you failed and catch you red handed.

[davis196]

Trading derivatives and the whole financial system are just nothing more than "casino capitalism" and gambling.
The leverage ratio doesn't matter anymore.The market caps don't matter anymore.
The only thing that matters are the prices.The charts,the trends and the BS that surrounds them.
The prices aren't connected to the reality anymore.They can be manipulated by the banks,corporations,investment funds,governments,even by complex trading bots and computer systems. 

[Broly46]

Trading derivatives and the whole financial system are just nothing more than "casino capitalism" and gambling.
The leverage ratio doesn't matter anymore.The market caps don't matter anymore.
The only thing that matters are the prices.The charts,the trends and the BS that surrounds them.
The prices aren't connected to the reality anymore.They can be manipulated by the banks,corporations,investment funds,governments,even by complex trading bots and computer systems. 

We certainly have loss connection with how the entire economy briefly work, I think it also dictate how we interact with people in real life too, too many people addicted to the internet to the point that they believe their life is MMORPG, loss the sense to deal with real life issues, their life is all about internet, want to get laid use tinder, want to have a meal use food panda, want to travel use Uber, want to shopping use amazon, want to have fun play MMO. Brave new world! Yeah!

[deisik]

I did some research and I found that there is some misinterpretation. The gold cover ratio is not a measure of leverage in any way. It is the ratio of the value of total value of the gold futures contracts on the exchange to the amount of deliverable physical gold held by the exchange. Without knowing how these contracts are settled and hedged it is difficult to gain any information or insight from this number

Fully support this view

People are talking about things they have no clue about, with FRB likely being the most recent example here (no offense intended). As always, the devil is in paying precious attention to detail. If I remember correctly, we had already discussed this issue in the past. It turned out that only a tiny fraction of gold futures are actually deliverable, with yet a smaller fraction surviving through expiration (read, not cash-settled)

[Averim]

Is the layman terms mean banker are shorting physical gold to the rate of 542x leverage??

Imagine gold market cap is $7 trillions
A simple math would come to the facts that:

542 * $7 trillions = $ 3,794 trillions

In layman term is rounding up to a whopping $4 quadrillions worth of printed dollar goes into shorting gold??

I smell cheating at a whole new level.

To win the real life game, we need to activate cheat code, I’m gonna activate my game shark action replay code to beat the bank.

And yeah I’m playing cheat in every online game, because the feeling of winning is so irresistible.

Winning isn't everything, all what matters at the end of the day is the person in the mirror. Winning doesn't mean happiness, it's just a statement in a competition. Regarding the gold, the volume of it is manly the same while the number of printed money is much higher. I believe the printed money is no longer direct relate with the gold deposits.