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What Is The Fair Value Of Gold?
Having detailed yesterday the manipulation in the precious metals markets that implies the bear market in bullion is an artificial creation, we thought the following 'rational' chart effort at 'valuing' gold may provide some frame of reference for the level of riggedness occurring...
Gold fair value, measured by a GDP-weighted average of global central bank's balance sheet expansion, as of Jul 2015
Source: @CarpathiaCap
Clearly the demand for physical metal is very high, and the ability to meet this demand is constrained. Yet, the prices of bullion in the futures market have consistently fallen during this entire period. The only possible explanation is manipulation.
The manipulation of the gold price by injecting large quantities of freshly printed uncovered contracts into the Comex market is an empirical fact.
The sudden debunking of gold in the financial press is circumstantial evidence that a full-scale attack on gold’s function as a systemic warning signal is underway.
It is unlikely that regulatory authorities are unaware of the fraudulent manipulation of bullion prices. The fact that nothing is done about it is an indication of the lawlessness that prevails in US financial markets.
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China will set the price when it's finished buying.
Soon, with Yellen's help.
Talking about fair "value" in play money is nonsense, non-sequitor. How much play money to buy real money?
There is a floor at $0.
Even if such a thing occured with PM's, just look at the banks today! Many are going to negative interest rates. Example? I got rid of an account which started charging a $7/mo fee, and for services which I absolutely do NOT need. The bank still assesses the fee if I refuse the forced marketing of BaZing (I call them ChaChing!)
Since the betting done on the underlying commodity may be betting and not the intent to actually deliver or take delivery of the commodity, please mention the statistics of all of the Fails to Deliver.
If the contract is uncovered and the expectation is that the seller is going to hold the bet past the notification date, then what is the amount of bullion that has failed to deliver?
... whatever the goldchuck can't chuck, if a goldchuck could chuck gold.
B..B..But...But Martin Armstrong says that the gold market is not rigged and these are normal fluctuations of... err......
Oh NEVERMIND.
Is denis the exhausted menace's shit show about to end?
Here is a fair value for gold:
2015:
M2: 12.04 Trillion / Govt held Gold: 261,498,926 oz
=1oz gold = $45889
That's only one country's currency out of 140, and the price is still too low. It's missing about five zero's if including all the debt on the books. Because it's supposed to cover the cost of ALL the captial including the debt with was last seen in 2011 at 2 quadrillion dollars world wide of total derivatives. Why no updated number? Everyone is a afraid to look. Derivatives in financial double speak is a fancy way of saying debt that is believed to have value, but doesn't. Even the richest trillionaire isn't worth sweet fuck all in relation to the debt that's on the books that is NOT written down or written off.
So $45889 per ounce...More like $4,588,900,000 per ounce.
Most likely though since is been so poorly managed, $0 per ounce is more likely before 4 billion. If you are making capital decisions on something as limited as PM's then at least apply the proper scope and size. The USA is not the only currency or country on the planet.
Total wealth in the world $240 trillion
Total debt in the world $220 trillion
Combined Total $460 trillion
Total gold = 171,300 tonnes or $5,507,000,000/ Troy oz
In a 100% gold backing
Without counting the total debt = 240 trillion = $43,580/ozIf we include the debt total outstanding = 460 trillion = $83,530/oz
What's surprizing is the fact that there still physical available at that price. ($1100)
I believe that most contracts are settled in cash much higher than the contract value. Thus enticing the big players to lock immediate profits so that they have inventory showing to keep the ponzi going.
Revised
Why should betting on the underlying commodity with no intent to stand for delivery have such an impact on the spot price then? I am not complaining, because when gold finally goes fair value (to paraphrase Margin Call) "a lot of things are going to get real fucking fair real fucking quick, and people say they want that, but they really don't".
Yup! Paper money is actually worth LESS than ZERO.....
It might be worth more than zero in Venezuela... After all, they are running short on toilet paper...
Or a ceiling at $infinitum.
Very Zen.
Zero = Infinity
Both make fiat meaningless, don't they?
I am waiting for the floor and then mannnn..I am backing the truck up.
Don't wait too long. Premiums tend to rise to offset drops in spot price until things have had time to settle and inventories are refilled at the new price. In a volatile market that may not happen, and if inventories run out before a drop is over, then you're S.O.L.
Actually, that is incorrect. The floor would be $20 if you are pricing in dollars. A one ounce gold eagle has a face value of $20.
$50
Thanks seasmoke. It is $50. You can tell I care a whole lot about their face values. I actually don't buy gold right now. One because I'm poor and two because silver is at a better discount.
Yep, and 1 oz Vienna Philarmonic has a 100€ face value.
Krugmann says they are much better.
There's a new Canadian at $200.
If you wait too long the price wont matter. Only delivery will matter and that will be the real question. Cances are you wont find it any where at the current prices. Wait a few months and you will wish you were early to the party.
And yet your IQ suffers from no such constraint.
Funny as fuck. I wish I could vote you up, but can't. WTF?
Hi Waylon, I too am now under another name.
My best guess as to the real value of gold (in time): $20,000 - $60,000 per oz.
EDIT: Let's see where BTC winds up as well...
Good to see you! Tehy try to ban teh we!
teh we at bitcointalk is "OROBTC".
OLO!
Looks like they got you again loser.
Were gold to return to its historical function of price being an inverse reflection of the value of money, the amount of money now in circulation would necessitate a price somewhere around $12,000/oz, but it could certainly be higher as you've guessed since we don't truly know what goes on behind closed doors.
Were the gold to silver ratio to return to its historical norm of 15:1 or 16:1, the price of silver would be around $750/oz if gold were $12,000/oz.
Were the current monetary system to collapse, I expect an ounce of silver to be able to pay a month's worth of rent for the average person.
The only question in my mind is whether I can stay solvent long enough for markets to regain sanity.
You can (and likely will) stay solvent, but the level of In-sanity before sanity returns will be mind-boggling, if it isn't already. Wheels are turning and the bearings are heating up much faster than most anyone realizes.
Jack Napier
Jim Rickards (he is not a FOFOA fan, I am however) says his best guess is $7000 - $9000. He states that China is buying so much gold so they can have a (big) seat when the time comes to set up a new currency system.
$7000 - $9000 is a reasonable starting point when the paper starts to burn...
1100 play money for 1 real money.
These r dumb articles anyway since they forget about XAU...comex is a joke. They never read the red baron series either :(
The quality of articles on ZH has been very poor as of late.
Very establishment oriented.
There are suits to impress so that there can be suits to press.
The invisible hand that moves the world is corruption, not virtue, and ZH is no exception apparently.
Most of the gold is in North America and Europe, held by private stackers. I wouldn't be worried about China.
As to the actual world inventory, I bet you it is 5X what people think. Gold has been horded all through out history. No one ever advertised their gold inventory for a reason.
(...an you would be surprised how much gold is in farm country, they all got guns, silver and gold and food stashes.)
It's difficult to document figures which you simply made up, isn't it.
According to marketwatch.. 4 bucks
Looks like anyone who purchased gold in 2000, was very successful in protecting their purchasing power. Soooo, why exactly should we be buying gold now?
Honest question. Since I clearly missed the boat back in 2000, why should I jump in now, and doggie paddle after it?
Just before 2000 was Brown's bottom. Now it's Janet's ass.
Silver under $15 is a way better value.
In July of 1915 Gold was $19.25 an once so it's nice to see how well fiat has maintained it's value since then. ($1097.31/oz today)
Good point. I'm sure they're done printing.
... depends on the time u observe it. In the late 90s it was round about 200. Why it should be 2000 now, well, i have no idea.
Mostly due to money printing, debt and rigged economy.
Go to your grocery store and ask why you can't buy food at 90's prices. Then run before security escorts you out or they call the cops to taser you.
"I'm rolling back prices to 1965, wudda ya think of that?"
https://www.youtube.com/watch?v=a2YRMixW9u8
Why is the chart fair value price so low ????
Error in article. Wrong chart
Whatever the Fed says it should be! /sarc
The crooks make me feel like I'm paying too much for it whenever I buy. Bastards.
Gold has always been expensive. It's supposed to be expensive.
FAIR PRICE FOR GOLD IS BETWEEN 300 AND 600 DOLLARS...
Meh. You're smoking too many pipes. Go back to collecting your paper rectangles loser.
FAIR PRICE FOR GOLD IS BETWEEN 300 AND 600 DOLLARS...
I couldn't agree more! I'll buy every troy ounce you're selling at that price.
Same as the S&P. Right Genius?
then why are the Chinese buying it hand over fist for twice that?
Is that what Lancelot Link tells you...?
some people say you can never pay too much. as for me i am not a buyer at anything like today's price.
A long time ago, and under my previous name, I acknowledged buzzsaw99's excellent calls, even though I was (and still am) very, very positive on gold. So far, buzzsaw99 is da winner...
Short-term: King Dollar. Gold's time will likely come though.
Today, Bloomberg points out that Gold is a relic of antiquity and has no real value. It’s more like a beanie baby or a pet rock than a tier 1 “asset.” Therefore, institutions that carry Gold on their balance sheets as an asset (US Treasury, IMF, ECB, BIS, FED, PBOC, etc.) are nothing but elaborate accounting frauds and should be shut down immediately.
A good place to start would be for the US Congress to seize and dismember the BIS. That would get the global markets’ attention and let everyone know that the United States will no longer tolerate the scam that is Gold. It is a fad and not an “asset” and has no place on a bank’s balance sheet. Any institution claiming otherwise is a rogue criminal organization operating an accounting fraud.
The only way to stop the ECB, PBOC, IMF, BIS, etc. from continuing the fraud is for the U.S. Department of Justice to get out there and start putting bankers in jail. There’s already a facility for them all in Guantanamo …
Watch Gold fall to zero as all the central bankers are rounded up and sent to prison for re-education.
http://www.bloomberg.com/news/articles/2015-07-28/gold-out-of-style-like-bell-bottom-trousers-signals-lower-prices
Constitutional convention anyone?
The real price of gold is what I can go out and buy a physical once for and take delivery. If someone wants to sell it to me at the spot paper price than that is his loss and my gain as I get it on sale. As long as there are traders who only want to make a small profit on gold the price will continue to reflect the spot paper price. When people realize that holding physical gold is a necessity than the real price, meaning price for deliverable physical gold, will escalate. Until then just keep stacking as it's on sale.
in search of answers, trying it here as well...
it's some what off topic though. i'm after the the advantage of repricing gold, what does that do, and how does it do it, the actual mechanism that makes it work.
FDR did that, but how does that give us more money? was that much more paper currency issued accordingly? if so, wouldn't the prices of all adjust accordingly, and the end effect would be equivalent not repricing?
if an economy's currency is not backed by gold, and it reprices gold, would that effectively make it's currency gold-backed?
now, if such an economy reprices gold, and with a right percentage of its paper currency to its gold reserves, it may print more paper currency than there is today. the additional can then be used to fill debt holes for example? is that how we could get extra free money?
whatever mechanism, the additional paper currency is not free, everyone in that system would be paying for it, right?
so what's so attractive about repricing gold that made FDR do it for example?
the question is just that, it has nothing to do how today is, nor what we think about today, nor whether that will solve today's problems.
all explanations/comments/views/opinions welcome!
This ISIS shill posted the same question yesterday... ignore him... he is just a time waster.
so this is your forum?
what ISIS, are you blind?
i suppose you don't understand what "a sentence" means, do you?
is is is. your bird brain can't handle that sentence for sure.
you can't even understand a question, can you?
then i must say you deserve what you get, in good times and/or bad times, so stuff it.
Thanks to the comments from the readers, I have changed my mind: I will not pay $14,000 for a gold iwatch but buy one in SS for $500.
ALL i know is that it is going down in US dollars and up in Aussie dollars. As an Aussie I don't mind.
When it goes below $1000US and perhaps towards $800US I might buy some more.
But if it goes to $800/oz, your Aussie will be priced accordingly, meaning, much less than it is now against the $USD. A rising $USD implies a declining price of gold, and yet while murderous as that might be, it is not nearly as murderous as the effect a rising $USD has on competing currencies such as the Aussie, $CDN, ruble, etc. The bottom line, or, the point I am trying to make is that should gold fall to $800, the Aussie will like fall as well against the $USD, so that at the end of the day, the effect on the Aussie price of gold will be a wash. At least that is what the effect the $USD has done to the $CDN. Gold has hardly budged off $1500 in $CDN since I can't remember when - that is $1500 to get it in your hand (i.e includes premium price). I suspect a similar gold price in Aussie's has remained relatively constant for quite some time regardless of what the price has been in $USD.
Go to goldprice.org and you will see how the daughter currencies of the USD are all flatlining against gold. This will probably become true of all currencies just it did after 1979-1980.
The way to price gold is not based on Central Bank balance sheets. Its the quantity of currency in circulation plus all the debt (that needs to be paid for from future earnings) plus the interest on the debt.
This way you can achieve a "in the future" value for gold.
Max
Just had my blog reading interupted. FedX just delivered my latest bullioni purchase.
I read or heard somewhere that there is a correlation between the cost of one ounce oz. of Au, and a tailored suit, which has held for decades.
Of course, this would have to be a subjective rule of thumb, as all suits are not created equally, but still would serve as an approximate benchmark.
"The fact that nothing is done about it is an indication of the lawlessness that prevails in US financial markets."
That's only part of the problem. The financial bigwigs have offices in The City of London because what's illegal here is LEGAL there. Ever notice most slams are during London office hours, before COMDEX even opens. That's the age-old lair of The Great Red Dragon, which has been around since the 1600s. In fact, the US still fly the similar flag of the Honuourable Company, founded in 1600. Only the blue shield artwork was altered. No conspiracy; just financial sociopaths (Snakes In Suits) banding together because of mutual interests.
Sharks or Whales, they are all POS to me.
There is no fear to be seen or heard, yet. The U.S. is still the Big Dog. It can bully/color-revolutionize/overthrow/black-ops/regime-change, etc., nearly any nation it wishes to in order to maintain $DX trade hegemony. Then again, it's a much different world even from as recent as 5 years ago, and geopolitical tension is such that literally anything could set off a panic. Until then, the apple simply continues to rot from the inside, while looking bright & shiny on the outside.
For all the fiat in the world.. gold is worth ... and with what china is planning..
1 kilo will be like $650,000 USD thereabouts...
Anyone notice that maybe Gold is frontrunning the Global Monatary base? If so, looks like a global deflationary bust is ahead
Gold is telling us that the world's debt will soon fall from the current $250 trillion to about only $8 or $9 trillion.
Simple:
The world has $250T in debt. Historically gold reserves backed debt at about 20%. Therefore, all the national gold reserves together should be worth $50T. Published reserves and a real reserves are two different things, but the published are about 30,000 metric tons. However, I will increase that to 50,000 metric tons, because if gold gets monetized they will tell us they have more, or go get more. Anyway that puts gold at ...
1,000 tons = $1Trillion
1 ton = $1Billion
1 Kilogram = $1Million
1 troy ounce = $31,104
Very round numbers that just seem right.
You might have a bit of a problem with metric conversion there.
http://onlygold.com/Info/All-The-Gold-In-The-World.asp
Says $6.5T of the stuff in existence at $1100/ounce. So if you go up to $50T, that's a multiple of roughly 7.7X, or roughly speaking $8.5k/ounce.
Either way, gold (and its solvent miners) appears to be the bargain of the generation. Much like the boomer generations' quintessential asset class was long-term government bonds (best performing asset class over the past 35 years), and real estate.
Gold Manipulation: It’s Much Bigger Than You Think
TND Guest Contributor: Dave Kranzler
http://thenewsdoctors.com/?p=487104
Ummm, let's see. Affixing a "NIKE" sticker to cheap Chinese-made goods can generate a 1000% margin over production costs for the sellers of such. So why can't gold have a 1000% profit margin at some point in the cycle?
to be honest, i feel sorry for all u gold junkies... get real ppl, there was never a paper price for Gold. Clearly, Gold is a sustitute for fiat money. As such, only the one or the other can have a trading price. What u trade in fiat money, are the chances for Gold to substitute it. Not more, not less. I believe in trading, but i dont believe in a system change. Thus, if u have spare money, buy real Gold, but don't be foolish expecting a bonanza. That will not happen as long as fiat money rules the whole world.
True, very true
Silver has clearly decoupled from the paper price. Premiums are greater than they have been for a long time. We are at the market floor for silver. Premiums on gold have gone up a little so we may be close to a bottom with only a little way down to go. Good time to buy both.
This is why we're all here.
FIAT must have a NUMBER VALUE.
Fofoa et al tell us that number is at least 30000 USD per oz.
Is that where we're going?
How will we get there?
(ps TPTB have already figured all of this out in terms of GOLD and OIL).
Gold supply increases linearly due to depletion offsetting productivity.
Gold price grows exponentially higher than birth rate. If growth rate is 2%, and $350/oz was a good price in 1983, then $700 is about right today.
Fixing dollar to a quantity of gold is deflationary, ie., good for creditors, bad for borrowers.
"good for creditors, bad for borrowers"
Do you come here much?
I had a laugh with this article:
Two Reasons Why Gold May Plunge to $350/Oz (Market Watch)
Written by Claude Erb, a former commodities portfolio manager at TCW Group, and Duke University finance professor Campbell Harvey, they forecast the long term price of gold at $350/oz and just in case they look like the retards they are, they cover themselves by saying, "It would not be inconsistent with their research for gold to now stage a powerful rally, and/or to remain above fair value for quite some time".
I may sound like a goldbug sometimes, but actually I don't think I am. Yes, I buy PMs for my retirement, yes I think every prepper should, but if there were any other tangible, investable assets with a better historical track record than gold during times of financial instability, I would not hesitate for a second before buying them instead. It's a rational choice for me, not a rationalizing one.
The only way gold will ever hit $350/oz is after the dollar has gone through hyperinflation and is reprinted at a ratio of a million to one value to the old dollar. These people are still under the delusion that the USD is a "Hard Currency" to which people who suffer wars, inflation, banking collapse, capital controls and social chaos around the world will go to in times of crisis. Hmmm, maybe that's why there is such a concerted effort to export the Empire of Chaos around the world? Anyway, the reserve currency is toast along with most of the economies pegged to it and that is the main reason why I hold physical. It's not rocket science.
a decent man's suit
Sadly, the 19 (now 17....1 went to each of our kids) 1 oz. $20 gold coins my wife's grandfather left for her in 2010 is worth less today. I kept telling her to keep it believing the gold promoters saying gold would go up in value. Had she sold them and invested in the......gasp......stock market she could have nearly doubled her money. We are still married.
Whether gold prices are manipulated or not, or stock markets have been artificially inflated, it's money lost.
The fact that you have to ask that question suggests there are problems with gold pricing. Since gold freaks like to talk about its history, the ratio of gold to silver price was 15.5:1 for a long time. Gold is currently about $1098 and silver is $14.80. Based on silver and the historic ratio, gold should be $229. Of course it could be that silver is way under-priced, so maybe silver should be $71. Uh-huh. Of course that ratio could be all bunk, but well, it is history and that's what gold freaks are always telling me is what matters.
Are you sure that alchemists cannot or won't be able to create gold in the near future? I mean, it is supposed to be very difficult, but all those technological advances?
Flyweight, gold comes from space. It has an atomic number of 79. It requires the energy of an exploding star (supernova nucleosynthesis) to produce it.
Gold found in the Earth's crust today got here via asteroid impacts that bombarded the planet billions of years ago. There is likely huge amounts of gold in the Earth's molten core too, but the "all in" cost to mine the Earth's core, the deep sea, or a careening chunk of rock in outer space could end up being slightly higher than the $1100 an ounce it currently cost to dig for gold in dirt with a backhoe.
So I wouldn't worry to much about DeBeers releasing their new line of man made gold any time soon.
Of course I could be wrong and the Fukushima nuclear power plant meltdown could all be just a clever ploy to attempt to manufacture man made precious metals. Just think of all that sweet, super cheap radioactive gold we could have coming our way! Heh!
LMAO!
I cannot speak for the rest of the World, however in the U.S., the “Statutory Value” for Gold is: $42.22 (ie 42.22 “Dollars”/ “$”) per Troy Ounce.
And anyone whose “Income” tax returns are based merely upon ponzied fiat FRN IOUs or duped into accepting “Market Value” of same, deserve to be financially a**raped by the counterfeiting CB's as it is a Maxim of LAW that “Ignorance of the law, excuses no one/ is no excuse”
Seriously, who is so naïve, or otherwise so stupid, to argue against “Statutory Law”?
Ever hear of “Statutory Rape”?
“Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.”
Upton Sinclair
"The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title."- Anonymous
The issue which has swept down the centuries...and which will have to be fought sooner or later...is the people vs. the banks. - Lord Acton, Historian...1834 – 1902
"Knowledge will forever govern ignorance and people who mean to be their own governors must arm themselves with the power which knowledge gives." James Madison
"Paper is poverty,...it is only the ghost of money, and not money itself" President Thomas Jefferson, Letter to Edward Carrington 1788
"History shows that once an enormous debt has been incurred by a nation, there are only two ways to solve it: one is simply to declare bankruptcy - repudiate the debt. The other is to inflate the currency and thus to destroy the wealth of the ordinary citizen."
Adam Smith
Leviticus 19:36; Deuteronomy 25:15-16
Proverbs 20:10;23
Wisdom is the principal thing; Therefore get wisdom. And in all your
getting, Get understanding. Proverbs 4:7
It is the common fate of the indolent to see their rights become a
prey to the active. The condition upon which God hath given liberty
to man is eternal vigilance; which condition if he break, servitude
is at once the consequence of his crime and the punishment of his
guilt. John Philpot Curran (1750-1817)
If there is no struggle there is no progress. Those who profess to favor freedom and yet deprecate agitation are men who want crops without plowing up the ground; they want rain without thunder and lightning. They want the ocean without the awful roar of its many waters.
This struggle may be a moral one, or it may be a physical one, and it may be both moral and physical, but it must be a struggle. Power concedes nothing without a demand. It never did and it never will. Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them, and these will continue till they are resisted with either words or blows, or with both. The limits of tyrants are prescribed by the endurance of those whom they oppress.
Frederick Douglass, "If There Is No Struggle, There Is No Progress"
Cheers,
S. Rex
Uh...I think the author must have just emerged from a cave...all obvious points repeated by others