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There Are Now 293 Ounces Of Paper Gold For Every Ounce Of Physical As Comex Registered Gold Hits New Low
Unlike Bitcoin, which has doubled in the past few weeks (as the predicted Chinese buying onslaught indeed materialized), it hasn't been a good week for spot gold prices which have tumbled from $1,180 to just over $1,100. While the reason for the selling is unknown, with recurring speculation that an imminent Fed rate hike will make holding gold even more unwelcome in real terms (if not in India where gold now pays interest on par with inflation), what we do know is that as of yesterday the total registered gold at the Comex had dropped to a fresh record low following another transfer of "registered" gold into "eligible."
This reduced overnight the total amount of eligible gold by a third to just over 151,000 ounces, or under 5 tons as the zoomed in chart below shows.
And since the gold open interest continues to rise modestly...
... this means that as of today, the gold "coverage" ratio, or the amount of paper claims for every ounce of physical, has just hit a new all time high of 293 ounces of paper per ounce of registered physical.
Curiously, the last time we observed a comparable surge in the Comex dilution ratio took place just two months ago when a comparable "adjustment" reduced JPM's "Registered" inventory by 122,124 ounces. Back then many said the adjustment would be promptly reversed.
Two months later not only has that not happened, but JPM is now down to just 10,777 ounces of Registered while many other vaults continue to see either outright withdrawals or comparable adjustments.
How much longer can this exponential surge in the dilution ratio continue? We don't know, although with less than 5 tons of registered gold left in the Comex vault system, we hope that the mystery of what is really going on at the Comex will finally be unveiled.
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Aren't naked shorts illegal?
For you and me?
Yes.
Hmmmm... so let's see...
If everyone owning gold on the Comex demanded their physical gold at the same time - that would be $1,150 X 293 which means that each ounce of actual gold would be worth $336,950. I know... it doesn't work that way, but it's fun to think about.
Yes, hence, Brazil maybe the only country doing even remotely honest accounting...
Anyone who says that gold doesn't have a place in an investment portfolio is either not paying attention or has an ulterior motive.
"While the reason for the selling is unknown"
Beg to differ. The reason for the selling is perfectly well known, it is the Commercials putting the Managaed Money through the "Rinse" cycle, by covering their (Receord) Short positions as they nydged the price down below the imprtant Moving Average and the Spec Algos then started selling in volume.
That ratio will start moving down once Venuzuelean gold starts coming into the vaults.
Still haven't gotten the Syrian gold though....
http://www.bloomberg.com/news/articles/2015-11-04/polyus-to-delist-from-...
Your article is largely bullship
"I would say gold is one of the least volatile assets"
The past 10 to 15 years the value of gold has fluculated by 700%. Sure it went up, but also went down substantially (and it's not finished yet)
It's simply an asset that has almost no utility, produces no returns, and there are huge worldwide stockpiles of it, and it's value is determined by greed and purchaced as a luxury during good economic times.
You're giving morons a bad name.
I didn't intend to single you out......
At least with government fiat you can wipe your ass with it when it reaches its intrinsic value.
Do you also use the same utilitarian criteria of value when describing books and paintings?
You do realize gold serves as symbolic substutionary exchange yes?
Books no, paintings yes.
Except a painting isn't a commodity like gold, where evey one (oz) is identical to the next.
As for fiat, of course it will go to zero. It's a medium of exchange, not a commodity. If you want to hold on to your fiat until it's worthless, you get exactly what you deserve. However with fiat, as it depreciates year over year, you also earn more year over year. Or do you still work for a 10 cents an hour like they did in 1860 and the dollar was still worth "something".
I am wondering why your writings and your handle are anopheles which means:
an?phel?s = unprofitable, useless.’
https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF...
it means parasite and mosquito too...maybe Tyler is trolling.
you do realise that gold's relative lack of utility (aside from jewellery which is a proxy for bullion) is precisely what makes it useful for backing an economy's monetary system?
If it was used for a bunch of other stuff, its demand/supply would fluctuate more ad it would be less suitable
When pricks like you learn that fiat isn't exchanged for food you're sunk baby but I'll have bread on the table.
I'll be the one selling you that bread. And a dozen loaves of bread will "cost" you an oz of gold.
Don't like the price? Shop somewhere else. What's that you say? Nobody else has bread? OK, the price just went up.
How about a few rounds of lead for that bread --- in the skull
Warren is that you?
"It's simply an asset that has almost no utility"
Never corrodes and makes a nice radiation shield...
That's too funny. I can buy your house or 1 share of the Dow for less ounces of gold today than in the year 2000. Strange asset indeed.
Funny how COMEX works like fractional reserve banks of old. Gold in the vault, paper claims out on the street. But that's a pretty damned big "money multiplier" or a very small "reserve ratio", if you prefer that term. They mean the same thing in this context.
Old man Yellen's going to get away with it too if it isn't for that meddling natural law.
its more fun to think of it this way:
Any oligarchs who want to break ranks, sit on a chair first, and ride gold to the stratosphere need only front up $170 million between them and their collaborators, ask for immediate delivery, and the comex vampire is slain
Squid ... You cannot hurt the COMEX in this manner. They reserve the right to cash out all delivery requests at the market rate.
Even if it were the case, any oligarch attempting that would soon find some democracy dropping through the roof.
yes yes but their ability to settle with cash is immaterial - the event that they ARE settling in cash tells the investment community to hang on to their phys gold for a MUCh higher price
a new pricing mechanism will have to prevail, and theres nothing comex can do about that.
Enter the dragon
But they DON'T want their physical gold. Because if they did take possession, that means they would have to PAY for it. They don't want to pay for it, they just want to PLAY with it.
Can you imagine what would happen to our entire economy if everyone had to fully pay for everything they own, BEFORE they take possession? The economy would grind to a halt. Imagine buying a new car when you have to bring in $50k in cash. Or $500k for a house.
Yeah, just imagine. How would the banks get rich then?
An ounce of gold is barely $1100. What's the problem?
what is it about debt being the forwarding of future consumption that you dont get?
make me vethy happy.........cheap gold and take possession........can it get any better
"Aren't naked shorts illegal?"
Silly rabbit, laws are for plebes
"The reason for the selling is unknown."???
HAHAHAHA....That's a good one!
"we hope that the mystery of what is really going on at the Comex will finally be unveiled...."
fuck hope...let me learn ya with 2 words....
FRAUD & MANIPULATION...
and still i and many others will not be moved...
DEATH TO THE MONEYCHANGERS....
I feel better after the DTTM sig.
Illegal? Not if they are blind and created out of thin air with no backing whatsoever. In that case, they are perfectly legal to make waterfall trades, rig markets and cap prices without limit no matter if you ever owned a real ounce of gold or not. Were those the blind naked shorts which you referred?
Clothed shorts are illegal. Naked ones are just fine.
Gold to 800.
Yes, and just like oil taking delivery at the "official" price will be something else altogether...
The price of any unenforcable, non performing contract approaches the same value as Monetary Velocity will approach in a dying economy.
In fact it needs be expected as when no product is available for trade...THEN THERE IS NO ECONOMY.
It is actually causation rather than correlation.
The price for a Gold Futures Contract will approach ZERO.
If the Commodities Markets were functioning, that would imply the price ought to be 293 times what it is.
But of course, the 'synthetic' or 'naked' trading happens on both the sell and buy side.
Commodities futures exist to hedge COMMODITIES.
They do not exist to hedge CURRENCY.
Having so many naked traders defeats the purpose of the market, leaving it a useless shell.
that would imply the price ought to be 293 times what it is
No. The amount of gold COMEX holds in its vaults has nothing to do with the amount of gold held by sellers in outside vaults. With a little hassle that outside gold can be registered into the COMEX vault for delivery to settle contracts. So the 293:1 thing is much ado over nothing.
The only way to assess the extent of naked and rehypothecated shorting would be to take an accurate inventory of the physical gold sellers actually have along with its comprehensive hypothecation status and validity of sellers claim to it. I.e., information that's completely impossible to obtain.
More info on the COMEX process here:
https://www.bullionvault.com/gold-news/comex-gold-stocks-072420136
In theory, I agree with you...in practice, I do not think you will get delivery of real gold in a pinch but I could be wrong.
I didn't say people would get delivery. I said the COMEX gold ratio tells you nothing about whether they will get delivery.
The COMEX vault is like your dinner plate. Just because it only has a little bit of food on it, doesn't mean there isn't a big serving dish in the kitchen loaded with more food than you can eat. Or not. We don't know. Because we can't see into the kitchen.
In theory, I agree...but, what has changed? Why is the ratio so small relative to the past?
The article I linked to explains that rising prices incentivize hoarding of larger stocks while falling prices incentivize dishoarding them. The chart on that page illustrates why gold stocks continue to fall right now - because price is falling.
ZHers misunderstand what COMEX warehouse stocks actually are. They are not collateral backing anything. They don’t necessarily belong to anyone holding open sell contracs. They are merely working inventory used by their owners, to provide a physical gold liquidity service to enable physical possession transfers. A service for those contract sellers who actually do want to get rid of physical and those who actually do want to take possession, including arbitrageurs. The number of bars needed to have on hand to provide that liquidity service depends on the volume of physical transfers expected in any given delivery month.
We may not like it, but the reality is COMEX does not require sellers to hold any stock in its warehouse at all. Zero. Zilch. Nada. Only that they be legally liable to produce it on demand.
Consequently, unless there was some profit in doing so, why would anyone tie up any more of his gold than he has to in COMEX registered status, which is more expensive than storing it in other warehouses. Registered stocks sitting in COMEX that aren't actually being used for COMEX settlements every month are a waste of money to maintain.
I'm under no Pollyannish impression the JPMs of the world aren't taking advantage of this fact by naked selling and rehypothecating up to their eyeballs. But at the same time I know JPM controls massive gold stocks it just stores elsewhere.
If all the COMEX physical gold was cleaned out for delivery tomorrow, more would just rush in to take its place via pullthough. Sellers would quickly pay higher premiums to entities supplying needed COMEX registered gold. JPM and many other entities would step up to pocket that premium, and supply would be shifted from other places to meet COMEX demand. There are many tonnes more physical gold out there in other warehouses and other forms like the ground able to come into COMEX promptly if paid to do so. The gold that happens to be actually sitting on COMEX shelves at the moment is but a buffer between COMEX and all that other supply.
where does JPM store it? Because as far as im aware they have to declare their holdings in daily reports - the same ones showing they have less than 5 tonnes between the holding banks
Don't ask me where they hold it. But I'm sure JPM does not warehouse any more of its gold holdings as COMEX registered stocks than it wants to in order to profit off facilitating contract deliveries. A seperate line of business.
But now you are asking the right question: how much physical gold JPM can produce from all its other vaults if required to do so by COMEX delivery demands on shorts it holds.
That is the relevant question we need to answer to be able to say how much naked shorting is going on.
Squid have you not figured out that internet trolls hang out here? They know nothing never did about Gold as a monetary asset. Nor do they know history when it comes to Govts & their monopoly money. If it is not tangible then it's zeroes and ones on a computer screen. They don't get that.
'So the 293:1 thing is much ado over nothing.'
Unless 2 out of 293 people want to take possession - right?
You seem to be having trouble grasping how futures market gold delivery works. COMEX gold stocks are not the only gold backing contracts. COMEX gold stocks are the visible tip of the spear of much larger gold reserves elsewhere also backing contracts.
Uh, don't sellers have to officially deliver from a Comex vault? If so, claiming that you have 100 ounces of gold to satisfy a contract only you left it in Singapore, is nice but not good enough.
The Comex has around 5 tons of registered gold in its vaults. That 293:1 ratio implies that just a little short of 1500 tons of gold is under contract. I know that even when it functioned normally that only about 1% or so of contract holders typically stood for delivery. But if you think there's 1500 tons of gold that the comex sellers could bring to the market then I think you're mistaken. This is not because there isn't 1500 tons of gold out there, around the world. It's because most all of it is in hands that will not suddenly sell it at these bargain basement prices to get JPM or HSBC out of a short squeeze.
Given some assaying, re-melting, and paper shuffling, any gold can become a COMEX registered stock. Likewise, COMEX registered stocks can be converted back to eligible stocks with a stroke of a pen and then they too are not available for delivery. Just as unavailable for COMEX settlement and untouchable as the bar of gold in London or Singapore. There is nothing magical about gold bearing COMEX registered status. Nothing requires it to stay in registered status and nothing binds it to sellers or to open futures contracts in any way. So getting excited about how much gold is in registered status is pointless.
Eligible stocks merely provide low friction physical gold liquidity in the junction between futures market and the physical gold market. That's their only role. The true supply lies (or does not lie!) in vaults of sellers who have physical gold outside COMEX and the vaults of physical gold holders willing to supply COMEX sellers who don't have enough but will pay for it. Both of these supplies are unknown and unknowable. Those who look at the size of the liquidity buffer mechanism and think that yields any insight into the amount of gold available to settle contracts are fundamentally misunderstanding how the system works.
In other words, the system is actually worse than you think. The actual ratio of open contracts to physical gold held as security at COMEX is not 293:1, it's 293:0. COMEX is a 0 gold collateralized gold futures exchange.
You seem to be having trouble grasping what naked shorting is.
As do you. Let's say I'm a gold coin dealer holding 1,000 oz in my safe at my place of business. I sell 10 COMEX contracts to hedge my price exposure. Am I a naked shorter?
Apparently you say yes, because I have no registered gold in my name sitting in the COMEX warehouse to cover my short. Sigh.
are you seriously suggesting that an increase in investors demanding delivery would not open a fissure in the comex system? Are you really saying thats immaterial? Do you really think the US still has 8000 tonnes and that it is unconcerned about this barbaric relic haemmorhaging to the east?
No, I didn't say that. People here seem to think if one does not take the 293:1 ratio as important, one must be a mainstream idiot who thinks paper gold is the same as physical gold. I'm actually doing the intelligent thing which is to inquire into the facts of what the hell the 293:1 actually represents.
I agree with the crowd here there is a strong possibility that naked and/or hypothecated shorting abounds, funded by manipulators, most likely backed by the Fed. I know that creates a supply/demand imbalance in physical gold forcing dis-hoarding from government vaults or GLD vaults that is covered up by a shell game to keep the sham going. And when that pinched physical gold subsidizing the supply/demand imbalance runs out there will be a massive price surge. I get it guys, I really do.
The problem is people think the 293:1 ratio in COMEX gold is a sign of that. They blithely think, "Ah, the gold is registered at an official COMEX warehouse therefore it must back futures contracts." Bzzzt, wrong.
Don't take it from me. Read up on how the COMEX exchange actually works. Study what registered stocks actually are, how they are used, and who holds them in inventory at the COMEX warehouse and why. Hint: they are not collateral backing futures contracts. They are used primarily as tokens good for satisfying procedural requirements for physical delivery. They can be removed from the warehouse or added to the warehouse but to avoid those transaction costs are more commonly just moved from pile A to pile B within the warehouse and back again later in exchange for cash/physical gold outside COMEX.
So it is meaningless to look at the size of the token stock and think that tells us anything about how much naked shorting may be going on. Only the ratio of gold reserves held by sellers outside of COMEX diminished by hypothecation claims on that gold compared to short contracts is a sign of the degree of naked shorting going on. And we don't have access to that data. We truly don't. COMEX doesn't require it much less audit it or enforce it.
cool, ok. I get your point that its effectively 293:0 not 293:1 - but there is a difference between 293:1 and, say 50:1 : the difference being the greater number of investors who have the propensity and ability to call the whole charade off - and the higher that number, the more inclined that those with holdings in the elligible pile are not incentivised to shift it over to the registerted pile
and at the end of the day , 'tokens' or not - when people ask for physical delivery it has to be handed over to avoid comex enforcing their terms for cash settlement
Oh great I'm short paper and long gold ... now what do I do?
get your tribe in order.
Does this make me a multimillionare now?
Irrelevant, according to Ben Bernanke gold is a "relic".
Makes you wonder why it remains the preferred collateral and a tier one asset by the very same bankers...
the great matin armstrong says so what? these are not the droids your looking for.
Tradition, I guess...
Main street would love you long time if ya showed up with real $$$$
What's the final/best theory on where Libya's gold went?
Germany?
Johnny that's an easy one. China
Obama's retirement plan...Clinton Slush Fund...Lloyd and Jamie "secret island" get away?
Those secret islands are gonna be jammed with old rich white guys and their trophy wives. They are gonna need servants. That's why obama is invited.
Can this be true, how can you sell what you don't / can't get? No regs on this practice?
Bankers rule!!
This seem sustainable.
Not
Seriously, how wide can this go? 1,000 to 1?
As wide as they want.
When it hits 1000 to 1 then the paper price of Gold will be at $350.
The contracts become valueless as there is no deliverable Gold. They become non performing.
@Tall Tom: Good point. You could be proven correct as the paper gold burns down to its true worth since there's nothing to deliver anyway. Might as well hold shares in Enron.
It is even worse than what I rudimentarily described.
Since the COMEX can Cash Settle any of the calls for Delivery they actually have the financial incentive to produce as much of that paper as the Markets will absorb.
When the price for the contracts declines, as a result of the oversupply of contracts, then the price declines accordingly. Thus the cash settlement payments also decline accordingly.
Jeff Christian is an absolute fraud and the game is a sham. Of course Jeff Christian also brokers the DERIVATIVES MARKET and used the THREAT OF DEFAULT to coerce the US Government to declare the COMEX as "Too Big To Fail" back in 2012.
See how that works?
Sorry nobody knows how much gold is really out there. I managed 2 safe deposit vaults in a wealthy suburb. When they'd clean out their boxes they'd leave behind a brick of gold in the back of the box. Mostly wives cleaning out their dead husbands boxes!
The estimates come from mining records. We know pretty closely what was in the roman empire, which was everything including egypt, mesopotamia and europe. We can estimate what the chinese had from their records. We know what Spain got from the Aztecs & Incas. After that the records are pretty accurate. The exact number could be 20,000 tons either way, but that changes nothing.
I have one ounce of gold worth about 1100 dollars....I am going to sell it to 298 people and promise to give delivery in the near future. Then after I collect the 300 thousand dollars, I am gonna fill my gas tank, buy some food, and get out of town. And start all over again in another city.
You've learned well. Go forth and seed the world with these ideas and you will prosper.
The only ratio that matters is 19 Trillion:Ounces of Gold
And what about the other $150 Trillion in unfunded liabilities that would have to be added to that Debt if standard GAAP principles were applied?
And thats only talking about the USofA.
Edit: see Tut below.
What's more important is the ratio of all the gold in the world 5 Billion oz, to total world debt of $250T (give or take).
That gives a price of gold of $48,600/oz. Of course world debt only needs to be backed at about 20%. But that's what the monetary authorities hold: 30,000 tons = 19% of 160,000 tons. So that price is still OK.
Actually, I like $1T per 1000 tons, $1B per ton, $1M per kilogram and $31,104 per ounce.
No, no, no. You have to take the price of the contract time 3.
0 x 3 = nevermind, I figured it out.
Gold will drop below 1000, paper that is but it will suddenly be pf and forbidden to buy.
They did it before here in Europe, a bit more then a decade ago i it was forbidden to buy gold.
And the stuff that's left? There are bankers who can buy that with their chrismass bonus!
But what I don't understand is that it's still so easy to buy all the gold you can buy these days.
Luckily, one can always buy gold...somewhere. Gold is easily available because the global economy has collapsed.
The answer is simple for me to see anyway. They have so totally screwed the pooch, that when the reset happens gold aint gonna be worth shit. Normally when shit gets ugly it is better than other invesments, but what is it really. If you cant eat it or fuck it, when the reset comes its worth doughnut.
Well you cannot eat factories or houses or cash, can you?
When the economy dies it may go Mad Max and all civilization dissolves. That is a possibility..and I am not writing remote.
Of course there are many other developments that can happen. And many of us, here, and elsewhere, may survive it to the other side.
And if we do then Gold has historically held on to its purchasing power. It will purchase that which you can eat or fuck.
It is INSURANCE...one of many forms of INSURANCE...but INSURANCE. Silver is also INSURANCE.
Now nothing is guaranteed in this life other than that you will die. In fact my Gold may not save me at all. I really do not expect to make it to the other side. In all liklihood I will die as a result of the collapse.
But I'd rather have some Gold rather than have none.
And as I have already stocked up on some survival goods...first...which is what I'd tell poorer people to do...
Of course you are free to choose not to buy any of it.
No, you can't EAT factories or houses, but they have UTILITY. You can USE them to EARN something of value, and still KEEP them.
Gold? What does it do? Nothing. And to get any value out of it, you have to give it away.
When you don't need to use gold, it's a sellers market, and the high prices reflect that. But if you NEED to use gold, then it's a buyers market and if the need to use it is dire, then the price you get will be extremely low, becasue it has no utility and returns zero.
What does it do? Gold, and silver, have the qualities that make for good money. They are durable, divisible, consistent, verifiable, scarce, possesses value in itself and with a history of use as money.
How well do paper dollars or digital dollars off a debit card satisfy these qualities? Not very well.
indeed. Gold hasnt had any 'utility' for 6000 years. Still....
Tell that to the people of Zimbabwe.
https://www.youtube.com/watch?v=7ubJp6rmUYM
Going on 7 years old. Still relevant?
Why wouldn't it be?
There's a huge difference. Zimbabwe was a LOCAL collapse, and gold maintained it's price OUTSIDE of the country. However in a WORLDWIDE collapse, the market for gold will be gone. The official currencies in Zimbabwe today? The US dollar and South African Rand. They have no currency of their own.
The people didn't really use gold as currency as in the video. There are thousands of individual miners and they trade their gold for either cash or goods. That hasn't changed for several decades, even before the collapse.
And I'm very familiar with Zimbabwe. Family members were working there, developing mines, just up to the collapse, and I have a close friend that was born there and his family still lives there.
I have some fabulous pictures of people trading their gold for currency in the middle of nowhere. The gold buyer was set up in a shipping container. In one end, he bought gold. At the other end of the container, he sold beer....
I also have a 5, 10, 20, 50 and 100 Trillion Dollar Zim bills on my wall as a reminder.
Wait..so what you're saying is that thousands of miners used gold to exchange for cash or goods but somehow it wasn't being used as a currency? Maybe you should take a minute to rethink that.
He is an old troll...
No, you can't EAT factories or houses, but they have UTILITY"
I depends. Do people want what the factory produces, will the chinks corner the mkt., will it be nationalized, taxed out of existance, taken over by workers.
House can be burnt looted or taxed away.
"becasue it has no utility"
silver does
So does gold -- especially in the presence of a failing currency.
And gold can be stolen from you. There's no difference.
I never said silver. But still, only 50% of silver mined per year is used by industry.
But I initially addressed Silver...
Your game is almost over and I am savoring it.
You can USE them [factories] to EARN something of value, and still KEEP them.
Not during a collapse...WHEN PEOPLE ARE NOT BUYING..due to a valueless currency in a hyperinflation. or, due to a very scarce currency in a hyperdeflation.
Of course I can USE GOLD to purchase that factory due to the prevailing Market Conditions.
There were entire city blocks of downtown Berlin purchased during the Weimar Republic Hyperinflationary Event and they were purchased with Gold.
And you are so dishonest to address the time frame of during the collapse?
Because it is OBVIOUS that I wrote that it is INSURANCE for the OTHER SIDE of the collapse. Yet you chose to shift the time frame to during the collapse??? Why is that?
Okay. Fine. I just addressed that time frame as well.
This is a completely fraudulent setup which also pulls silver/gold from our childrens future in an unnecessary way, by making it dirt cheap when its a precious resource Its fucking mind boggling that paper gold/silver is legal? It totally distorts the market by providing gold that is not gold, add in QE and a few more goodies and there you have it. Just like money that is not work, our gov is a fraud. Totally manipulated market by our very own gov. and WE WILL ALL LIKE IT WHETHER OR NOT WE DO because thats freedom these days, being told how it will be. Its not good and thats my opinion.
Gold and silver a precious resource? Hahahahhahaha
A resource is something that is NEEDED and used. There's already a hundred thousand tonnes of gold that's doing nothing but sitting in vaults, and half a million tonnes of silver that's also sitting, doing nothing.
It's hilarious to see when the price of gold was soaring, it was becasue it was a good "investment", but when the price crashes, it's all blamed on "paper" gold. Paper doesn't create the trends, it just follows them, both up and down. Sure it makes the lows lower, but it ALSO makes the highs, higher.
I sleep like a baby at night.
You, on the other hand, seem to be in a panic -- frantically trying to convince people that the folly of fiat is anything but. You are clearly worried that the charade has been exposed and the banker gravy train will soon be coming to an end.
Why would I be in a panic? Where did I ever say that I would be relying on fiat? I rely on supplying others with food, water, fuel, shelter, and security.
In your worst scenario, YOU will happily be handing ME your gold at the equivalent of $50 an oz to buy food, fuel, shelter and security. And that's assuming that my suppliers for diesel fuel, fertilizer and supplies will accept gold at $100/oz. If they accept less, then I accept less from you.
When SHTF, the market for gold becomes a BUYERS market. Don't like the price I'm offering you for your gold? Shop somewhere else.
The reason intelligent people hold gold has nothing to do with buying food during periods of war or panic. Gold is designed to preserve wealth for use afterward, when the economy stabilizes, which typically happens within a couple of years except in very extreme situations. One does not hold gold in favor of the necessities of life. One holds gold in addition to such necessities. As for putting all of one's money in beans or whatever, all I've got to say is either you do not have much money or you are going to need a warehouse.
Already have the warehouses.... That's why I will be able to collect all the gold I want.
Unless people have ways of MAKING "money" during a collapse, they won't have any gold left. A collapse won't be over in a couple years. It will take decades. Gold prices won't recover until the economy becomes strong, again, decades. And even then, it won't be worth much. A history of a couple decades of low prices means people aren't excited about it.
A recovering and building economy will have high interest rates. Gold won't be viewed as a good investment, so price will be and remain low. Just like the couple decades after the 1980 spike in gold and silver prices.
The (high) value of gold depends entirely on widespread public desire, a continually rising price, low interest rates and lots of disposable income. None of these things will occur during, or for a long time after a recovery.
Don't like the price I'm offering you for your gold? Shop somewhere else.
I will.
You will not be the only one with food and fuel.
I have that luxury to choose my vendors. You will not be one of them.
And remember that food is perishable.
If the currency fails, what do you think you will be using to transact business with your suppliers? Certainly not the worthless currency that caused the crisis.
Or are you going to rely on bartering with them? Good luck with that; it's not a very efficient way to continue conducting business -- and there is no guarantee your mutual needs will permit it.
He who has the gold makes the rules -- ALWAYS.
All well and good, but it just does not make any difference. What a farce this all is.
I agree , I bought the pessimissim porn and lost big. Disgusting.
Everybody knows it paper gold and they still trade it.
Nothing exceeds like excess.
"If you do not know who you are, the financial markets are a very expensive place to find out." Words to the wise, source unknown.
For me, it's like this...I'm buying gold because I do not know what else to do. Am I happy about that? Obviously not, but one must adapt. I've failed several times in life yet ended up doing okay. I trust myself, implicitly. Win or lose, I'll be fine. If the universe fails to cooperate? That's okay, too. I'm too old to really care.
Buy gold until you think you have a good insurance policy. Then buy some underpriced miners. There's good value in them now.
Part of the reason I am bullish on gold is I'm expecting a major shakeout in the mining sector.
Shakeout has already happened for the most part. Most of them were juniors with low grade ore and high production costs. The miners that are around today will weather the downturn as long as gold is above $700/oz to $800/oz Most of the miners have hedged their production well into the future. You know all that paper gold? Some of those contracts are PHYSICAL delivery in the future from miners. Some major mines today are producing at $400/oz.
Look up PDAC Conference. I've been there every year for a number of years and know very well what's happening with the miners.
Gold getting nice a cheap again, more physical will dissapear.
Someone has to buy most of the contracts and demand delivery.
That would be real sweet to see the COMEX close up.
I think its more like each claim on an ounce is worth $35. Not each ounce is worth 300k.
But surely its illegal to sell something you cant deliver?
Does this happen anywhere else with any other commodity?
Why doesnt Kitco have a physical spot price and a paper spot price?
Isn't that irrelevant how much gold is atm in comex vault?
After all it is not comex buying/selling gold but mines. Mines buy options from banks to secure income.
Generaly mine won't sell at market price but at fixed price. Fixed price is set by mine and bank. Bank sells options, gives cash to mine and mine delivers gold.
So generaly banks are not creating gold, but are selling contracts from mines. Mine is paying some fee for risk of price change. But thay always (2-3 year contracts) sell at same price, no matter what "gold price" is.
Or am i missing something.
Why would you care how much gold in in comax vaults? It's not comax responsibility if miner won't deliver gold.
Can someone explain why you care about how much gold is at vault ? IMHO as long as gold is delivered it is irrelevant. if gold won't be delivered miner will have to pay back cash, prooly with some fine.
Same weird thing is with Mines - stocks their price - price of stocks change down if gold drops, but it dosn't affect mine, since it sells at same price as contracts guarantees.
If gold price drops banks loses cash. Mine agreed to get 1300usd per oz. Bank sells at 1100usd per oz. So bank lost 200usd per oz. If gold sky rockets and gold goes to 10000usd/oz than mine sitll gets 1300 per oz, and bank earns 8700usd per oz.
So why ppl here are claiming that bank has interested in keeping gold lower, while they lose cash on "price drop"?
Think about it how much OIL or natural gas is stored at comex vault :) i bet than 0, and nothing bad happens.
If there is low amount of gold in vault, it means gold moves faster from mine to the guy who bought it, and not sitting at vaults. Eh so what's the big deal?
Because they are selling derivatives based on gold. Back in 2007/2008 great recession, banks were found to sell some 13 percent of derivatives MULTIPLE TIMES!!!!!
This means that if there is a gold rush, there would not be enough gold to issue and the price would skyrocket to the $20,000 an ounce or whatever ridiculous price was predicted.
That is why I have GLD ETF in my portfolio.
No, COMEX can settle in cash at the spot price. If COMEX doesn't have enough gold or cash, then they go bankrupt. Gold price doesn't change.
Holders of that paper then get 1/300th of an oz of gold as settlement.
It is not Comex's gold.
It is not Comex selling it - Comex is like place when ppl trade goods.
If buyer dosn't gets what he buys seller is responsible.
Can't see reasonable explanation.
Does anyone on ZH understands why we "should" worry about low gold in Comex's vault?
IMHO it might show that sellers, that were allowed to store their gold on comex's vault choose not to store sold product (gold) at vault.
I think it is something like buying food online. You buy 100 breads - but the market has only 10 breads on shelf. You don't take those 10 breads from shelf, but bakery that normaly delivers breads to shelves in market chooses to deliver bread directly to you. Lacking 90 breads on shelv dosn't mean you don't get 100 breads delivered, it means that less bread is on shelf, and you got 100 breads delivered fresh directly from bakery.
you clearly have no idea at all.
Do you?
If COMEX doesn't have enough gold or cash, then they go bankrupt.
Untrue, It is an absolute intentional lie.That is NOT the truth and you know it and I know that you know it.
COMEX is backed by the US Taxpayer you lying fuck. It was declared as TOO BIG TO FAIL by your Obama Administration back in 2012.
You cannot plead ignorance on that.
When I feed the masses in thepost collapse environment they will be required to take a survey before I offer any assistance.
When they demonstrate their complicity then they will starve.
What derivatives?
I don't know about derivatives that needs you to store sold good in vault in comax.
"prooly with some fine".
You have got to be kidding me...."Prolly".....you lost any credibility you had right there.
I didn't come here for "credibility" but for an answer.
Can't see answer, just tons of ppl going "crazy" and seems that NOONE has knowledge. Or dosn't share their knowledge...
usually one buys 'gold' - because there is lack of faith in fiat money, there are few other uses for GOLD other than jewellry - and they get paper... and their is no gold covering their paper contract... well then.. that's a problem isn't it. Cause when the shit hits the fan real gold will be demanded to settle... but none will be there... even when one buys gold paper to speculate the value is nebulous at crunch time... who will buy the paper gold once they realize the paper is a worthless paper contract used only for short term speculation.
If you sold food - wheat say... 300 fake wheat contracts to one real one... trucks roll up and say "where's the wheat? It's time to make bread".. and the comex says..." oh well maybe the crop next year will produce wheat... wait till then, we are out of wheat now. here is your cash back go find wheat somewhere else" ... now what do you suppose will happen to the price of REAL wheat... ready to be loaded on the truck?
I have SLV... if they don't have the silver there to account for my deposit - then that is fraud.... they need to be jailed. I bought silver that was to be stored... but I am sure they are liars... can't wait to get out of that.
So it's the derivatives trading then.
The circumstantial evidence is that the unregulated OTC derivatives in gold and silver are not really hedges to short positions in Comex but are themselves structured as an additional attack on precious metal prices.
If this supposition is correct, it indicates that seven years of bailing out the big banks that control the Federal Reserve and US Treasury at the expense of the US economy has threatened the US dollar to the extent that the dollar must be protected at all cost, including US regulatory tolerance of illegal activity to suppress gold and silver prices.
And yet the dollar is at all time, apparently uncomfortable, highs?
WTF? This is such a crappy system.
Then there are the banks. Not enough cash on hand if even 15% of the depositors wanted their money.
Paper gold... ROFL! Absolutely worthless.
Here is why gold prices are so low:
http://michaelekelley.com/2015/07/20/dear-fed-plz-raise-gold-price/
http://www.zerohedge.com/news/2015-07-09/are-big-banks-using-derivatives-suppress-bullion-prices/
So, let's do the math. 293 suckers think they have a $1,109.98 claim on a single gold coin.
That's 293 X $1,109.98 (current fake value) or $325,224.14.
I'd say the true value of gold is $325,224.14 an ounce. Where am I wrong???
You're assuming a linear function when that is probably not the case. I think of it more like a coiled spring. In order to push the spring down and coil it further requires more and more energy. But, the force required is proportional to the length of the spring. Outside of the linear range the force required to move the spring goes parabolic. I think that's what we are looking at here but interested to hear other theories.
https://en.wikipedia.org/wiki/Hooke%27s_law
John, looks like you are on the right track.
You might want to check out this video posted by Bill Holter. He discusses the gold revaluation mechanism:
https://www.youtube.com/watch?v=ryYDDbDwxMo
You can jump to about 12:00 where he discusses revaluation.
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When they can 'legally' settle the contract in Yellen the Felon bucks the game goes on and on. Nothing more QE and derivative stacking can't solve. When you are the same entity that writes the 'rules' and 'enforces' them the con/ponzi goes on and on. Until Joe Six pack figures out our whole system is fraud and the dollar will become rendered useless nothing will change. I don't encounter many people who care, much less understand what is going on. There's just too many selfies to be taken and meaningless tweets to be sent. Who's got time for education, activism, social justice? Not when the t.v. is in complete control of our society. Think I'll go walk the dog and see if I can get hit by lightening.
According to the contracts, holders have a legal right to insist on delivery in gold and refuse settlement in fiat. They just bear counterparty solvency risk and sovereign contract enforcement risk.
Note also that if fiat is still valued by anyone producing goods and services, the Fed can just print more fiat and hand it over to the naked shorters who could use its value to buy physical gold to meet their gold delivery obligations. Gold price would rapidly rise, of course. But the futures convertibility to physical could be maintained if that were the government's preference over seeing the paper market implode and no longer exist.
It's a casino where "players" BET on "the gold price". Leverage could be 10,000 to one and they'd just pay off the "winners" in cash and the games would go on the next day...makes no difference whatsoever.
Thousands of tonnes of real metal change hands elsewhere in the world with ZERO effect on "the gold price".
GOVERNMENTS want it this way.
So a smart man would have physical gold set aside and wait for paper gold to blow the hell up? Owning physical gold sounds like the smartest thing you could do right now.
Paper Gold is actually melting down and will realize a price of ZERO.
The issue of the price of Gold...MEASURED IN US DOLLARS...is rather moot.
All fiat currencies will die...ALL OF THEM.
You have that 100% correct. All fiat currencies die.
Gold, measured in US dollars......lets take a look at that. While the USD is on its death bed, the number of them you can get for an ounce of gold will skyrocket. Which is simply a measure of how near death that dollar is....but lets look at something else. Lets say, for the sake of arguement, you have 50 ounces in your safe. As the dollar declines, you can get $20,000 per ounce. Funny thing is that your mortgage is now well within reach to pay off. Lets say you owe $100,000 on that mortgage. So you sell 5 ounces of gold and pay off your mortgage. You could do the same for every debt you might have.
Then, the gold which you have in reserve can be utilized to establish your wealth in the new currency issued. Granted, it probably would be fiat also, but you will have retained your purchasing power by holding gold...
Sounds like a good deal to me.
Yellen gave you a negative. But only because she still has her job.
There are too many black swans circling right now. I expect some event- Hot war with Russia being foremost, perhaps a stock market collapse....where is money going to go for safety?
Sometimes things show up out of the blue, and for some reason, I can just feel it coming....I keep stacking and I know vindication will come. Exter's pyramid and all that.
Has anyone other than me noticed how front and center the Cental Banks of the world are right now....they are running the world as we speak...30 years ago they were in the background...now they are the markets and the politics...of the world....to me it means the game is soon over...soon they will be printing trillions a year to just stay alive...and then the end of fiat is soon to follow...
Cabals banksters tried to fool the ppl with paper gold and ran their shop, lived big in style. However , all the gold they collected, they sold it to China & India.
Now all they have is paper gold, good for nothing , fools gold.
Hey cabals, convert all this to paintings fast & vanish (to reappear in Israel)
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Btw everyone knows that you are trying to get it all back with the help of American military by forcing your bribed puppet American govt. to wage wars & loot it back , as usual.