When the gold hits the fan.

[boneyard bill]

Below is a link to a USAWatchdog.com interview with Rob Kirby, who specializes in gold trading and other economic services. Kirby is claiming that the price of physical gold in Asia is AT LEAST 50% above the COMEX price in the US. It should be made clear that the COMEX price is not a price for physical gold. It is the price for gold contracts. If COMEX does not have enough gold to meet the sale to you, they can force you to take the cash equivalent instead. For most investors this is just fine. They are speculating on the gold price and would simply sell the physical gold for cash anyway. The point is, that the COMEX price is not the actual, physical price for someone who wants actual gold delivery. That is important to know before you listen to the interview.

https://www.youtube.com/watch?v=k6ZM5t1SYdw&list=UUG-G8LLr38fQUNZU8K0t-EA

Of course, if physical gold is at least 50% more than the spot price what does that mean? Clearly it signals that money printing has been more significant than the central banks are willing to admit. Since many market analysts base their investment strategies on the what gold is doing, they are currently being deceived by the spot price. It also clearly indicates that someone is intervening in the gold market to keep the price down. Kirby is convinced that it is the bankers themselves who are doing this although it is likely being done in concert with the US Treasury Dept. and the Federal Reserve system.

It is easy to manipulate the gold market by simply shorting gold. You don't need to own gold to sell it. You simply put in the contract to sell at a certain price. If the price goes down, as it is likely to do if you sell enough, you can then buy gold contracts and deliver on the sale and even make a profit. These are called "naked" shorts, and they are illegal but, as Kirby points out, the big Wall Street banks have been caught manipulating the markets before and been fined. While some of these offenses carry criminal penalties, they have only been subject to civil prosecution, never criminal. Thanks, Eric Holder.

Supporting Kirby's claim is the fact that gold has been in backwardation for over a year. Backwardation occurs when the future price of a commodity exceeds the spot price, and it is very rare for gold to go into backwardation and even then it only does so for a few days. So the current backwardation is unprecedented. Lengthy backwardation is rare because a speculator could sell gold at the spot price and buy at the future price and realized a sure profit. The sale of the spot gold, of course, would bring it down while the futures purchase would raise that price and the backwardation would end.

Backwardation is a sign that there is a shortage of physical gold, hence speculators do not sell gold because they do not own any or because the expect the price to rise further. It also seriously suggests that the market is being manipulated when it occurs for such a long time.

But the bottom line is that the current situation where the physical price is so much greater than the spot price and where backwardation has lasted so long, suggests that some serious changes in economic fundamentals are going to have to happen in the not very distant future.

Above all, as Kirby suggests, this manipulation has taken place largely to preserve the value of the dollar, and its status as the reserve currency. A dramatic rise the gold price would upset that entire structure.

Here's an article on backwardation:

http://www.fgmr.com/gold-backwardation-explained.html

 

[Togo]

Below is a link to a USAWatchdog.com interview with Rob Kirby, who specializes in gold trading and other economic services. Kirby is claiming that the price of physical gold in Asia is AT LEAST 50% above the COMEX price in the US.

Well yeah, physical settlement is generally more expensive that cash settlement, particularly for gold, because of the massive costs and risks of transporting it.

It is easy to manipulate the gold market by simply shorting gold. You don't need to own gold to sell it. You simply put in the contract to sell at a certain price. If the price goes down, as it is likely to do if you sell enough, you can then buy gold contracts and deliver on the sale and even make a profit. These are called "naked" shorts, and they are illegal but,

I don't think naked shorting of gold is, actually. A lot of naked shorting is, but that's generaly to stop people trying to topple businesses and governments just to make a profit on it. Currencies aren't usually included unless the country is vulnerable.

as Kirby points out, the big Wall Street banks have been caught manipulating the markets before and been fined.

Market manipulation in my experience is widespread, rarely investigated, and commonplace.

 

[boneyard bill]

Well yeah, physical settlement is generally more expensive that cash settlement, particularly for gold, because of the massive costs and risks of transporting it.

It is easy to manipulate the gold market by simply shorting gold. You don't need to own gold to sell it. You simply put in the contract to sell at a certain price. If the price goes down, as it is likely to do if you sell enough, you can then buy gold contracts and deliver on the sale and even make a profit. These are called "naked" shorts, and they are illegal but,

I don't think naked shorting of gold is, actually. A lot of naked shorting is, but that's generaly to stop people trying to topple businesses and governments just to make a profit on it. Currencies aren't usually included unless the country is vulnerable.

as Kirby points out, the big Wall Street banks have been caught manipulating the markets before and been fined.

Market manipulation in my experience is widespread, rarely investigated, and commonplace.

The cost of transporting physical gold is small in contrast to a minimum $600 an ounce premium that you have to pay for it. I think gold is classified as a commodity not a currency. At any rate I've heard that naked shorts of gold are illegal, but I can't cite the chapter and verse. Certainly, manipulating the price is illegal. Market manipulation may be commonplace, but it don't think it is proper to say that it is rarely investigated. Regulatory agencies have filed many suits against the Wall Street Banks for market rigging and have won most of them. However, regulators can only file civil suits. It requires the Justice Department to file criminal charges against the perpetrators, and that has not happened.

 

[Loren Pechtel]

static void boneyard_bill
{
     while (gold.price < float.maxvalue)
          MessageBox.Show("Gold is going up!  Buy gold!");
}

 

[Bronzeage]

Well yeah, physical settlement is generally more expensive that cash settlement, particularly for gold, because of the massive costs and risks of transporting it.



I don't think naked shorting of gold is, actually. A lot of naked shorting is, but that's generaly to stop people trying to topple businesses and governments just to make a profit on it. Currencies aren't usually included unless the country is vulnerable.

as Kirby points out, the big Wall Street banks have been caught manipulating the markets before and been fined.

Market manipulation in my experience is widespread, rarely investigated, and commonplace.

The cost of transporting physical gold is small in contrast to a minimum $600 an ounce premium that you have to pay for it. I think gold is classified as a commodity not a currency. At any rate I've heard that naked shorts of gold are illegal, but I can't cite the chapter and verse. Certainly, manipulating the price is illegal. Market manipulation may be commonplace, but it don't think it is proper to say that it is rarely investigated. Regulatory agencies have filed many suits against the Wall Street Banks for market rigging and have won most of them. However, regulators can only file civil suits. It requires the Justice Department to file criminal charges against the perpetrators, and that has not happened.

There is manipulating and then there is manipulating. With worldwide, almost instantaneous communication between markets, it's fairly simple to push the price of a commodity up a fraction by bidding high and when the market shows the increase, quickly offer large lots for sale and hope they get picked up by traders who think they've spotted an upward trend. It happens every day. It only works for large trades, but if the trade is large enough a small difference in the unit price means a big cash profit for a few minutes work.

If there is no real demand, speculation cannot keep commodity prices up indefinitely. These days, we can expect to see gold prices fall because oil revenues are tumbling. Gold will be sold to cushion the loss of cash income. Gold does best when people are worried about future stability, which usually means fear of high oil prices. When oil supply outpaces demand, gold suffers. What else have they got to sell?

 

[Will Wiley]

The thing about the gold market, very particularly in Europe and America as opposed to Asia is that only a very small percentage is ever delivered. The vast majority is cash settled. If you look at the volumes that trade as opposed to the volumes in storage, it becomes clear that the gold that is sold could never actually be delivered. This is very unusual.

 

[Nice Squirrel]

The thing about the gold market, very particularly in Europe and America as opposed to Asia is that only a very small percentage is ever delivered. The vast majority is cash settled. If you look at the volumes that trade as opposed to the volumes in storage, it becomes clear that the gold that is sold could never actually be delivered. This is very unusual.

And that is why scammers like the NORFED wind up in trouble. They ship their gold at a 40% mark up (and call it legal tender).

 

[ksen]

These are called "naked" shorts, and they are illegal but, as Kirby points out, the big Wall Street banks have been caught manipulating the markets before and been fined. While some of these offenses carry criminal penalties, they have only been subject to civil prosecution, never criminal. Thanks, Eric Holder.

Some people call it "market manipulation" others call it "savvy business practices".

If you don't like it go start your own gold market instead of getting the government involved since government involvement only makes things worse.

Also, who the fuck cares what a gold bug has to say?

 

[Nice Squirrel]

Acorn futures are looking mighty good for 2015. Invest now before the oakconomy collapses.

 

[ksen]

 

[Nice Squirrel]

Thank you Ksen; you did the right thing for your family. If you ever find any more money, let me know and I will be there for you.

 

[funinspace]

When the gold hits the fan; the fan will break into many pieces.

 

[boneyard bill]

The thing about the gold market, very particularly in Europe and America as opposed to Asia is that only a very small percentage is ever delivered. The vast majority is cash settled. If you look at the volumes that trade as opposed to the volumes in storage, it becomes clear that the gold that is sold could never actually be delivered. This is very unusual.

That's just the point. The COMEX is not a physical gold market. It is a market for gold contracts. If you want physical gold, you have to pay much, much more. Yet the media reports the COMEX price as the price for gold. It isn't. If you own gold contracts at COMEX, it is unlikely that you will be able to redeem them for physical gold.

Nonetheless, the current spread between "paper" gold and physical gold is still extraordinarily high, and gold backwardation for a year and half is absolutely unheard of until now. So something is going on that is being shoved under the rug and that something is not good for the dollar.

 

[Jimmy Higgins]

So every other currency and commodity is being manipulated for the dollar's sake? Because otherwise, you are nuts.

 

[Togo]

The cost of transporting physical gold is small in contrast to a minimum $600 an ounce premium that you have to pay for it.

It's not the cost of transport, it's the risk of insuring or otherwise guarenteeing it's delivery. There are huge risks involved there, and that gets directly factored into the price as counterparty risk.

I think gold is classified as a commodity not a currency.

It's definitely a currency, which is a bit odd, but makes sense for technical reason. It does have similar delivery problems to other precious metals, which are commodities.

 

[Bronzeage]

In 1979, the retail price of gold had been steadily climbing for several years. Rising oil prices and inflation made gold look like a good deal to a lot of people. I met a retired woman who thought she had a much better idea. According to her, gold would be of little use in the coming crisis. The nature of the crisis was a little vague, but it had something to do with the collapse of governments and international banking. Her solution was to store dried beans, rice, and toilet paper in large glass jars, and store them in her basement. She was in her 70's at this time, so I assume her family has finally dealt with the jars.

 

[dx713]

Yes.
A lot of preppers store ammunition too: it actually has use (especially in their Mad Max influenced doomsday scenarii), and would probably be easier to barter with than gold, and is quite easy to store/hide.
(but is totally useless for civilized emergencies. Food/water, you can actually use in things that do happen, like flooding, snowstorm or fallen trees blocking roads, things like that)

 

[funinspace]

It's not the cost of transport, it's the risk of insuring or otherwise guarenteeing it's delivery. There are huge risks involved there, and that gets directly factored into the price as counterparty risk.

I think gold is classified as a commodity not a currency.

It's definitely a currency, which is a bit odd, but makes sense for technical reason. It does have similar delivery problems to other precious metals, which are commodities.

The ultimate delivery problem:
http://www.scmp.com/news/hong-kong/...nessman-who-bought-hk27m-gold-ends-metal-bars

Police were last night making arrangements with a mainland businessman to check whether HK$270 million of gold bullion he bought in Africa was genuine after part of the consignment was swapped with metal bars.

On Wednesday, Zhao Jingjun, 43, opened part of his shipment in front of his buyer in Hong Kong and discovered the gold had been switched for worthless metal.

A senior officer said it would be the city's biggest heist in a decade if it was confirmed that all the gold had been stolen.

An initial inquiry showed Zhao purchased 998kg of gold bars from a company in Ghana in mid-April, police said.

The consignment, in 14 cases, was escorted by his staff and delivered from Ghana on a chartered flight late last month.

 

[NobleSavage]

Yes.
A lot of preppers store ammunition too: it actually has use (especially in their Mad Max influenced doomsday scenarii), and would probably be easier to barter with than gold, and is quite easy to store/hide.
(but is totally useless for civilized emergencies. Food/water, you can actually use in things that do happen, like flooding, snowstorm or fallen trees blocking roads, things like that)

My doomsday plan is to get a 55 gallon drum of DEET. I'll barter that shit by the mg.

 

[bilby]

Commodity money enthusiasts hate to admit it, but gold is fiat money.

The value of gold is the same as the value of dollar bills - it resides not in the material, but in the completely arbitrary perception people have of its value.

Gold is not completely valueless as a commodity - and nor is the rectangle of cotton paper with green ink on it. The former can be used for dental work, jewellery, optical coatings and electrical contacts; And if you have lots of it at a low price, it would make a good corrosion proof cladding - nice and soft, it would be a good replacement for lead in flashings and stormwater drainage applications, for example. The dollar bill would make pretty good toilet paper, in the absence of any perception of value (and if you have ever tried to live for any length of time without toilet paper, you wouldn't sneer at that as a measure of value).

In the event that civilisation collapsed, paper money would be pretty much worthless - and so would gold. Neither would be a good exchange for a tin of beans or a roll of 3-ply loo paper, unless the quantity being offered in exchange was huge.

An oz of gold might be tradeable today for 1,000 tins of beans; but in a post apocalyptic dystopia, a can of beans would likely get you a good deal more than 1,000oz of Au.