What's happening with Gold?

[Makalakumu]

Gold has traditionally been viewed as the investment of choice when the economy tanks. It's also the canary in the coal mine when it comes to the devaluation of the currency. In times like these, one would expect that gold would rise through the roof. The economy is tanking and trillions of dollars in debt has been monetized...yet the price of gold is FALLING.

Have the laws of supply and demand been suspended or is something strange going on?

I found this article very interesting.

“Why is gold dropping right now when anyone in their sane mind would expect it to rise? The simple answer to this question is, ‘because Comex-gold isn't gold’ – and because it deceptively pretends to be ‘the’ price-setter for real gold.

“Gold is gold, paper is paper, and ‘Comex gold’ is nothing but paper masquerading as gold while simultaneously pretending to be the price-setting medium for actual gold in the world. Now, finally, Comex-gold is in the process of being unmasked.”

Wallenwein went on to explain what this unmasking will reveal:

“The real supply and demand determinants for Comex gold are not actual gold investors but fund managers. Fund managers are inextricably intertwined with the world of contract-based credit instruments. They bet on Comex gold contracts to hedge their other (currently horrendously losing) bets with something they all, in their in-bred belief in paper markets, believe will 'go up' in value while everything else is going down.”

The price of gold is being artificially manipulated. Futures contracts are being conflated with actual supply, driving the price down. For an idea of the real price of gold, check out what the actual physical commodity trades for on Ebay. Demand is so strong, you can't even find it anymore!

Why is this important?

It means that the commodity markets are compromised. People are buy promises to mine or make more commodities in the future. The real value of commodities, based on the actual supply is being hidden. All this does is hide the effects of hyperinflation that we should be seeing. How long will these futures be traded on the same level as actual supply? What will happen when the market for these futures becomes over-leveraged? With gold, we are looking at an immediate doubling or tripling of the price when the lid comes off. If this happens across the board, you could see immediate and massive price increases in consumer goods.

The more you dig into this stuff, the worse it gets, it would seem.

 

[terryl965]

Will th eunmasking of companys ever stop.

 

[Brian R. VanCise]

Well buying stock in gold does not necessarily equate to having the gold on hand.

 

[Makalakumu]

Will th eunmasking of companys ever stop.

It's hard to say, but eventually you have to have some gallows humor to deal with all of this. We should have been regulating this stuff decades ago, but instead we let it grow into this monster. I'd tell you to invest in gold or put your money somewhere, but I don't think anything is safe. Maybe put your money in coffee cans and bury them in your garden. My great grandparents did that during the Depression.

 

[Makalakumu]

Well buying stock in gold does not necessarily equate to having the gold on hand.

Absolutely. The supply isn't there. If you dump your money into commodities there is no gaurentee that you are actually buying even a fraction of what you thought you were.

 

[terryl965]

It's hard to say, but eventually you have to have some gallows humor to deal with all of this. We should have been regulating this stuff decades ago, but instead we let it grow into this monster. I'd tell you to invest in gold or put your money somewhere, but I don't think anything is safe. Maybe put your money in coffee cans and bury them in your garden. My great grandparents did that during the Depression.

Mine did as well put money in the mattress, I guess we always turn back to the basics.

 

[Bob Hubbard]

Just buy the real deal, not the paper.

 

[Sukerkin]

I have long said that the fate of the global economy rests in how a relative handful of people feel when they get up in the morning; that the 'wealth' of the world is an illusion based upon that most ephermeral of currencies, 'confidence'.

That has been proven true in recent weeks, as the faux money has been exposed for what it is.

But, having been out of circulation {yeah, economics based pun atack !} for a couple of decades, even I am surprised to find that one of the most fundamental of commodities has been compromised by the 'phantom value' obsession.

That's an uncomfortable feeling for me, as an ex-economist (are we ever truly 'ex' what we used to do mind you?).

So far, I've been watching what's been going on with a distinct "Yep, that's what I expected" view (including the ludicrous future impoverishment of the tax payers with the global 'bail out'). The value of gold actually going down would have been number one on my "What I don't anticipate happening" list.

 

[Makalakumu]

The value of gold actually going down would have been number one on my "What I don't anticipate happening" list.

That's why I started looking into this in the first place. The value that gold is trading on the market doesn't seem to correspond with any events in reality. We should be seeing prices two to three times higher. Which begs the question, what is the real value of gold? It's hidden and its impossible to determine because gold paper and real gold are being traded as the same thing.

About the only way that I can see to try and determine a real market value is to see what real stuff actually trades off of the exchange. Check eBay, Amazon or other trading sites. One thing you'll notice is that you can hardly find a thing. The next is that if you do find it, its trading WAY above the state Market value.

Ultimately, I think that this is a harbinger of more bad news. The laws of supply and demand have been compromised. You can't trust that you are actually buying anything on the market unless you are holding it in your own two hands. I'm not exactly sure what the impact would be if these futures market collapsed, but I suspect that we'd see something like hyperinflation as Market adjusts to the real supply of commodities.

What does everyone think?

 

[Bob Hubbard]

http://en.wikipedia.org/wiki/American_Buffalo_(coin)
On September 26, 2008 the U.S. Mint announced it is temporarily halting sales of the American Buffalo coins because it can't keep up with soaring demand as investors seek the safety of gold amid the current economic turbulence[5]

 

[Makalakumu]

The same thing happened with the American Eagle Coin. Australia is usually a good market for actual gold bullion and they have also suspended sale. There's no supply. What does that say about the stability of the market when supply can almost completely dry up and the exchange price drops?

 

[Makalakumu]

This article explains what is happening with gold and why it's important. We are living in unprecedented times. Decades of economic voodoo are coming undone before our eyes. The more our "leaders" do, the worse it gets because the only cure they have for the problem is what caused the problem in the first place. I don't know how this will all turn out but people need to find the courage to say to themselves that the system is broken. Then look for solutions instead of being told what will be done.

Here are a couple passages from the article that I found interesting...

Our economy has become too centralized. Everything has to travel over long distances, so face to face cash-transactions will not be able to keep the system alive. There is much to be said for localized, decentralized distribution systems, which in essence involve many different and varied local economies rather than one large and uniform one. For arms-length cash transactions to be able to sustain an economy, economic activity needs to be localized, i.e., decentralized,

The same thing goes for politics, of course. That’s why the framers of the Constitution gave us a de-centralized federal system with little power at the center and much of it spread out to the states. That system can develop its own evils, as we have seen during the days of slavery, but we are now seeing that centralizing and controlling everything from the federal level is not really the answer, and rather magnifies evil on an aggregate level.
And now, in the face of all this abundant evil, the G7 crackpots have the audacity to suggest that we need to centralize power even more and come up with 'global solutions.' Yet, globalization was the very reason our profligate lending and spending habits here in the US spread around the globe so fast. True to their form therefore, politicians and so-called leaders are now using the bad situation that they created as an excuse for persuading us to give them the added power they need to make it even worse!

Silvio Berlusconi, the Italian prime minister and former EU president, let the cat out of the bag last Thursday when he blurted out (God bless his soul for being such a loose cannon!) that the G7 want to shut down the markets this coming week while they figure out how to deal with the crisis. That cat was very quickly stuffed back down his throat as he was forced, only an hour later, to retract his statement by saying he just repeated what he had "heard on the radio."

Right.

These groups that get together behind closed doors to play Master's of the Universe need to go.