Based on yesterday's response in
the paper gold market in NYC after the Fed's rate hike announcement, it seems that the western Central Banks / bullion banks are losing control of the bullion market.
Not exact matches
We and others have commented at length about the contradictions between the
markets for
paper (synthetic) and physical
gold.
Such a hypothesis, in our opinion, does much to explain the incongruity of a declining
gold price while fundamentals for
paper currency, and the US dollar in particular, obviously deteriorate; while demand for physical
gold has exceeded new mine supply for several years running; and while above - ground 400 - ounce.999
gold bars located in London, New York, and other financial capitals (in cohabitation with speculative trading activity in
paper markets) have steadily dwindled and disappeared into Asian financial centers reformulated as.9999 kilo bars.
But when new discoveries of
gold are made,
market participants do not begin to hoard
paper or to set up printing presses for the issue of unbacked currency.
When an irresponsible monetary authority begins to overissue
paper money,
market participants begin to hoard
gold, which stimulates the
gold - mining industry and drives up the resource costs.
Signs of stress that reflect a growing shortage of physical
gold to support the
paper market include the prolonged backwardation of the co-basis which has existed now for 3 1/2 years and now approaching extremes last seen at the bottom of the
gold market at year end 2008:
It is also worth pointing out that downward pressure on the price of «
paper»
gold that was not supported by the «physical»
market would inevitably result in the price of «
paper»
gold making a sustained and substantial move below the price of the physical commodity, which hasn't happened.
Holders of
paper claims to
gold will receive polite and apologetic letters from intermediaries offering to settle in cash at prices well below the physical
market.
I know it's hard for most of you to believe that
Gold and Silver will surpass their old January 1980 highs, but that is what a 20 + year generational bear
market will do to a whole generation of investors who have grown up with falling real assets (
Gold, Silver and commodities) and rising
paper assets (stocks and bonds).
Perhaps the most overlooked way to invest in
gold is the Gold IRA which has out performed almost all other paper investments such as real estate and the stock mar
gold is the
Gold IRA which has out performed almost all other paper investments such as real estate and the stock mar
Gold IRA which has out performed almost all other
paper investments such as real estate and the stock
market.
In their May 2015
paper entitled «Lumber: Worth Its Weight in
Gold: Offense and Defense in Active Portfolio Management», Charles Bilello and Michael Gayed examine the recent relative performance of lumber (a proxy for economic activity via construction) and gold (a safe haven) as an indicator of future stock market and bond market performa
Gold: Offense and Defense in Active Portfolio Management», Charles Bilello and Michael Gayed examine the recent relative performance of lumber (a proxy for economic activity via construction) and
gold (a safe haven) as an indicator of future stock market and bond market performa
gold (a safe haven) as an indicator of future stock
market and bond
market performance.
Physical
gold that may be suffering from a falling domestic fiat currency price is still exponentially more valuable than devaluing
paper fiat currencies, as anyone living in the Ukraine, Russia, Mexico, Brazil, Venezuela, and in any number of dozens of other emerging
markets have unfortunately rapidly learned in the past few years.
The following chart, taken from the
paper, shows the rolling 250 - trading day correlation between U.S. stock
market returns and
gold returns (in U.S. dollars) based on daily data.
After effectively shutting down the major rise of
gold and silver in the
paper markets, the tables have finally turned.
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When the stock
market crashes, disease pandemics break out, terrorists attack, or the value of local currency plummets, people convert their
paper money into
gold.
Paper money always drives gold out of circulation since the market ratio of paper to gold severely under values
Paper money always drives
gold out of circulation since the
market ratio of
paper to gold severely under values
paper to
gold severely under values
gold.
In my opinion, there are three major pros when it comes to
gold investment: (1) It is a quality hedge against a down
market, (2) it will still have value if
paper currency inflates, and (3) there is an apparent upside to its value vs. prior years.
They acquire an emerging
markets mutual fund here and a
gold ETF there, plus a few stocks they read about in the
paper, and before you know it, they have no idea what they're invested in or how much they're paying in fees.
Today, we use the system of «fiat money» which says that currency is intrinsically worth only the
paper it is printed on is is used only as a medium of exchange for the supply and demand of goods and services in an economy, including precious metals like
gold and silver, with the value of money allowed to fluctuate based on
market forces.
Gold mining company reserves in the ground should gain appreciation as the market loses confidence in «paper gold» assets as the physical gold market tightens with increased investment flows and the ratio of gold futures contracts to warehouse inventories rises punctuates the scarcity of physical gold to the amount derivative gold instruments traded on a daily ba
Gold mining company reserves in the ground should gain appreciation as the
market loses confidence in «
paper gold» assets as the physical gold market tightens with increased investment flows and the ratio of gold futures contracts to warehouse inventories rises punctuates the scarcity of physical gold to the amount derivative gold instruments traded on a daily ba
gold» assets as the physical
gold market tightens with increased investment flows and the ratio of gold futures contracts to warehouse inventories rises punctuates the scarcity of physical gold to the amount derivative gold instruments traded on a daily ba
gold market tightens with increased investment flows and the ratio of
gold futures contracts to warehouse inventories rises punctuates the scarcity of physical gold to the amount derivative gold instruments traded on a daily ba
gold futures contracts to warehouse inventories rises punctuates the scarcity of physical
gold to the amount derivative gold instruments traded on a daily ba
gold to the amount derivative
gold instruments traded on a daily ba
gold instruments traded on a daily basis.
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Also participating on the call: Cal Dooley, American Chemistry Council (ACC); Donna Harman, American Forest &
Paper Association; Kenneth E. Bentsen Jr., Securities Industry and Financial
Markets Association; Linda Dempsey, National Association of Manufacturers (NAM), Jonathan
Gold, National Retail Federation; and Rob Mulligan, U.S. Council for International Business.