Posted on 09/09/2015 10:12:22 AM PDT by blam
Tyler Durden
09/09/2015
Just over one month ago, when looking at the latest changes in registered gold held at the Comex ,we were stunned not only by the collapse in this series to a record low of just over 350k ounces or barely over 10 tons, but also by the surge in "gold coverage", or the amount of paper gold claims on physical gold, which exploded to a record high 124 per ounce.
This is what we said on August 3:
While on its own, gold open interest - which merely represents the total potential claims on gold if exercised - is hardly exciting, as we have shown previously it has to be observed in conjunction with the physical gold that "backs" such potential delivery requests, also known as the "coverage ratio" of deliverable gold.
It is here that things get a little out of hand, because as the chart below shows, all else equal, the 43.5 million ounces of gold open interest and the record low 351,519 ounces of registered gold imply that as of Friday's close there was a whopping 123.8 ounces in potential paper claims to every ounces of physical gold.
This is an all time record high, and surpasses the previous period record seen in January 2014 following the JPM gold vault liquidation.
(snip)
(Excerpt) Read more at zerohedge.com ...
The USA has a socialized, centrally-planned money supply
Just like central planners trying to centrally-control food supplies, or medical services, they must act to control all sources of supply, black markets, and the behavior of individuals.
Gold is just that for the socialist money planners. Its an alternative which must be controlled.
Don’t doubt the FED, and their constituent crony-capitalist banks on Wall Street are heavily involved in manipulating gold.
These “end of the world” stories involving gold never seem to amount to anything.
The “end of the world” prognostications from Zero Hedge never amount to anything.
Are these futures?
It might be better to own gold futures instead of pork bellies. That way if you have to take delivery you find a few bars of gold sitting on your lawn and not a huge mound of pork bellies.
On the other hand pork bellies are the same as bacon, so maybe not...
“Don’t doubt the FED, and their constituent crony-capitalist banks on Wall Street are heavily involved in manipulating gold.”
The Treasury maybe, since they own a huge stock of gold. The Federal Reserve wouldn’t have any use for it, although Paul Volcker seemed to be using a gold price target back when he was chairman of the Fed.
In a queer display of the dismal science, Janet Yellen has summed the trillions of US Dollars in foreign Central Banks, and she has concluded, quite absurdly, that the value of gold is a myth. We are doomed.
Can someone tell me what the real on-the -ground difference is between paper gold and and going to the bank only to be told that the money you deposited into your account isn’t actually there?
I am not a financial genius, nor do I claim to be, but I cannot understand why a person would entertain the thought of purchasing paper gold. It’s a ridiculous concept to me.
Mrs. AV
I had never thought about it but yes, taking delivery in gold (or silver for that matter) is much simpler than getting wheat or oil.
Don't think to long and hard about what it means to "own" a share of stock without having a certificate.
I am not a financial genius, nor do I claim to be, but I cannot understand why a person would entertain the thought of purchasing paper gold. It’s a ridiculous concept to me.
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It works like any other commodity. If you buy or sell oil, you usually don’t want to take delivery of the actual oil. You are betting on the price going up or down.
However, you can take delivery if you wanted.
So, if only a tiny number of people wanted to take delivery, the gold isn’t there.
They are seriously over selling gold that they don’t have.
Paper gold is as useless as a government promise. Unless you hold the bullion in your hand all you have is a promise to deliver at some point in the future.
” but I cannot understand why a person would entertain the thought of purchasing paper gold”
It would likely be investment firms rather than individuals. They don’t want to pay to store the gold. It’s probably a short term buy, maybe a hedge against something else they are holding. Paper gold doesn’t cost much to trade. Moving gold around, storing it in a vault is another matter entirely.
No doubt all of the stocks traded around the world every day really exist, too.
This must mean that it is OK to sell shares in non-existent gold mines.
Especially an ounce of paper gold that is already promised to 123 others.
Mrs AV
It’s all fantasy money, just like fiat currency.
Mrs. AV
Your explanation makes more sense than an individual purchasing paper gold. Doesn’t fill my heart with confidence for those depending on paper gold purchases to fund their retirement, though. Selling the same thing to 124 people seems wrong. I expect there’s lots of money to be made in doing it, until it’s time to pay the piper. Then hemp futures will skyrocket(if there are such things) along with the price of lamp posts.
Mrs. AV
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