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Thread: Gold on the rise?

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    Senior Member Butrcup98's Avatar
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    Default Gold on the rise?

    I've been tracking the price of gold because eventually I'd like to buy a few more ounces. Most websites say that gold is worth between $8-900 an ounce. However, gold p/ounce is selling for over $1k on ebay and from the US Mint. Why are the numbers so different?

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    Banned Melonie's Avatar
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    Default Re: Gold on the rise?

    more of the same reasons pointed out in your previous thread ...

    Basically, it boils down to there being a huge difference between 'paper gold' and real physical gold. Some investors in gold ETF's, gold futures contracts etc. are beginning to realize that when it comes right down to it there may not be any physical gold to back up the paper promises. Thus some inverstors have been seeking to take delivery of the real thing ... which has greatly exceeded the inventories of retail dealers and has also exceeded the combined production capacity of the world's mints !!! Thus investors who are anxious to lay their hands on the real thing are being charged a premium price by those who actually have physical gold and who are also willing to part with it.

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    Senior Member Butrcup98's Avatar
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    Default Re: Gold on the rise?

    Thanks. I guess it's simple supply and demand.

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    Veteran Member StuartL's Avatar
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    Default Re: Gold on the rise?

    Sort of. Supply and demand but there is also a mass of institutional meddling to take into account as well...

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    Default Re: Gold on the rise?

    a mass of institutional meddling to take into account as well
    truer words were never spoken !!!


    guess it's simple supply and demand
    it's never that simple where a commodity is concerned. The reason is that, on the COMEX, the 'market' places equal supply versus demand value on 100 ounces of real gold for sale as it does on a piece of paper - a piece of paper issued by someone who doesn't actually own any gold, who effectively promises to go out and buy 100 ounces of gold at whatever future spot market price prevails, and then sell it at a pre-agreed price which may be higher or lower than the actual price they must pay to buy the 100 ounces of gold on the future spot market.

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    Default Re: Gold on the rise?

    Don't you think you should talk about default risk provision instead of "paper" vs "real"? I think that is slightly misleading. The fact that people are trading a contract has nothing to do with the price, it's the precise nature of that contract - ETO vs OTC vs IOU for example. In an ETO gold swap, there should be virtually no discount to the "proper"future price.
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    Default Re: Gold on the rise?

    ^^^ from a supply and demand standpoint, real gold is real gold. 'Paper' gold may or may not ever exist, depending on the solvency of the paper 'hanger'. In other words, watch what happens very carefully if say 25% of current GLD investors decided that they want to redeem their shares in the same time frame !!!

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    Default Re: Gold on the rise?

    Here is an interesting "gold bug" site for you.
    https://www.kitcomm.com/forumdisplay.php?f=10
    Obviously these folks are biased but it's still some very good info for consideration.

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    Banned Melonie's Avatar
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    Default Re: Gold on the rise?

    ^^^ I check that BBS occasionally ... lots of hardcore gloom and doom gold bugs. And many seem to follow an almost 'religious' worship of gold !!! Just my personal opinion, but gold is like all other investments ... there is a time to get on board and a time to get the hell out. Obviously, having been on board for the last few years turned out to be rather profitable.

    As to the future of gold prices as denominated in US dollars, this almost entirely boils down to future US dollar inflation versus deflation policy which will come out of Washington as well as the central banks of China, Japan, the EuroZone ... and to some degree from the Saudi Oil Sheiks. Again my personal opinion is that the inflationists are pulling out all the stops lately, and will probably 'win' in the end ... which could indeed send gold prices much higher than current levels as denominated in US dollars.

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    Default Re: Gold on the rise?

    You can't really and actually spend gold because you have to convert it back into money first, unless that person/business wants your gold for some limited use. So gold is not money. Gold is just a variable-priced commodity that is a storehouse for money at variable conversion rates. It is different from most other commodities because it has limited uses, has great weight /volume, has infinite storage life, looks pretty, and is fairly easy to convert. In troubled times those gold bugs really have to take physical possession, as anything else is just paper.
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