Confused or intentionally confused?

The fees was talking about WHY the Fed might have lent this gold out. Its very expensive to have a vault, and why should the gold just physically sit there earning no income?

As to manipulation, yes every market is some. Most of the "manipulation" is intentional, allowing margin both in buying and selling. However, there are literally tens of thousands of very smart people who spend every second trying to make a buck on the markets. Do you really think every single one of them are just stupid? The PM market is, in the scheme of things, very tiny markets. You really think that if there truly was blatant manipulation going on someone would not pony up the money and call their bluff? If its truly manipulated to the extent most here seem to believe, why doesn't a billionaire just buy the market and call their bluff?

So, in effect, I never put my trust in human nature, human generosity, or human good will towards their fellow men. However, I do put my faith in human greed, and if there was truly open manipulation going on there would be tons of Wall Street types scrambling over themselves to make a buck on it and arbitrage it away. That is why I am not a big believer that "gold is really worth $5000 an ounce and its the big bad boogeyman making it worth only $1200".

 

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It may be an expense, but, again, the issue is that the gold has basically disappeared. Keep in mind that we have a good number of military bases in Germany, underscoring that the post-WWII relationship between Germany and the U.S. is based on trust and cooperation. With the revival of Germany following that war, and especially during the Cold War, I highly doubt the Germans would have been unable to afford these fees, assuming they were even charged. Germany, as a strategic partner, is not a nation you can bait and switch, and say to them: "Well, the storage fees were high, after all, so it will take 35 years rather than 7 to return your gold, if that."

So, no offense, but that argument seems absurd on its face, and I find you to be a very reasonable guy.

 

Ok, Let's say I agree with you and this is a political mess and the Gold is gone. How does this affect the Bullion investor? How are your decisions affected by whether the Gold is present or not. What do you or I do differently because of this.

From strictly an investors point of view, how does this change anything? It seems to me it is just another case of the PM pushers desperately trying to grab onto to something and peddle their wares

 

Yes, I see that point: if gold is manipulated, then one can argue that it is best to stay away from such a market lacking transparency. Fair enough.

Others are arguing that the manipulation is nearing its end due to these red flags in the market. It may not be convincing to some here, but what the heck, gold at least is a hedge to inflation in the long run. I personally like that aspect of gold and silver, especially at these prices.

Mind you, I am not for people going all-in into gold, especially when they are married with kids or about to retire. This industry (expanding the definition beyond just bullion dealers) also attracts a lot of shady characters, though this is, from my experience, a bit taboo here to openly discuss (when I say industry, again, I also include the coin dealers). I am all for the industry, both bullion and numismatics, getting whatever heat and scrutiny comes its way.

 

Apparently I didn't make my self clear enough on that point, I know that "normal" banks can do what investment banks can do (mostly), my "classes" were not mandated by any laws, only what the banks actually did. You seemed to be insinuating in an earlier post, that there was only one banking industry, that they were all doing the same stuff (generally).

Guess what? That's wrong.

 

A lot of information on the internet is probably outdated. I am not pulling stuff out of thin air; I have a business degree and it taught me almost nothing about how the real world actually works. I have spent the last couple of years rewiring my brain to account for this disparity. Actually, I had a suspicion about my professors, since they seemed to parrot the same views on the textbooks. This is from Wikipedia:

In the United States, commercial banking and investment banking were separated by the Glass–Steagall Act, which was repealed in 1999. The repeal led to more "universal banks" offering an even greater range of services. Many large commercial banks have therefore developed investment banking divisions through acquisitions and hiring. Notable large banks with significant investment banks include JPMorgan Chase, Bank of America, Credit Suisse, Deutsche Bank, Barclays, and Wells Fargo. After the financial crisis of 2007–2008 and the subsequent passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act, regulations have limited certain investment banking operations, notably with the Volcker Rule's restrictions on proprietary trading.

Trust me, I am not trying to one-up you. You seem to have an interest in banking and economics, which is good, but I encourage you to look at how these definitions have become blurred in recent years and the arguments for re-establishing the barriers between commercial and investment banks. I am not suggesting I can walk into a regular bank and get investment advice as with Morgan Stanley. You might also want to check out Nomi Prins, who was a high-ranking executive at Goldman Sachs.


Source:

http://en.wikipedia.org/wiki/Investment_banking

 

I miss the times when you could win a war and keep the spoils.

 

By the time GBLA was passed banks

By the time GBLA was passed banks, utilizing a holding company structure, had the authority to deal in non-eligible securities for over 12 years. Although Solomon Smith Barney was a sub of Travelers the main issue with the 1998 merger with Citi was the insurance business concerns. The Bank Holding Company Act of 1956 prohibited banks from afiliating in the business of insurance underwriting.

 

Making billions isn't worth being assassinated over, anyways they made an example out of the Hunt Brothers by changing the rules of the game to take them down. I'm sure that didn't go unnoticed by the billionaires of the world.

China is importing over a 1,000 tons of gold a year, and keeping their own mine production in the country. Having the price manipulated downward is only to their advantage as well, so they have no desire rock the boat.

The gold market isn't really that small btw, the market cap is something like 7.5 trillion. That is the equivalent to about the 30-40 biggest companies in the USA combined.

 

7.5 trillion might be all of the gold in the world, but how much is for sale? Most physically cannot/will not be sold. I have my wedding ring, ostrogothic gold, byzantine gold, and other pieces I simply would never sell at any price. I was referring more to simply buying all gold currently for sale. The Hunts got in trouble by the leverage they were using. They were leveraging money to try to corner the market, not just buying. Silver would be an easier example. Why not spend a few billion and physically buy all silver for sale if you truly believe its worth much more?

I thought the article linked earlier was interesting, how lower gold prices were actually forcing higher production, and current production was actually historically very high. Might help explain why China can buy a lot of gold but prices not increasing.