March 9, 2017, from the website http://investmentresearchdynamics.com "...Just like everything else in the western financial system, the paper trading markets are leveraged beyond redemption. The amount of paper “claims” on actual physical gold was estimated to be 100:1 in 2010. We can assure you that ratio is much higher now. On the Comex alone, for instance, if more than 9% of the April open interest in gold futures were to stand for delivery – based on the currently declared 1.4 million ounces of gold reported as being “available for delivery” (registered) – the Comex would default. The entire open interest in gold futures is 60x greater than the amount of gold available for delivery. This is just the publicly traded paper gold derivatives. There’s also the shady world of OTC gold derivatives. We have no idea what kind of leverage is embedded in these contracts. But the total notional amount of OTC “precious metals” derivatives according to the OCC’s latest quarterly report on OTC derivatives (Office of the Comptroller of the Currency) is over $28 billion. Just to highlight the degree to which the Government goes in order to hide the facts about the gold and silver market, the OCC used to break out OTC precious metals derivatives into the categories of “gold” and “silver and other.” Now the OCC reports just “precious metals.” What is it that the Government and banks are hiding? The amount of leverage embedded in a Comex futures contract, based on the current amount of margin required, is about 25:1. There’s no telling how much leverage is embedded in the OTC derivatives agreements. All we know is that the disclosure requirements are becoming increasingly more opaque..." Your comments welcomed:
Yep, sounds like our current banking system - the bank only keeps on hand 10% of what I deposit and loans out the other 90%. If everyone wanted to withdraw their deposits at the same time, the system would collapse.
Banks leverage every asset at every opportunity. People say the banking industry is a house of cards . . . My own opinion is that fiat money itself is the house of cards, and not the banking industry. We are in a race to the bottom, and it's going to hurt very badly when we finally hit.
Fake News: Part right. There is probably just that much of gold available for delivery. Most Wrong: Only those future contracts that have paid the current FULL Price for the gold can have it delivered ( see the word registered). The other contracts even though they say "gold" are entirely paper based on the "ACTION" of gold. They are paper bets and are paid off in paper money~ no gold changes hands. Since COMEX is paid upfront, if they need more gold, they can obtain it before the contract comes due. YOU can not decide at the last minute ~Hey, wait I want gold instead of $$ if you didn't pay the larger amount up front! Comex has a prospectus and no one reads it on the bullion sites. If, IF they can not deliver gold ( such as World wide war, quarantines, Zombies, whatever, they can pay off in USD @ the delivered price. So they will not DEFAULT. But it is well known that bullion groups have gone out of business. Just remember the biggest conundrum of bullion investing. "If bullion is better than paper cash , Why would they even sell it to you for cash??? Think.
Very true. But what would it do to the price of physical gold if they had to buy so much at one go? Who would sell so much: not the Chinese, Russians or Indians, who are the main beneficiaries of the low prices. Fact is, not everyone is going to try to cash in because almost all are funds, only playing the paper market, and have no interest in the physical item. This simple fact alone is why the price is so controlled. If all paper contracts were required to be delivered in gold (or silver) then the price would be much higher. Assuming, of course, that there would still be the same number of contracts. There wouldn't be. The price of physical silver is closely tied to the price of paper silver only because the insiders, the big metal dealers such as APMEX, are willing to sell physical at the paper price. They hedge their bets and so don't care what price the sell at as long as the buy as a lower price.
So far, so good. But the first default, even in the Eurozone, sets off an avalanche, and a LOT of paper wealth will disappear, and that paper wealth is often the collateral for other big deals. I'll continue buying a little bit each month and hoping for the best. All the folks buying little squiggly lines on Lincoln's face, good luck with that.
Most PM miners ( companies) are hedged several years ahead. They do not sell everything they mine as it would lower the price, so they do their own paper, hedging into the future so the average income is predictable within a range. Jewelry and some few industrial industries use the physical delivery contracts as they must have it to make their rings and things. The rest ( and the 90% is probably true , are strictly paper. a person or company can bet on gold going up or down by a certain amount for a small percentage $$ for a set period of time. If they are right they get paid with the losers cash. Wrong, they lose .The exchanges get their % fees as usual and continue to grow.
That is correct. Their business is taking something of lesser value and exchanging it for something of greater value, and the difference is called the profit
The difference in called an increase in fiat. It is only turned into a profit when you then trade those scraps of paper for items of value, such as commodities (PMs, food, housing, etc.) If it is not turned into an item of value then inflation eats it away.
Than nothing is money by your definition. Money is dollars in the USA. Money is what you buy and sell things with. I would be more than happy to take anyone's paper fiat who feels its worthless though
