More on Paper Gold….

Posted: July 21, 2015 in Geo Politics, Paper money, Statistics
Tags: , , , ,

A long standing concern with using Gold as sound money is the market in which it operates. Please see previous posts exploring this however a current article from the Telegraph sheds more light on the workings of these mechanisms, further highlighting the extent of the manipulation possible and the lack of transparency – it is a wonder that we still call it a market, since it arguably doesn’t even meet some of the fundamental proponents, namely efficient information and price movements based on real participants trading the commodity.

It is telling how much speculators were able to move the market recently. Some commentators have often ridiculed the extent of their influence when markets work in the right way….whenever that is.

Note also the reference to how controlled the price is relative to the US Dollar – the world’s (great fiat) reserve currency – any thoughts the days of the Dollar were numbered should be tempered. This demonstrates the ability to control Gold through the ‘tool’ of paper currencies and interest rates, let us not think merely changing the base of money will solve our problems, we must reconstruct the entire market and all it stands for.

Emerging markets have borrowed $4.5 trillion in US dollars. The borrowers are vulnerable to a double squeeze from both higher US rates and a dollar spike.

What threatens to become a “margin call” for dollar debtors could ricochet through gold markets as a secondary effect. It may have begun already.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s