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Gold in the precious metals markets and deviation in gold and world crude
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Gold in the precious metals markets and deviation in gold and world crude

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Gold in the precious metals markets and deviation in gold and world crude

I received a reply from Ingo Bischoff over at The Daily Bell regarding the GC gold price with details which I was not aware of.

I do not trade the GC, but have been analysing it in terms of following the price of gold.

Ingo Bishoff is a financial educator and the founder and president of The San Francisco School of Economics.


Ingo Bischoff
Gold is not a market commodity. Gold is Money. Money is a commodity with constant marginal utility, and it is therefore ideally suited to serve as a standard of value. Gold is that commodity.

To trade gold on the precious metals markets is in essence a hoax to make people believe that gold is just another commodity, and that gold is not money.

The "price" of gold in any irredeemable currency is merely the price of the irredeemable currency in terms of quantities of gold. Gold is really the standard by which currencies are evaluated in the FX markets. Gold has no place in the precious metals markets.

In order to let people believe that the irredeemable USD had much greater value than it did have in reality, Treasury Secretary Robert Rubin under President Clinton manipulated the "gold price" with the help of the Bank of England in the mid to late 1990s. A good source for documenting this manipulation is GATA and its president Bill Murphy, as well as the SEC hearings of March 25, 2010.

To speak of Gold futures with a straight face is laughable. The number of "naked" contracts (contracts which are not covered by physical gold) is estimated to be up to 50% of all the Gold Contracts traded on the exchanges. Large quantities of leased gold are still traded after the lessees, such as Lehman Bros., had gone bankrupt.

If push comes to shove and the exchanges find themselves unable to deliver, the exchanges will promptly activate their "clause majeure" in their contracts with the traders, and the holders of Gold Contracts will be paid off in irredeemable USD. That is exactly how this gold contract trading scheme is going to wind down.

My advise is to be careful and to read your trading contract with the exchange.

If you want to play the value of gold, you are much better off to play it by watching any deviation in the synchronicity of gold and world crude. When that occurs, arbitrage.


Laurus

“If you wish to see the truth, then hold no opinions for or against anything.” - Hsin Hsin Ming

Last edited by Laurus12; April 17th, 2013 at 07:27 AM.
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  #3 (permalink)
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The price of Gold and the value of US Dollar


Here is another quote regarding price of gold and the value of US Dollar.


Ingo Bischoff
There maybe a long-term bull market in silver, silver being a commodity with superb electrical conductivity characteristics. However, to talk about a bull market in gold is missing the point.

The point is that gold is the standard of measure to determine value. Therefore, gold has no price, although aliquot parts of gold do set the standard for pricing the value of all other goods and commodities.

Only, if one believes in the quantity theory of money, can one talk about the market price of gold.

How is the market price for gold quoted... ??? It is quoted in terms of USD. Does that mean today's USD is the standard to measure value... ??? Of course not.

A quote of an ounce of gold in USD, is a quote of a USD in terms of gold. The USD started off in 1792 to be 1/20 of an ounce of gold. Today's USD is around 1/1800 of an ounce of gold. Quite a difference.

Since 1971 the world's currencies have been floating against each other. This means that the USD is no longer fixed to gold. The FED central bank determines the value of a USD depending on the quantity of USDs in circulation. Today's USD is monetized debt. The USD prior to 1933 reflected the value of gold which is determined by the amount of "work" required to mine and refine it.

Though the FED central bank arbitrarily determines the value of the USD based on the quantity of USDs it creates and brings into circulation, it is nevertheless still the amount of "work" required to mine and refine an ounce of gold which serves as the standard to judge the value of other goods and commodities.

It isn't the supply of or the demand for gold which gives value to gold. It is the amount of "work" required to mine and refine it which is used as a standard to measure value universally.

The bull market mentioned is not in gold. The bull market mentioned, or rather the bear market, as it should be called, is in USDs when priced in ounces of gold.


Laurus

“If you wish to see the truth, then hold no opinions for or against anything.” - Hsin Hsin Ming
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Soros: Gold a Safe Haven No Longer

Here is an article by The Daily Bell staff posted yesterday April 16th.

Soros: Gold a Safe Haven No Longer


Laurus

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