Has anyone considered the possibility that there the amount of gold that has been puirchased is more than the amount of gold in existence? So much gold investment is on paper and we have to think about the possibility that there is some dishonesty going on in the marketplace. Think about the housing bubble and the non-existent "money" that fuelled it. If someone placed an order for 1m tons of gold I am sure it would be filled whether anyone has that much gold to sell or not. Could it all be a ponzi scheme of sorts? Is there any proof that the gold you buy actually exists if called on?

With this much money and speculation going on it makes you wonder oif the fraudsters are not busy.

Any thoughts on the fraud aspect?

well I can't say whether it's all accounted for but there's a big ass vault about the size of a football pitch in the middle of Zurich that has a lot of it.

Fort Knox too. But what about all the demand recently? Surely the traditional holders of gold have not been selling which means it must be recently mined? My thoughts are that the amounts sold far outwiegh the amounts that could have possibly been mined or in the hands of those who actually sold.

In other words--could it be that the vast majoirty of gold sales are on paper which is, in effect, more fiat than the currencies that are used to buy gold?

Anyone got the stats to show mining rates compared with gold sales and purchases? If this is a huge fraud it could devastate the metals markets for a generation or more.

The reason I know about that vault is because I performed an inventory check on it in 1999. As well as the pallets of gold, silver, platinum and palladium bricks, there was a lot of coins under individual accounts. This is not to say that a fraud couldn't/hasn't be perpetrated but it's hardly a no-brainer.

Good post, you touch on something I have sometimes thought about in relation to macro-economics. If everyone at once called in their fiat currency in exchange for something of real value what would happen?

In thinking about the answer to that question I can only conclude that whilst it may be possible that certain methods of gold investment e.g. shares and non-physical (this is not what the goldbugs use I can assure you) may be questionable- but to say they are questionable would put even more doubt on the entire system.

Hence the reality is that if there truly was a problem the first people to be hit will be the shareholders, then the fiat holders, then the paper gold holders and last but least physical gold. So as you can see for physical gold to become risky the world needs to get SO desacrated that people will only trade things of immediate usable value like food, cigerretes, alcohol etc.

I don't expect my post to impact your crazy-man thought pattern that the dollar is somehow safer than gold. But at least some of the lurkers will see how easily I debunked your rather silly assertion on gold.

It's a good idea to actually hold the gold you buy. Don't trust paper.

The “does the gold exist” argument gets banded around by people who say the US government tries to manipulate the price of gold down by selling gold it does not have. The argument then goes a long the lines of “if enough people start taking delivery the price will start going to the moon etc”.


I don’t follow this, billions of shares in companies are traded daily this doesn’t require a constant stream of new shares. I think gold is simply traded like shares are.

There is allocated and unallocated gold, if you are buying gold yourself then allocated gold seems the thing to have (if you don’t want actual physical delivery): here is an edited quote from Bullion Vault’s help pages:-

Unallocated gold

Unallocated gold is a bookkeeping device by which a bank or other enterprise provides you with notional gold. The gold is a liability to you on their balance sheet. It is synonymous with gold 'accounts' and its holders are unsecured creditors.

It arises from an important legal difference between the terms under which banks look after their customers' valuables. Unallocated gold is formally a deposit, which becomes the bank's property and its liability to you as a depositor. The alternative agreement style - known as allocated - obliges the bank to hold your gold as your outright property, under a custodial or safe-keeping contract.

Under the law a liquidator returns your formal property to you if a bank fails. But where it is your asset - like unallocated gold (not your property) they almost certainly cannot return it to you. Instead you would be in a pool of unsecured creditors waiting to see what cash the liquidators might raise in selling all the bank's assets.

…

BullionVault does not provide unallocated gold. All its gold is delivered in physical form. It is held as the outright property of the service's users. It is available in single gram multiples, and is not required to be moved at the buyer's expense in settlement of a sale. This generally makes it more valuable to buyers than spot gold.