Long version:
There’s somewhere around 200x more “paper gold” in circulation than there is actual metal in the vaults supposedly backing it up. This is politely called “rehypotecation“, and less politely it’s called “fraud”. Basically, they are selling the same gold bar 200 times and counting on the fact that almost nobody demands physical delivery. Now, the BIS apparently demands that the holders of gold as a tier 1 security under Basel III demonstrate that they actually hold physical gold in the quantities they are reporting on paper, and the deadline for that appears to be 28.6.2021. This means that some of the major players, who previously used to defraud people massively by playing with paper, are in a situation where the music will stop playing, in a game of musical chairs, so they are now dumping all that paper gold (read: fraudulent garbage that is about to be exposed) in order not to get caught, and since the market treats those forgeries as if they are physical metal, the price of both is connected, so selling off immense amounts of paper lowers the price of both. At the same time, the demand for physical metal is enormous and everything that appears on the market is immediately lapped up. When the paper positions unwind, and all the thieves manage to cover their naked butts, the price of gold, now fully physical, will likely explode to cover the same volume of money that was previously the valuation of all the “paper gold” forgeries in circulation, basically expanding to 200x or so compared to where it is today, because the “paper gold” was artificially introduced to satiate demand without allowing the price of metal to rise accordingly.
Short versions: hold and buy now while it’s cheap, and if it drops more, buy more. Think of it as Bitcoin at $300, a few years ago.
Funnily enough, just went through this part of novel (Atlas Shrugged):
“Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked: “Account Overdrawn.”
In theory, there is no reason why paper money would be a bad thing. In practice, when you give someone the ability to create more money to finance his idiotic schemes, such as wars, you’re just asking for trouble. However, currency debasement wasn’t invented with paper money – in Rome, denarius was debased to the point where it contained hardly any silver at all. The problem is when a central power is allowed to control money. At that point, it can force you to use some garbage item for payment under threat of force, which basically means everybody is forced to sell valuable goods for questionable money, instead of money being some form of universally desirable and acceptable commodity, such as gold or silver. This looks like an example of what happens when government takes control of something that was originally developed by free market – it basically turns to shit.
Yes, they are massively pulling physicall metal off of Comex: https://twitter.com/GarrettGoggin/status/1370373577720143878
What is your opinion on Bullionvault, do they have enough quantity of precious metals if massive withdrawall occurs from their users? I’m aware that they are supposed to have real metal in their vaults but there are discusions and doubts on various forums because the number of users is rising and somehow everyone gets their share of requested metal.
I think bullionvault is reliable, but within reason. This means that if there’s an infrastructural failure, you can’t get either metal or money. Also, if there’s some law restricting access to it, you can’t get it, but that’s the same thing as with bank accounts/vaults, which I don’t trust either. Basically, bullionvault is something that I find preferable to paying 25% VAT on silver, plus huge spread for physical. Also, if I were to buy platinum, I’d buy it there. However, I treat it as merely one of the options for owning vaulted metal – I’m sure there are others, with their own set of pros and cons.
I guess Basel 3 lays out only those rules that would “burn” the paper gold but I guess they can continue this kind of faking with paper silver? 🤔
In theory, yes, but I don’t think it’s realistic, since the major players are clandestinely removing huge amounts of metal from both Comex and LBMA:
https://www.youtube.com/watch?v=x2tEjhr6mdc
Basically, there is a loss of confidence in “paper” on the highest levels of the financial sector; on the lowest levels, people are still clueless.