While proponents of paper gold feel that it is easy to store, transport, and trade, the opponents think that it can be a riskier option. I fully expect the printing game to continue to provide the fuel for hard-asset investments like gold and silver to increase in price in the years to come.
Signs of high physical demand from China, India, and small investors buying coins from the mint indicate that gold prices should be rising.
What is actual and what is imitation will make all the difference going forward when it comes to the subject of gold. The Physical Gold Market Previously, there was little difference between the physical and paper markets for gold.
When I first signed up to trade futures, I was appalled at the powers the broker wrote into the contract, which included them having the power to immediately liquidate my positions at their discretion.
Four years later, inthe number for COMEX ballooned to paper ounces outstanding for every physical ounce of gold. It details the long and the short positions of three categories of traders.
My point is that this market is much too easily riggedand that the warnings about manipulation are valid. Those seven banks have the opportunity to manage the gold price: Placing a sell order big enough to affect the overall market price suggests that someone with powerful backing wanted to drive the price of gold down.
One could argue about how long these growth rates will continue, but the incentives are all there for all central banks to bail out their governments and their commercial banks. Once the futures market makes a big move like that, stops can be triggered, causing it to move even more on its own.
Investors who have invested their money in physical gold will earn extremely good profits during a limited supply of gold. The prices we see quoted all day long moving up and down are taken from the latest trades of futures contracts.
I fully expect currency debasement to drive gold higher, and I continue to own gold. The derivative market in gold is roughly times larger than the actual physical market.
The ones to watch are the large speculators non-commercialsas they tend to move with the direction of the market. They allow to be solely exposed to the gold price variations in dollars minus the cost of hedging without any monetary incidence.
Let me tell you that I had many cases when I was told to put up more margin or lose my positions. These banks accounted for all but 19 of the contracts sold.
A run on trackers would take the form of musical chairs. If there are multiple owners of bars, certain shareholders could not obtain delivery in a timely way if at allsince depositories would first have to recover the bars they leased to other institutions non-allocated gold may be leased to other banks that use that gold to increase their stocks on which their own GETFs are guaranteed, which opens the doors for a Ponzi scheme.
This tends to have a tremendous influence on the price of gold on a short term basis. The Physical Gold Market Previously, there was little difference between the physical and paper markets for gold.
Can markets really be influenced by big players.
To conclude, gold trackers cannot be put on the same level as physical gold, which remains the only gold asset that serves as real wealth insurance. It can become a panic, where markets react more to fear than fundamentals.
In light of this patent conflict of interest, it appears that physical gold is safer when stocked with depositories specialised in storage than with entities whose main activities consist in lending money. But the statistics show just the opposite: While paper gold has a better liquidity, owning physical gold is less riskier.
Physical Gold versus Paper Gold.
Buying physical gold is just one method of gaining exposure to gold and silver: By purchasing physical bullion, buying shares in an exchange traded fund (ETF), a traditional fund or mining company, or riskier option such as spread betting, futures or.
Mar 26, · Physical gold may be scarce, but available paper gold has been limitless. Someday the confidence in gold futures is likely to collapse. Some event will prompt traders to look at the shocking amount of leverage built into the izu-onsen-shoheiso.com: Clint Siegner.
What is "Paper Gold"? The term paper gold means you have a piece of paper acting as a substitute for the physical gold. With paper gold, you don't own the gold; you own a promise to receive physical gold. In plain English, it means you are a creditor of the corporation issuing the paper gold certificate, thus subject to counterparty risks.
Owning the physical gold has no counterparty risk. Paper gold is usually ownership of the “option” to buy physical gold, ownership in a company that mines gold or the “option” to benefit from a price movement of gold in the Exchange-Traded Fund (ETF).
It is not usually the ownership or possession of the underlying physical gold. Physical Gold vs Paper Gold. If part of the reason you’re investing in precious metals is as a hedge against an economic downturn, black-swan events or experimental monetary policy with a longer-term outlook, there is no substitute for owning physical gold, stored in your name.
I call the gold futures market the “paper gold” market because very little gold actually changes hands. $ billion of paper gold is traded per month, but only $ million of physical gold is delivered.Physical gold or paper gold