If You Own Gold, You Must See This Chart…

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What I'm about to say will challenge even the most steadfast gold bears – or anyone for that matter right now who thinks that gold has seen its better days.

The chart below tells a story – a big story. In fact, I encourage you to forward this email to anyone you know who is serious about his money.

What I found here, with the help of Frank Holmes from U.S. Global and one of the smartest people on earth on the potent combination of Asian markets and commodities, is a chart that shows a truly astounding fact about gold.

Let me walk you through it, and what it could mean to your money, your gold and your financial future.

china gold


Courtesy U.S. Global Advisors -
click to enlarge

Join the conversation. Click here to jump to comments…

About the Author

Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs The Geiger Index, a reliable, emotion-free guide to making big money and avoiding losses, and Strike Force, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.

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  1. Martin | July 10, 2013

    Great article…but doesn't the chart also suggest that there was much more gold being produced than demanded for many months before? And if the supply is drying up, why is the gold price tumbling? Maybe demand has peaked and production was able to cope? After all, the price peaked two years ago now….so not sure I agree, though the metal may bounce near term.

    • Peter | July 10, 2013

      The price of gold is fixed by the price of paper contracts. This means that buying or selling real gold does NOT stand for the outcome of the gold price. Last April one party sold a lot of contracts in one sell (53,000) by the start of the weekend. This dropped the price too fast. It was done on purpose. Which investor likes to loose quite an amount of money by such a foolish act. Not you or me I guess. It was done to manipulate the price of gold and the price of gold dropped indeed.

      BANKS SELL GOLD BY CONTRACTS SO THEY DON'T HAVE TO DELIVER THE REAL GOLD.

      This means that the same amount of real gold can be sold time after time. Buyers of contracts simply don't know that they are fooled.
      Banks can do this, while they know that buyers don't want to possess the real gold. 99% of the gold buyers actually don't have the gold themselves.
      Within a short time people will understand what is happening and will ask for their "real" gold instead of the "paper contract". This alone will trigger sky rocketing gold prices, because of the simple fact that banks cannot deliver the real gold. The banks need to buy the real gold themselves and there is not enough gold to make this happen.
      The amount of real gold has been sold too many times over and over again to different people (but only on paper contracts). So the pieces of the real gold have too many owners in the meantime! The banks simply cannot deliver when all earlier buyers want to collect their real gold. Many earlier buyers will end up having nothing. The paper contracts have only the same value of the paper on which the contract is printed.

      Selling Gold on paper contracts by banks is the biggest manipulation ever in history !!!

      Some real clever parties (including central banks) buy the "cheap" REAL gold at this moment to make a real fortune in the near future. Don't be surprised if the gold price per ounce will eventually rise to $5,000 or even much …. much higher ……….

    • fallingman | July 11, 2013

      Here's what the chart tells you. The Chinese want gold, and while the feather merchants on the Comex are busy trading paper contracts with very little actual metal changing hands, the Chicoms are taking delivery of the real thing.

      That's significant, but you can stop there.

      What it DOES NOT tell you is that the price of gold should rise because mine supply is being eaten up.

      How can I possibly say that? As Mr. Fitz-Gerald puts it, "…the basic laws of supply and demand stipulate that whenever supply is reduced but demand remains constant or accelerates, higher prices result. This is as immutable as the sun coming up tomorrow or the grass turning green in the spring."

      Yeah, it is, in most markets, including silver, BUT NOT GOLD.

      Huh? How could that be? Please note: The same error has been made two other times in the last 10 days or so in the pages of Money Morning. This is the 3rd time I've tried to address it. Here goes:

      GOLD IS NOT USED UP LIKE OTHER COMMODITIES.

      There are some 173,000 tonnes that have been mined throughout the ages. Very little has been "used up" or disappeared.

      About 1,700 tonnes are mined a year. Do the math. New mine supply adds very little to total supply each year. It's a trickle.

      SUPPLY IS BEING DEFINED HERE EXCLUSIVELY AS SUPPLY FROM MINES. That's the error. Unlike oil or wheat or platinum which are used up, have smallish stockpiles, and depend on fresh supply to maintain market equilibrium, gold can be readily "supplied" from massive existing stockpiles.

      While nowhere near all the world's gold is available for sale, nor are most owners interested in selling, there's a whole lot more than just 1,700 tonnes in the market at any given time.

      Bottom line: The idea that once the yearly output from mines is bought up, prices have to rise is incorrect. The good news for people like me who prefer real money to phony is that if (when) prices ramp higher, any increase in mine supply will not mean that prices have to go down either.

      It's what makes gold gold and great for use as money. Total supply increases only gradually at between 1-2% a year.

      Last quick thought. You want to know why gold prices are down , look no further than the Fed and JPMorgan. They've manipulated the price lower…period…end of story. The price will rise when one of two things happens. they decide they want it to rise. JPM is now net long gold, so that time may be at hand…or real, honest-to-god physical buying cleans out the warehouses, it becomes clear that those 173,000 tonnes are pretty well locked up and not as available as they seemed to be, and the manipulators are FORCED to desist.

      • iLion | July 12, 2013

        THAT was very well explained, fallingman, thank you. I've been holding physical gold for a few yrs, yet have never quite understood the market – but your explanation is very, very well done. Thank you!

        Btw – based solely on my understanding of human nature (such as it is), I suspect that if gold drops below 1000, even by the tiniest margin, we'll see at least a sudden flashing spike upward as so many gold bugs who see 1,000 as the line in the sand at which to buy, buy. You think? And if that does happen… would it immediately 'correct' downward again?

        • fallingman | July 13, 2013

          Thanks for the kind words ILion.

          First a disclaimer: Gold has two faces. Gold is, first and foremost, money insurance/portfolio insurance you hold as a hedge against currency/financial meltdown. Given that fact, forget about what the gold you bought for insurance is selling for in clownbucks today or where it might trade in the near term. It doesn't matter.

          Second, gold and the miners/royalty companies can be great speculations, but don't confuse investing for cap gains with holding for insurance purposes. Those are two completely different things. Speculation is speculation. You can make a lot. You can lose a lot. You have to get the timing right.

          Okay, as to near term price movements, I'd just be guessing, but it's a good guess to suppose that $1,000 would trigger buying.

          But, I'll say it again. This is NOT a free market and the charts you see don't tell you anything about real supply/demand fundamentals. The tape has been painted by the Fed working through JP Morgan, Goldman, HSBC, Merrill, etc. The "technical picture" lies. Don't trust it. Don't expect it to guide you. They've been dumping "paper gold"…gold they don't have (naked short) to suppress the price. That's the only explanation for 100s of tons being offered "at the market" in the wee hours when there's little or no liquidity. They want to crush the price…to cover their shorts(old and new) at lower prices…to sell the story that the economy, the financial system, and the dollar are doing fine and there's no need for protection.

          What matters are two things and only two things:

          When does the Fed/JPM decide to let the price rise/push the price higher? JPM is now net long gold on the Comex, so it may not be long. Or they may be forced to allow it to rise as actual demand for physical metal cleans out the warehouses at these stupid-low prices. In other words, their bluff would have been called. You've "sold" us this gold. Now, deliver it!

          The other thing is how relentlessly does the Fed debase the currency…and at what rate do they debase it? The rate…the second derivative…is very important. The currency is virtually ALWAYS being inflated. But when they're accelerating the inflation, it kicks the demand for gold into high gear. That's when you'll see spikes and will eventually see super spikes…when the Fed panics and just starts monetizing everything and/or the Feds just start sending checks to everybody.

          Bottom line: THE POWERZ THAT BE DESPERATELY WANT PEOPLE TO TURN AWAY FROM GOLD, so they sell naked short in massive amounts, all the while propagandizing that people are selling gold for reasons X, Y, and z…all of which are BS.

          The Titanic is sinking and their trying to talk you out of the lifeboat.

          Last thought. People on board the Titanic had no idea the ship had a huge, fatal gash in the side and was destined to go down. The band literally played on. They didn't need no stinking lifeboats.

          Not for the next hour that is.

          Hope this helps.

        • fallingman | July 14, 2013

          Thanks for the kind words iLion. I sent a detailed reply, but as so often happens, the system just swallowed it.

          Bottom line: Gold is money insurance. You own it for protection against meltdown in the currency / financial system. Don't worry too much about the near term price movements. It means very little as they're painting the tape, You're seeing what they want you to see.

      • Keith | July 15, 2013

        Well said; and, thank you for the well thought and articulated reply. There is another wrinkle that transcends the physical supply which you obviously understand exceptionally well. That's the use of gold as a marginable asset vis a view the fractional reserve system and, not surprisingly derivatives that are related to both.

        What this means is that the manipulation is ironically not on the physical side as most people think but rather a function of leverage. I'll have more on this in an upcoming article.

        Thanks very much for taking the time to read and contribute for it makes Money Morning a great place to be.

        Best regards,

        Keith :-)

        • fallingman | July 16, 2013

          You are welcome sir. Thank YOU for your consistently fine work.

    • Spartacusstoo | July 13, 2013

      Ahem! All that is being shown for "effect" is what the Shanghai gold exchange is doing versus the comex. THERE ARE OTHER BUYERS who are not shown…duh!

  2. Raoul Schur | July 10, 2013

    Sounds like a lot of common sense to me, but anyway who was it that said *Common sense is not very common*? Just needs patience and nerves for gold, along with all it's precious metal relatives, to go north.

  3. Tim Caldwell | July 10, 2013

    The phrase As Good As Gold has stood will stand the test of time. Here's to a yellow future.

  4. Greg | July 10, 2013

    Dumbfounded by this insight. Gold continues to drop under $1000. Bank on it.

    • Fred Bradley | July 10, 2013

      Not sure how you arrive at your conclusion. As I write this, Gold is at 1254, quite a ways from being below 1000.

      • Nitro Charged | July 10, 2013

        Now at 1284 …. seems to be going the wrong way still…. ;-)

  5. Jak | July 10, 2013

    The Chinese are very astute & while Obama and the US are dithering over which country to invade next, the Chinese are accumulating huge amounts of gold…why?
    Well, it means that IF the US $ ie.. B Bernanke were to consider reverting to the "Gold Standard" the Chinese will have more than enough to completely control the gold price. Plus with all that gold supporting the Yuan, the US $ will be in the doldrums.
    They are on both sides of the seesaw… dollars one side and gold the other. The only answer is for the US, by far the world's biggest market & hopefully (but don't hope too much) will decide enough is enough and close off their home market to China.

    China without the rest of the world gobbling up it's cheap "charlie romeo alpha papa" would descend into a bottomless pit. Their movement of tens of millions of rural peasants to become urban factory workers would end in disaster and unrest on a scale only possible in a country of 1.4 billion people.

    Caught in the crossfire would be other countries like South Korea & Japan who use the Chinese to produce their goods for them more cheaply than they can do it themselves, but the answer is simple… to survive follow the Thatcherism saying "cut your coat according to the cloth". Only "self sufficiency" will allow survival… in a supermarket in the UK… runner beans grown in Egypt & Kenya transported thousands of miles to the UK! What a joke… we used to grow enough of them not to need imports, and if you think of the uboat blockades in WW1 & WW2 and exchange the German uboats for Chinese… "makes yer fink, doanit"? It would make a good movie!!!

    • Skipper | July 10, 2013

      Another point on the Chinese buying strategy, which they require all international banks to adhere to is:

      Any gold purchased by a Peoples Republic of China Passport Holder can only be sold to either the Chinese Government, on the Shanghai gold exchange or to another PRC Passport holder.

      The are buying it and making sure once it is bought it stays in China one way or another.

  6. Derek | MoneyAhoy.com | July 10, 2013

    I think gold hits 1,000 before we go higher.

    For the long term (next 20+ years), I think gold and silver are a good hedge against financial uncertainty!

  7. Raoul Schur | July 10, 2013

    For Martin: It seems to me that's the point of the article and the chart, that there is a historic anomaly here which needs to be corrected. In my opinion the great selling wave was due to two factors – profit taking which snowballed due to panic selling and attractiveness in the non-commodities market. My guess is a switch is about to take place.

  8. Iaqn | July 10, 2013

    These exchange traded quantities do not mean much. Just like the Forex market trades 100 or more times the value of all commercial trade. If A sells to B, B to C, through to Z in the same month then 1 tonne of gold registers on this graph as 26 tonnes. Shanghai is a new and recently liberalized exchange so the usual dumb idiots all want a spin in the casino until they lose. London is not even included because it does not publish its trading figures, but the quantity is huge.

  9. Don | July 10, 2013

    The chart is interesting though the full gold picture is not represented. So, I cannot readily agree with the conclusions, especially given the deliberate policy of India to constrain gold purchases. Also, it would be helpful to provide a comparison of the gold supply rather than just the annual gold mining production to assess how the supply quantity is changing – Up, Steady, or Down? I think that information would provide a clearer picture of the supply and demand state of the gold market.

    The move seems like a wise contrarian investment strategy by China to bolster global confidence in their currency as China makes progress toward increasing liquidity and tradability to achieve foreign reserve status for their country. They have publically spoken of doing so with a 2015-2016 target. This is also a smart approach to divest themselves of the vast quantity of U.S. dollars they have accumulated over the past few decades. This has the smell of shorting the U.S. dollar for the long term, while increasing China’s ability to back up their financial system to achieve the level of currency exchange confidence needed to insert the yuan as a major foreign reserve currency.

    Don

  10. Steve | July 10, 2013

    Interesting but worthless looking at a single chart. Gold is presently priced USD/Oz. We are fed information by the media of how the USD gold price price is dropping but fx rates against the USD over a similar period is never included. Don't be surprised when China begin large scale sell off of gold, flooding the market because they need cash to prop up their economy. It could take years for gold to recover. Make sure you also include USD inflation and fx rates when looking at the gold price. Not such a winner over the past century.

  11. Richard M | July 10, 2013

    If china is buying all the gold, would they not control the price and continue to buy as much as they can as low as they can until they wanted to have the price increase buy not buying all the gold?

  12. Jeff Pluim | July 10, 2013

    I recently saw a chart that pitted gold against interest rates. the chart went back for 30 years. As interest rates went up gold went down, and vise versa. What the Chinese are doing is impressive but I don't think that it is different enough from the past that the link between interest rates and gold price will change. Watch for gold to continue to drop as interest rates continue to climb.

    • fallingman | July 10, 2013

      And what happened in the 70's? The exact opposite. Gold rose as short rates hit 20%. It's the real rate that matters and the speed at which the Fed is debasing the currency. The second derivative is key.

  13. Lorenzo | July 10, 2013

    You are following the wrong index ie interest rates to gold, look at gold vs. oil which just hit $103 barrel. Oil is up and the price of gas is down, this is called manipulation and you can bet that is being done. Watch out for the big collapse, not if but when.

  14. GLM | July 10, 2013

    The chart also indicates there was a LARGE surplus production of gold from Jan 2009 to Jan 2013 (4 years). What happened to that surplus? Unlike natural gas, Gold is very easy to store, so is there a huge surplus sitting in storage waiting to be delivered?

  15. Andy Schuck | July 10, 2013

    The red lines are CHINESE gold consumption, India is the next greatest devourer of gold and then there is the rest of the countries of the world. THAT is why the red line in previous months is way below the gray area, DUH

  16. H. Craig Bradley | July 10, 2013

    IS THE PRICE IS RIGHT ??

    Gold is subject to manipulation by international bankers. I think alot of the decline in "paper" (futures) gold is largely due to such manipulation. The "spot price" of gold is subject to investor moods and to periodic booms and busts. Gold crashes, then resumes its climb. So, you have to sell inorder to make alot of money and of course, it pays not to buy your gold unless "the price is right".

    Just exactly how much per troy ounce is the "right" price? Nobody really can say right now, so its all about speculation. You buy at today's price and hope the next guy will come along and pay a higher price, and so on. That's how the gold market works.

  17. H. Craig Bradley | July 10, 2013

    CHINA IN "CATCH-UP" MODE

    China craves physical gold, no doubt. However, who has most of the store of existing gold bullion in their vaults? China wants to catch-up with the other global central bankers. So, current production is about their only source to add meaningful bullion in their vaults.

  18. Spartacusstoo | July 10, 2013

    And then there is the big picture…let's see, the national debt, somewhere around 14 or more trillion…and then the unfunded liabilities taking that to 80+ trillion and then there are the derivatives held by hedge funds and the big commercials now quoted at one quadrillion dollars. Ummm.

    Now, think! First is the question: will the wily and wise on the hill actually perform a miracle and stop spending???? Will the lackey, the Fed stop printing????

    Perhaps the Chinese aren't as stupid as some think. Since advanced weaponry makes real war impossible, how about financial war instead? How about a bonafide gold backed currency like, say, the Yuan?

    And then too contemplate how an infinite QE will work out…hyperinflation anyone? Not yet you say. OK, then where is this money 85B/mo. going? Toxic asset buying including buying US treasuries at auction? Me thinks that the toxic asset buying is tapering but not QE as our spendaholic government needs more money than the tax base can produce…and then some! So where is the cheap, and I mean really cheap money to feed all those government agencies going to come from, Santa Claus? No, the Chinese know that they have had enough worthless dollars for their labors and want a new sovereign currency backed by gold. Y'all had better start taking Chinese language lessons at least to where you can pronounce yuan instead of dollar.

    • Greg | July 11, 2013

      I think the Federal Government is the lackey! The Federal Reserve is a private bank, and is in total control of the value of the "legal Tender" it creates (It stinks so much they had to get a law passed to force your to accept it!). The fact that the Chairman is appointed by the Govt. is just smoke and mirrors.
      Indeed the USD price of Gold or any other "thing" that is real can have it's market price fall below replacement cost. However; this cannot last for a long time. It is one of the few things that will never become worthless like some Stocks, and will not go "out of style"; at least within many more human lifetimes.

    • WADE | July 12, 2013

      I couldn't agree with you more "BUD",your the first one that I've come accross so far that has a head on their shoulders and knows what they're talking about."CONGRADULATIONS",I'LL have to keep an eye on your name to read up on more of your information.TAKE CARE "BUD".

  19. Sean Peatfield | July 10, 2013

    Physical holders should not be worn out or scared out (Mike Maloney)

  20. MajorDrama | July 10, 2013

    Ahhh the good old supply and demand argument!! "As sure as the sun does rise" indeed?!

    Really? Tell that to all the folks that were advised to jump in at $1700, $1600, $1500, $1450 etc!! (Again!).

    Demands been stratospheric for 6 months now and yet the price is at its lowest.. Seems to me that regardless of whatever caveats you theorists may wish to apply, that this rhetoric is mainly peddled to sustain the value of your assets! Or would that be to limit the losses on your liabilities?! Depends where you bought in doesn't it!

    Reality check for the flat earth society: Sustained huge demand correlating with Lowest and down-trending price is prima facie evidence that the old supply and demand argument is currently nonsense – too simplistic

    Yes it has significant influence in very calm markets, but there are many other significant influences and especially once emotion is playing a significant role you can throw it straight out the window – Does not apply in turbulent times!

    Look at house values in various markets – Very poor correlation between supply and demand because the market's spooked – And for good reason! Ironically its partly because supply and demand no longer holds sway!

    Its hard to tell, but that may well be bad news for all you wise men holding Gold

    Remember even at $1250 its trading at 3 times that average price of the last 20 years

    Yes there is some upward pressure from being around marginal cost of production.. But it still has a very long way to fall if it is to fall to anywhere the last 20 years average

    Its irresponsible to even make a call on it in my opinion

  21. g. shea | July 10, 2013

    Interesting information. Would like to see a similiar look at silver.

  22. stevo | July 10, 2013

    Yeah cool. One thing to notice: this chart tells that in 2nd quater that was the case, and gold collapsed, how come ?

  23. Sahaj India | July 11, 2013

    GOLD IS GOLD LIKE Movie Mcnaz Gold.

    One should buy at any price physical gold. It is an valuable and anytime encashable. Your Bank can betray you. But Physical Gold or Silver never ever betray you. You can have batter sleep when you have physical gold with you. Price is manipulated by big gamblers. Buy ant Trust GOLD,, SILVER and DIAMOND

  24. Peter | July 11, 2013

    Just because something is rare, does not make it valuable.
    Your logic is flawed, for so many reasons, like do you realize that gold prices are fixed, and the price is set by paper gold, backed by nothing; and Its done by a bunch of criminals. I don't see any of that on your chart.

  25. Tactical111 | July 13, 2013

    Ha. Have to agree "when JPM wants the price of gold to go it will go up". Nuff said.

  26. Myron Martin | July 13, 2013

    Reading the comments I am reminded of a truism; "a man convinced against his will, is of the same opinion still" or expressed another way, "my mind is made up, please don't confuse me with contrary facts" so lets look at some. #1) Gold has been used as "MONEY" for over 5000 years of mans history and has maintained its "purchasing power" in terms of any human necessity you want to name, food, clothing, shelter, energy etc. #2) Fiat currencies throughout history have been a total failure as a "store of value" usually returning to their intrinsic value of ZERO in about 100 years. #3) The official definition of a "dollar" is 340+ grams of GOLD, which at a current roughly $45.32 per gr. should translate to roughly $1500. to $1550. in paper dollar purchasing power, but a dollar today has about TWO CENTS in purchasing power, showing 2 things; A) the price of gold is grossly undervalued at todays manipulated paper prices, and B) paper dollars are rapidly approaching ZERO value against its original relationship to gold.

    CONCLUSION: Based on 5000 years of history, where would you be best to place your faith, in physical "hold in your hand" GOLD; or the lying promises of corrupt politicians who always promise more that they can actually deliver and by supporting the banker designed "PONZI SCHEME" of fractional reserve banking, gradually STEAL your hard earned money through inflation and rising taxes?

    If you have bought into the political/banker propaganda of "the magic of compounding" then it is time to do a reality check! If every one can be a net recipient of "compounded interest" then pray tell, WHERE does the interest come from? Somebody has to pay it, and it is never created by the fractional reserve banking system where "every bank loan is a new creation of money, and when it is paid back it ceases to exist" (Graham Towers Governor of the Bank of Canada) testifying under oath to a 1939 parliamentary committee! REALITY CHECK, since our medium of exchange is BORROWED into existence as DEBT, requiring the payment of interest the Ponzi scheme never creates, payment of interest can only last as long as there is available collateral for exponentially increasing new loans to replace those paid back, PLUS the ACCUMULATED INTEREST! Stated another way, interest can only ACCUMULATE as DEBT until there are no more willing borrowers able to pledge acceptable collateral to keep the Ponzi scheme going.

  27. Cathy | July 13, 2013

    When you can make sense of this I will be very interested, but for right now it is under your thumb and it looks like the answers are backwards. Would it be nice to know why, maybe there is a reason for a chart like this. I do not know maybe common sense of an illusion and when you wake up it will change paper into Gold. Someone or some large player has a big misconception of how to react to this deception. Two negatives make a positive right. But this looks like what comes out of the ground got looked at and put back in the ground. The people play the wonder why and you are supposed to have the reason. I think the invention of the press or should I say money press has a bigger picture that the paper the trees came from to print it on. Now would be a good time to tell us who has Gold and who does not, that is what we pay you for with the clause that says in fine print all predictions are of your own choice. What I want to know is what Gold Company has the best integrity and will not be affected as much as the others. That should make some sense to know who is legally safe meaning what company is standing on the best ground so to say. I think GG is the best bet for various political reasons and that is only because of there auditing firms verification. What do you think ? Who has the best paper for deceiving the rest? I know two hard questions and the only other answer is what royalty company has the best verification of the present and the future. I think there is a sleeper in the bunch and only a few know who but I do think GG is in the top tier morally.

  28. Larry Livera | July 15, 2013

    I have been predicting the end of the way of life as we know it. Runaway inflation, martial law, one world government. You only need to study God’s Word to know the truth and the knowledge of how to live without one hair on our head being harmed.
    As a Christian I am in the world but not involved in the “world system”, i., e., Satan’s domain.
    I believe my Heavenly Father’s promises without a doubt!!!!!!!!!!
    Furthermore, I believe God has given me the guidance, instruction, every temporal and spiritual need to spread this information around the world setting up discipleship homes where people are born again, and trained according to the ministry God has chosen for them. This will bring about the final revival before Christ returns!!!!!!!!!!!!!
    In His Service,

    youshua@comcast.net

  29. Larry Livera | July 15, 2013

    I wanted to continue receiving the Money Morning Newsletter please.

  30. Keith | July 15, 2013

    WOW! Thanks for the fantastic discussion everybody. There are a lot of interesting thoughts here as well as some very detailed thinking. I'll do my best to continue to elaborate and track gold's manipulation in the months ahead. As rates rise, capital costs will too and this is going to have a direct effect on carrying capacity needed to hold gold. While mostly an institutional issue, I expect the translation to effect prices that come home to individual investors.

    Thanks to everybody for being part of the Money Morning family!

    Best regards,

    Keith :-)

  31. JamyRahul | July 20, 2013

    One of my friend purchased Gold of total $95,000 at rate $1900/Ounce . He is worried a lot now due to sudden downfall of prices , I teach him a lot that Gold is always Gold . But what are your guidance ? Please write me here so i can too tell him :-D

  32. Ashley | August 26, 2013

    I admire the author's intellect and knowledge. However this article presents a small pragment rather than a big picture on gold: 1Chinese production of gold has risen dramatically year over year since 2007; 2Gold is durable -unlike older generation which endured sino-Japanese war and Cutural Revolution, a current generation enjoying middlecalss lifestyle can afford gold and pass it down to the next generation as preservation of wealth. But gold offers no cash flow, it does not make economic sense for an investor to allocate a significant portion of wealth to gold,once a family buys gold on the a price dip for the children, there's no further need for the asset. Gold is not bond or property, for families it's an expensive gift for children's wedding / a symbol of passing down wealth, for speculators it's a play of "the greater fool's game".

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