What happened to gold prices last night?

With all of the market manipulation, paper markets and central bank printing, it’s anyone’s guess what happened to gold prices last night, but here are some of the more logical theories that explain yesterday’s 500 ton paper gold sell-off:

  • The paper gold market is collapsing, and smart money is dumping their paper before it’s too late.
  • Central banks are manipulating the market to make fiat money appear to be the only sound safe haven.
  • According to former Assistant of the US Treasury, Dr. Paul Craig Roberts, “the exchange value of the dollar is (being) threatened, and if that collapses the Fed loses control over interest rates.  Then the bond market blows up, the stock market blows up, and the banks that are too big to fail, fail.  So it’s an act of desperation because they’ve got to establish in people’s minds that the dollar is the only safe place, it is the only safe haven, not gold, not silver, and not other currencies.”

    The Federal Reserve is “trying to destroy gold as a haven from the dollar in order to carry on the Fed’s policy of negative real interest rates.”

trying to destroy gold as a (safe) haven from the dollar in order to carry on the Fed’s policy of negative real interest rates.

What Is Paper Gold?

Paper GoldIf you’re new to precious metals, you might have read about paper gold and wondered what it is. Paper gold is not physical gold. Paper gold is a piece of paper, or digits on a computer, acting as a substitute for physical gold. Paper gold is usually traded in exchange-traded funds (ETFs) or futures markets. In a futures market, speculators bet on the direction of the gold price. They do not produce gold or use it. They cannot deliver gold to a buyer, nor do they take delivery of the gold. They merely try to profit from a change in the gold price. This mechanism can provide price stability for producers and buyers, but the problem is that there is more paper gold than physical gold in existence. In fact, it is believed for every ounce of physical gold, there are 200 ounces of paper gold. What happens if consumers try to take delivery on more gold than there is in paper existence? Pop goes the weasel!