NYSE Runs Out of Gold Bars: What Happens Next?

[David Guyatt]

David

Your last post is a Gem if I may say so. (just can't get away from those age-old yardsticks of value can we??)

As you are no doubt beginning to divine, my interest in paper contracts is confined to the factors that influence both short-term and medium-term price trends though, the better not to get fleeced on my ultra-short-term trading activities. Those activities, when one has actually survived and profited from them over any length of time, inevitable involve developing a keen interest in the deep stuff that drives it all. I would no more consider INVESTING in gold, gold miners or ESPECIALLY the various Exchange Trade Funds than I would in the future of packaged holidays to Mars.

I do agree the prudent private long-term 'in case of total catastrophe' stash though and have helped my own family similarly. The thing is, I sense there are a LOT of people doing exactly the same thing - especially the seriously wealthy. That in turn implies a LOT of official, documented, hall-marked etc gold exiting the vaults so-to-speak and I suspect that, in addition to the black obligations/collateral scenarios you paint, serious amounts of it are being systematically laundered to replenish otherwise empying vaults. I am very curious to discover mechanisms employed - and 'curiosity' killed the cat didn't it?

Hi Peter.

Does it really imply lots of official, documented,hall-marked do you think? Especially if that is the one thing that the powers that be wish to avoid doing?

Lots of people could be buying coins it seems to me.

The interesting thing about coins is that they do not have serial numbers or other identifying marks and their designs are usually rudimentary and, therefore, are easy to emulate, which is why, I suppose, one former CIA/ONI officer remarked many years ago now that quantities of Marcos gold were finding their way into Krugerrands. But of course, there are so many different coins out there these days that it makes one almost dizzy trying to keep track of them all.

Then, of course, you have various smelting and refining outfits - say in the hills of Ticino - but numerous other locations too - that may not necessarily wish to conform to Good London Delivery? Or they may wish to conform to GLD? It might depend on the client? Or the fee? Or both?

Does a drug running Chinaman necessarily care if his stash of gold bars is GLD or not, providing that he knows he can dispose of it speedily and quietly whenever he wishes? Do the Generals of Burma care about theirs being GLD I wonder?

Overall, the future of a packaged holiday on Mars strikes me as a more dependable liklihood...