CNBC's Santelli gets it: 'Paper gold' suppresses the price of real gold

CNBC's Rick Santelli today sounded like a certified tin-foil hat wearer in GATA's peanut gallery during his interview of Frank Lesh of Chicago's FuturePath Trading. "Paper gold," securitized gold, pretty much defeats the purpose of investing in gold in the first place, Santelli said, insofar as it may be hard to tell if there really is any gold behind the paper.

Of course the creation of "paper gold" as part of a system of fractional reserve gold banking backstopped by central bank gold sales, leases, and derivatives is responsible for having held gold's price appreciation below the nominal rate of inflation, responsible for having created a vast supply of imaginary gold to deceive investors with and maintain central bank power.

That is, anyone buying paper gold in the hope of price appreciation might as well flush his money down the toilet, as such purchases may not take any real metal off the market.

Santelli's exchange with Lesh is three minutes long, is headlined "Santelli: ETFs and the Creation of 'Gold Paper,'" and can be viewed at CNBC's Internet site here:

http://video.cnbc.com/gallery/?video=3000149973&play=1