That's
a silly question.
Gold
doesn't go anywhere. What "goes" up or down are the dollar figures
we have all been trained to attach to it - but we all know, for a fact, how
illusory those are.
Today,
a "dollar" is primarily an accounting unit. Nothing more than a
concept, an idea - and a very fleeting one at that. It is created just like
that, and it can be destroyed just like that, and it's the same thing with
all other fiat currencies.
Currencies
are pure legal fictions. They are treated by the law as property, but just
like corporations aren't really "persons" they are not property
themselves. Today, it is literally impossible for you to hold "a
dollar" in your hand. All you can hold is either a piece of paper that
says it is a federal reserve note and that carries the legend
"dollar" next to a number imprinted on it, or you can hold a piece
of gold or silver in your hand that states it is "worth" so-and-so
many dollars - and you KNOW that the number is way off.
In
times like these, the accounting unit, i.e., the mental concept of what an
ounce of gold is "worth" to most people (and at which price they are
willing to exchange it for something else) is said to be less than 800 of
those ideas, those afterthoughts, we call "dollars."
So
what? Who cares?
At
this point, one of the largest dealers in American Silver Eagles coins is
sold out, there is talk of rushes on precious metals dealers in London, and in Saigon,
Vietnam,
several access roads to large gold dealers experienced traffic jams, all from
retail investors. Yet, the rigged COMEX-generated "price" of gold
and silver is falling.
Jim
Turk of GoldMoney
reports (click on 'Founder's Commentary) that there still is no shortage of
large LBMA bars of gold and silver, but that may not last long. What does
that tell you?
The
actual price of gold is far higher than the illusion the major exchanges
create for you.
So
much for the non-existent tangible property aspect of what a
"dollar" is. Now, let's go back to the collective price-illusion we
attach to gold. Our real question is: "How low can the illusory price of
gold go while there are serious supply bottlenecks that are popping up all
over the place?
The
price-illusion of gold and other metals (let's call it the "i-price" for brevity's sake) is manufactured mainly
at the New York Commodities Exchange. There, willing trader-sheep are
presenting themselves for their voluntary fleecing every day. They place bets
on the i-price of gold while knowing full well
that, if worse comes to worst and their winning bets cannot be filled one
day, they have to go to court for a dollar-settlement on their claim. I
wonder what a dollar will be worth relative to real goods and services in
those days?
The
only reason the i-price of gold is falling is this
fact - that virtually nobody takes delivery of the
gold they contract for at the exchange. If everyone took delivery on their
contract at expiration, there would not be any gold left to play with. The i-price of gold would have
to rise to a multiple of what it is today, until it coincides with the
"a-price" - the actual price that normal laws of supply and
demand would dictate.
To
keep a potentially endless article very short, the answer to the question of
"how low will gold go?" is a thundering "IT DOESN'T MATTER.
GO GET YOURSELF SOME - NOW!"
It
absolutely matters not how low the price goes. You are lucky if you can find
any gold or silver at these prices, so if you can find some, buy it. The
lower it goes, the better for you.
Now,
since large bars are still available, would it not make sense to buy some while they
are, at these incredible i-prices? I think it
would.
Sooner
or later, even the mutual fund managers who buy and sell contracts instead of
storing metal will figure this out. Until then, happy buying!
Alex Wallenwein
Editor,
Publisher
The EURO vs
DOLLAR GOLD-MONITOR
Just like driving your car,
investing only makes sense if you can see where you are going. The Euro vs Dollar
Monitor is your golden windshield wiper that removes the media's crud
of financial misinformation from your investment outlook. Don't drive your
investment vehicle without it!
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