EDITOR NOTE: Here’s a simple analogy to help you understand the scope of this disturbing irregularity. Let’s suppose that you own the only mango tree in town and that the entire town depends on your fruit as no other mangoes are imported into your region. You produce 200 fruits a year. But each year, people are circulating paper bids equal to 65,720 mangoes. Because of all this crazy buying and selling of paper contracts to buy your fruit, the price goes wild, up and down. The thing is, you’re producing only 200 fruits, not 65,720! Whatever price it ends up during harvesting season, it’s likely to go even higher, since there’s barely going to be any product on sale. This analogy describes the current gold market. People are bidding paper gold contracts equivalent to $70 trillion in gold. There’s only $213 billion available that’s been produced. The moral of the story, buy non-CUSIP physical gold coins or bars now before the real price of gold skyrockets in the years to come.
$70 trillion of paper gold is traded each year, despite only $213 billion in annual mine production.
In sum, the math, and hence the pricing of paper gold, makes no sense!
— Egon von Greyerz (@GoldSwitzerland) February 4, 2021
Originally posted on @goldswitzerland