What About Gold Now?

Nick Migiliaccio has asked the question, “Why Is Gold Treated So Badly” in this article from him.

His point is that gold prices are set in US Dollars primarily on the COMEX, and those prices are mostly created by algorithms and speculators (such as JP Morgan) selling PAPER contracts to others who want to buy PAPER contracts.  Very little actual gold changes hands.  So are COMEX prices real and representative of the actual physical market?

Option A:  Yes, all prices are real.  End of story.

Option B:  COMEX prices are paper prices and are heavily manipulated by computer trading, High Frequency Trading algo’s, agents of the Central Banks, the Treasury, and other large pools of digital currency who have an agenda to either knock down or drive up the prices for gold.

His point:  Look at MNT.TO which represents deliverable gold.  It is more real than COMEX.

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Why is Gold Treated so Badly?

By Nick Migliccio

“How could this be in this time of instant information?   Consider a programmer’s saying from the last century: “GARBAGE IN, GARBAGE OUT.”  Use compromised data going into your work and your answers will be compromised as a result.

Gold

We know by looking at a 3 year chart that all three previous bottoms of the KRIMEX were at quarter end, suggesting price intervention for greater bullion bank profits and traders’ bonuses.  At the end of each quarter, computer-driven traders had near-record short positions on the KRIMEX in the War on Gold.  Over a year and a half, a triple bottom formed from these “interventions”.

If we have 3 bottoms @ KRIMEX $1180, what is the outlook here?  Well if you are bearish, the KRIMEX price takes a dive and breaks under $1180 KRIMEX, in a Quad Bottom, with a bottom potential target of KRIMEX U$D 1050.  Quite disappointing to Gold Bugz, I am sure.

Gold P&F

What can you see, think or do if you are not bearish?  We know that their prices are based on paper transactions, not real gold changing hands except in token amounts.  Getting 10 Oz’s may be possible in one transaction.  The proof would be, could you obtain 10,000 Oz’s at one time in the same transaction?  I think not.  Not delivered.  Maybe promised, but not delivered.

That sets up the following example.  Let’s look at a DELIVERABLE, Certified, and Guaranteed by a Government Corporation, and see how that works.  Royal Canadian Mint Gold Reserves, MNT, is a part of the mint’s gold inventory, monetized, by EXCHANGE TRADED RECEIPTS, getting the public to carry the cost of their inventory while maintaining access to the inventory.

Publicly traded like all other securities in Toronto, it can thus be charted and priced by the same process as the others.  How does MNP compare to the KRIMEX Chart I see people so casually refer to as “The Gold Price,” when in fact, we know it represents the price of a paper contract for future non-delivery of gold?

MNT

My conclusion is that The Royal Canadian MINT Gold Reserve is DELIVERABLE without exception.

Consider a quote from Alasdair Macleod’s article “Why Gold is Undervalued”:  “So long as there is no significant change in the purchasing power of the currency against which it is traded, prices in the past have relevance to the future.”

Has the U$ Dollar been stable in its purchasing power?  No?  Then how can using it have significance for anything except at that moment in time?  The US Dollar has been in constant decline since 1913!  We know how it ends, with a lot of currencies including the U$ Dollar, at 1% or less of their 1913 value, if they still exist.  How does that square with using the U$ Dollar to measure the price of gold?

Thus tomorrows prices are truly subjective, if they can be determined at all.

Reach in your pocket and remove a common 1 gm gold piece or use a 1/2 or 1/4 Oz silver coin, like a First Majestic 1/2 Oz or a US Eagle 1/4 Oz coin.   I doubt you can.

We are far removed from the specie metals that form the basis of currency and gold trades, paper, digital, and our basic financial system.

What brought us here?

Back in “the day” gold was deposited in commercial banks who then issued currency notes based on that gold, which became dollars payable in that gold.  When the FED was created it recruited that gold from those commercial banks, issuing dollar denominated currency theoretically backed by that gold, and issued its notes and recorded reserves against that gold.  And issued, and issued, and issued, and issued…… and so on, not ending yet……

So Paper Gold is valued in a never ending tsunami of paper or digital currency of constantly declining purchasing power.

Given that so few have any contact at all with specie metal, and that we are flooded each day with price quotations in denominations of constantly shifting value, is it any surprise that we are almost all lost in this never-ending thicket of unbacked paper currency?

It all ends when each one of us puts specie metal in our pocket.  There is no counter party, no one to owe; it is your money.

 Here, in summation is why:

  • Dollars are debt with no fixed value and are based on someone owing you unknown value.
  • The abundance or scarcity of dollars has no relation to supply and demand or production or consumption.
  • Dollars are used to move real things of value to those who control dollars, from the hands of producers and consumers.
  • Specie on the other hand is real money.
  • Specie coins are made of real materials with no counter party, and have a real relationship to physical goods.
  • Specie coins are not subject to arbitrary valuation.
  • Specie coins are controlled by those possessing them, not subject to fiat decree.
  • Valuation is based on weight and fineness.
  • You cannot be required to transact in specie coins, but you may choose to do so at your advantage when possible.
  • The possible advantages in all their hue and variety may well be limitless but boil down to individual liberty vs external control. Your choice.  Right now you have a choice.
  • Perhaps you will be 1 year too early. Perhaps you will be 1 second too late.  Your choice.

Sign up with PEAK PICKS on this link before it is too late.  FRONT RUN THEM with US.

Thanks to Alasdair Macleod and his excellent article “WHY GOLD IS UNDERVALUED”, which in its very thought provoking content provided the inspiration and basis for this piece.”

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Thanks to Nick Migiliaccio for his article.

 

Gary Christenson

The Deviant Investor

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