Thoughts on the concept of FreeGold, and the differences between the paper and physical markets
I don't usually frequent FOFOA's site because I often find his posts too obtuse. A recent video post of his was quite refreshing though, as it consisted of the attempts by many of his friends to come up with their own definitions of "freeGold". For me, reading through all of the quotes helped me to connect some dots on the concept of freeGold, and to further understand why in fact we don't have freeGold today. In many ways, the non-freeGold that we have today (you might think of non-FreeGold as simply Gold controlled by the paper, derivative markets) is a vestige of the Gold standard, since manipulation of the price of Gold (it is fixed in the classic Gold std) is in fact part of the game. FreeGold says that Gold is no longer fixed against anything, but simply becomes the mirror against which everything else, including of course fiat currencies, is valued. I highly recommend watching the video below if you want to expand your thinking on Gold.
As well, it occurs to me that there is no simpler (Einstenian) illustration of the differences between Gold as practiced in today's paper, derivative markets, vs. Gold as practiced in today's physical markets than the compare/contrast we can set up in viewing two recent stories where Gold was in the news;
1) The April 12 Gold price smash where 300 tonnes of Gold was dumped in a period 30 minutes.
2) Germany's plan to repatriate 300 of the 1500 tonnes of Gold stored at the FED in the US, but over a period of seven years.
So let's see... in the paper markets, where price is set but deliveries are relatively few... 300 tonnes can be "sold" and change hands in the period of 1/2 hour. In the real, physical world though, 300 tonnes is so much Gold that it needs to slowly metered (or meted) out over a period of seven years, or, to match the time units, 122,640 1/2 hours. The difference is six orders of magnitude. How rare is Gold really? Which of these stories reflects the true rarity and value of Gold that will be in play once the paper markets fail? Interesting points to ponder this weekend.