SOTP: Spot Price Swindle: Paper gold decouples from physical gold marketsSubmitted by George Strait on Thu, 04/25/2013 - 07:57
From the article....
Falling prices are associated with a drop in demand, and an increased number of sellers. However, that's the exact opposite of what we are seeing in physical markets. This means that the two markets are separate, and unequal.
So what gives? People are naturally losing trust in financial institutions, so the gap between how much people value a promise from an investment firm and an actual hunk of gold is widening. In a perfect world, investors would value paper gold just as much as the real thing. In a world where the European Central Bank can steal 80% of someone's bank account in the middle of the night (that is to say, the world we live in), you can easily see how the market value of a paper promise would diverge from the real thing.
Even Germany will have to wait seven years before the US Federal Reserve Bank of New York coughs up their gold, which was supposedly waiting in a vault. If you had a friend that said he was keeping $500 bucks in his closet for you, and told you it was going to take seven years for him to get it to you in installments, would you suspect that maybe he didn't actually still have the $500?