Hot Potato - Who's Holding the Gold

W

Wait4proof

The price of gold is determined by traders buying and selling futures, not by the average Joe buying rings and necklaces at jewelry stores. I get how the price goes up in the futures market. But, I do not get how a dealer in the real world would make a profit if they are the last in the chain buying the gold. Frankly, who is the last in the chain?

For instance, I have some old jewelry. I sell it to a cash-4-gold outlet. They of course are not giving me $1800-per-oz. They are a middleman who sells it again to make a profit. But to who? All the jewelry stores are advertising silver jewelry nowadays - why - because gold jewelry is too expensive, no one is buying the stuff. So who's buying all this gold in the end?

One thing is for sure, it's not the one's making the price go up. The traders create the demand but are not holding any gold. Who's ending up with all the gold?
 
Quote from Look4aSine:

The price of gold is determined by traders buying and selling futures, not by the average Joe buying rings and necklaces at jewelry stores. I get how the price goes up in the futures market. But, I do not get how a dealer in the real world would make a profit if they are the last in the chain buying the gold. Frankly, who is the last in the chain?

For instance, I have some old jewelry. I sell it to a cash-4-gold outlet. They of course are not giving me $1800-per-oz. They are a middleman who sells it again to make a profit. But to who? All the jewelry stores are advertising silver jewelry nowadays - why - because gold jewelry is too expensive, no one is buying the stuff. So who's buying all this gold in the end?

One thing is for sure, it's not the one's making the price go up. The traders create the demand but are not holding any gold. Who's ending up with all the gold?
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GLD, for example.
 
Take a look at the gold coins on ebay. Almost every coin that is being auctioned has multiple bids, so it seems the retail buyers are out there.

Also there's a high demand from India, they see it as a sign of wealth so I've been told!
 
Quote from Look4aSine:

The price of gold is determined by traders buying and selling futures, not by the average Joe buying rings and necklaces at jewelry stores. I get how the price goes up in the futures market. But, I do not get how a dealer in the real world would make a profit if they are the last in the chain buying the gold. Frankly, who is the last in the chain?

For instance, I have some old jewelry. I sell it to a cash-4-gold outlet. They of course are not giving me $1800-per-oz. They are a middleman who sells it again to make a profit. But to who? All the jewelry stores are advertising silver jewelry nowadays - why - because gold jewelry is too expensive, no one is buying the stuff. So who's buying all this gold in the end?

One thing is for sure, it's not the one's making the price go up. The traders create the demand but are not holding any gold. Who's ending up with all the gold?
More...

Those Shit-For-Shit-Gold kiosks are paying you at best 30% of the spot content. They bundle all that junk up and sell it to a smelter who folds it in with all the stolen gold from pawn shops. They don't pay much because smelting ain't cheap. The smelter's product then goes back into the jew-ellry binness as "jew-ellers gold", or it might make it into cheap "rounds." The newly-minted good stuff from new mining is going into vaults, PM depositaries and safety deposit boxes.
 
The world is so awash in paper reserves that only a miniscule move into physicals will drive the price of these much smaller markets up dramatically. Obviously too there are physical buyers or they wouldn't be paying whack-jobs like Glenn Beck to hawk the stuff to the retail crowd.
 
Quote from rrhandle:

My cyclical analysis of Gold showed a strong rise over the last three weeks. That of course happened. Right now I am showing a slide down run till the end of the month (Aug). The move down should start mid-week, if not sooner.
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Welcome to the metal futures;
also called metal derivatives. $1795+ coukld be a major ''high'.' The ''cashcow ''gold buyers, not only buy @ nice profit[ANYTIME];
not only is trend friend, but takes time for an uptrend to end.

Anybody worry- ing about an ''end to trend'' misses the point;
unless you buy the high/highest And are silly enough to buy high -leveraged, or buy high with 100 % of your position.None of that is wise or wisdom.

But most likely gold[GLD equivilent also ] is going over $2,000, this year.Not a prediction, simply probabilities.

Gold uptrends/gold wealth has a 4,ooo+ year track record.
Dont care how well US dollar does /doesnt or Swiss Franc;
simply no comparison to 4,000+ track record of gold.

Warren Buffet doesnt like it, Dave[FOX] Ramsey doesnt like gold either;
also it pays no dividends.

Monthly, weekly, daily uptrends look fine;
but 2008 trend on 10 year candlecharts., semed to prove Dave Ramsey, Warren Buffet right, in 2008.:cool:
 
Quote from Look4aSine:

The price of gold is determined by traders buying and selling futures, not by the average Joe buying rings and necklaces at jewelry stores. I get how the price goes up in the futures market. But, I do not get how a dealer in the real world would make a profit if they are the last in the chain buying the gold. Frankly, who is the last in the chain?

For instance, I have some old jewelry. I sell it to a cash-4-gold outlet. They of course are not giving me $1800-per-oz. They are a middleman who sells it again to make a profit. But to who? All the jewelry stores are advertising silver jewelry nowadays - why - because gold jewelry is too expensive, no one is buying the stuff. So who's buying all this gold in the end?

One thing is for sure, it's not the one's making the price go up. The traders create the demand but are not holding any gold. Who's ending up with all the gold?
More...

Well, to try to answer the OP's question -- where's the gold ending up?

The major retail buyers are in India and China. In India gold jewelry has long been a major part of a woman's dowry. Chinese retail demand has been growing and is now about twice the retail demand in the United States. The Middle East is also a major source of retail demand for gold. In the 90s and early 2000s central banks were major net sellers of gold. Western central banks sold the stuff by the hundreds of tonnes. The Bank of England famously sold a bunch of gold at the very bottom. Now central banks are net buyers of gold. Western central banks have stopped selling gold while India, Russia, China, and South Korea are hard at work increasing their gold stores. I believe that the Chinese central bank is acquiring all the output of the Chinese gold mines, so that gold isn't coming on the market.

Of course the gold ETFs now also account for a large part of the gold demand. ETFs are more fickle, as people get in and out of them quickly, unlike physical buyers who tend to sit on their horde. So the ETFs are as often a source of supply as demand.

The least significant part of the gold market is the Americans selling off their class rings to the Ca$h4Gold people.
 
Former U.S. Federal Reserve Chairman Alan Greenspan argued the case for returning to a 'pure' gold standard in his paper "Gold and Economic Freedom", in which he described supporters of fiat currencies as "welfare states" intent on using monetary policies to finance deficit spending.

In 2001, Malaysian Prime Minister Mahathir bin Mohamad proposed a new currency that would be used initially for international trade among Muslim nations. The currency he proposed was called the Islamic gold dinar and it was defined as 4.25 grams of pure (24-carat) gold. Mahathir Mohamad promoted the concept on the basis of its economic merits as a stable unit of account and also as a political symbol to create greater unity between Islamic nations. The purported purpose of this move would be to reduce dependence on the United States dollar as a reserve currency, and to establish a non-debt-backed currency in accord with Islamic law against the charging of interest.
 
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