The True Price Of Gold

October 5, 2013

As we speak gold is selling for far more than the quoted spot price we see on various web sites. That spot price is a dollar price which does not take into account the fact that this world is neither homogenous, informed, static nor safe.

But what price do people pay if it isn't the spot price plus a couple of percentage points?

The individual who buys a piece of jewellery in a US or European shop could be paying up to four times the price of the gold content due to taxes, labour, overheads and profit margin. This puts the price at around $5,200 per oz.

A continent away, the GDP per capita in India is $3,851 as opposed to $49,922 in the USA. This means that the average Indian citizen is paying the equivalent of around $17,000 per oz of gold given the income disparity between the two nations. Funnily enough they can't get enough gold and the government is trying to stop its people's appetite for it rather than deal with its own structurally corrupt nature.

In another country, the hapless depositor who held his money with the Bank of Cyprus is facing a haircut of 47.5% on anything over 100,000 euros and is therefore going to be paying the equivalent of almost $2,500 per oz.

The sheeple of the USA who trusted in their government's dollar, have gone from paying $288.50 per oz at the beginning of January 2000 to now having to pay $1,300 plus. Not only that, the 30 year Treasury rate has gone from around 6.5% to 3.7%. If it's sitting in the bank then bring in the CSI to locate any interest earnings.

The people of Fukushima who have lost their homes, businesses and land are probably not even able to think about buying gold and  "remain largely hidden after being placed in tiny, so-called temporary apartments across the country." To add insult to injury, TEPCO, the operator of the Fukushima plant, is handing out what are called "temporary compensation" payments to victims of the Fukushima disaster, which must be repaid. Yes, that is how warped things are.

As for those that have had their homes bombed in Lybia, Iraq, Afghanistan and other places or who have had to flee their homelands, the price of a gold oz  is beyond reckoning because they have lost everything. For those that have lost their parents or children the price of gold is academic.

In the rest of the Western world where we have the rising spectre of unemployment and in particular youth unemployment, the slashing of pensions, the confiscation of pension funds and the loss of homes, the price of gold is just another statistic and after a visit to the pawn shop just another memory.

Someone somewhere may well be manipulating the price of gold, but take a good look because gold may be currently bruised whereas the world is truly broken both financially and spiritually.

The world has ignored gold and the standard it had set over the course of human history along with its feisty smaller brother silver, but the revenge they have extracted on the system is evident for all to see wherever one looks. Gold is bruised but it is standing on its own while being kicked, gouged and pushed from pillar to post. Moreover the damage to the system is even more telling given that the road to recovery has not even been located let alone embarked upon.

The system has one broken leg and one gangrenous leg but manages to stand with the assistance of two crutches marked Q and E and proudly proclaims recovery to the applause of idiot bankers, economists and politicians.

Gold bugs do not have a price. They pray, as Larry LaBorde recently wrote, for $500 per oz gold, because that would be a world of shrinking government, full employment, no trade deficits, no government deficits, and an army that is a defender rather than an invader.

A true gold bug actually hopes to receive nothing for his gold because he prays that one day he will be able to hand it down to his children and grandchildren as a gift to be held as an insurance policy until they too can hand it down to their offspring.

A true gold bug extrapolates as best he can and asks himself what can happen to this world, its institutions, to the economy, to his work, his home, his retirement fund and his health and then values an oz of gold accordingly. The spot price is nothing more than a snapshot of a moment that has already passed.

A long time ago Joseph of Egypt was able to deal with the GFC of his time by having filled the grain stores in advance to the brim. When our GFC hit us however, our silos were largely empty except for the fattened rats that were wiping their mouths and barely concealing their grins as they loudly roared for "MORE!!". I ask you dear reader, is there no Nuremberg Court for these scoundrels that have caused so much human misery?

We are a generation raised on bread and circuses like never before. However, the pieces of  bread are becoming mouldier and smaller and the circus is turning into a controlled prison of fewer rights and less privacy. The populace amazingly still remains largely catatonic.

Ben of course is waiting for the clown act in Congress to give him the nod so that he can start up his printing press once again. The product of that printing press is the equivalent of junk food. It can fatten you but it will eventually kill you. So good luck to the fools that think that Ben will be dropping mana from his helicopter. He will instead be dropping the financial equivalent of agent orange until the system and its people are well and truly deformed and f#@*&! Then again that might be the plan.

Until next time, I remain bruised but not broken !!

 

Sydney Australia

Gold is still being mined and refined at the rate of almost 2,600 tonnes per year.