Saturday, April 13, 2013

Fallout And Other Thoughts Post-Massacre...

Here were some other thoughts I had not thought of last night when I published my initial reaction to the Great Price of Gold Drop of 2013.

First five comments on gold supplies.

  1. "Michael deV", a knowledgeable and fellow fan of FOFOA, published a comment re FOFOA's idea that physical would disappear as the paper price goes down.  Yes, I completely agree!  I have often noted his wise comments over at FOFOA's blog.  Take a look at his comment in my article just below re the Massacre.
  2. Mr. de V raised the matter of supplies drying up.  I forgot to mention that my LCS (local coin shop) sold me the last one of their Gold Eagles yesterday.  Worse: no more sales of ANY gold until Monday when they could get price & delivery information from THEIR suppliers...
  3., one of the largest suppliers on the internet for gold is down now, and was down much of last night when I went to look (I was curious re if they were selling and if they had changed their premiums...).
  4. There are other vague-sounding rumors about gold now getting harder to get...  Worldwide...
  5. The eBay/ price-premium widget (found on the bottom of's home page at shows a +/- 14% premium of Gold Eagles to spot price, relatively high but not unheard of.  The premium is often high for a few days after a price drop I have noted in the past.

Many of you who actually know me (or have read enough of my stuff) know that I like numbers.  Well here is a fun calculation for you.  There are approximately 170,000 tonnes (metric tons = 1000 kg each) of gold being held today around the world.  This is a pretty well accepted figure.  Take a look at the below numbers, all numbers approximate because who really knows how true the 170,000 tonnes figure is...

170,000 tonnes = 170,000,000 kg = approx. 5,500,000,000 troy oz

(That is close to one oz per person in the world)

Let's examine the "loss" seen in the gold market yesterday:

5.5 billion oz * ($80 / oz) = $440 billion dollars lost!

OK, that is a "paper loss" and may have little or no larger affect on the world as a whole (just as the October 1987 stock market crash (some 21% if you remember...) had relatively little apparent affect on the larger economy...).  Even if there is no large or measurable affect on the larger world economy as a whole, a $440 billion dollar loss, just in "paper gold" is noteworthy!

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