Thursday, October 25, 2012

Oh, boy, I'll BET a bunch of people are on edge:

In the aftermath of Wednesday’s report of a tungsten filled 10 oz PAMP gold bar discovered in Manhattan, it appears we now have an epidemic on our hands, as the NY Post has just reported that a total of at least 10 tungsten filled gold bars have now been discovered in Manhattan.

The NY Post reports:
The Post has learned as many as 10 fake gold bars — made up mostly of relatively worthless tungsten — were sold recently to unsuspecting dealers in Manhattan’s Midtown Diamond District.

The price of gold has risen more than 600 percent since January 2000, while the S&P 500 index is down 0.6 percent over the same period.

The 10-oz. gold bars are hugely popular with Main Street investors, and it is not known how many of the fake gold bars were sold to dealers — or if any fake bars were purchased by the public.

An Australian mint has called in the Federal Police after being shown evidence by Seven News that its gold bars are being counterfeited.
The investigation uncovered Chinese 'forgery factories' that will churn out fake bullion and even Australian coins, for a fraction of their face value.

I wonder how many people are nervously studying their shiny investment right now?


Phelps said...

Tip of the iceberg. Germany just ordered a physical audit and assay of its sovereign gold. I'm just waiting to hear news of the first empty vault. I wouldn't be surprised if it was at the US Fed, where they store some of it.

Sigivald said...

Especially the people "buying gold" without ever taking possession.

Then again, I've never thought Gold Bugs serious people. I've thought gold was in a price bubble for years now.

Expect gold to tank if/when Romney wins the election - on the grounds that the people nervous about the dollar and US economy will have a collective giant sigh of relief and the demand for a hedge against it will subside.

Firehand said...

I wouldn't mind having some pretty little bars of gold and silver; but I wouldn't wipe my savings out buying them.

Sigi, I've never understood that: if you're buying a precious metal in case of disaster, why the bleep would you leave it- supposedly- in a vault somewhere you can't get to it?

Anonymous said...

One of the beauties of using a specific metal for money, is how easy it is to check the analysis.

Counterfeiters may substitute a cheaper metal with the same specific gravity, but it is much, much more difficult to match the Young's Modulus (elastic modulus / stiffness) at the same time.

the checking doesn't take any fancy equipment, just your ears.

the pitch of the "ring" or clank made when a coin or a bullion bar is jangled in your hand or hit with a hammer, is related to both the stiffness and the density of the object.

If you have identical shaped coins or bullion bars, and one of them is known to be good

Check the weights and volumes are the same (same density)

then make them ring,

a different note indicates a different stiffness, therefore a different composition.

Anonymous said...

Money is simply the commodity on the market which is most acceptable in exchange.

Ideally, it should be easily divisible (quarter of a dairy cow is not much use!)

each unit of it should be identical to every other unit (No, I'm not accepting that ugly "wife" in exchange for my camel)

it should be easily recognizable

it should have a high value for a small weight and bulk (which rules out using barrels of oil).

Many monies have arisen on markets (there's a fantastic paper by Radford, from 1945 describing the monies arising in the POW camps in WW2 Germany; cigarettes were the most favoured money).

Gold emerged as the most acceptable commodity used in exchange - not a government choice, but a choice of individuals participating in freely conducted exchanges on the market.

It retains a hugely important property, the quantity available in the world is effectively fixed - it is very expensive and time consuming to mine sufficeint gold to appreciably change that quantity.

By contrast, the US money supply was doubled in 3 months in 2008.

As the quantity of goods on the market did not change - the effect of that increase was to tax anyone with savings by 50%.

Those receiving that new money first, are able to spend it before prices rise - those who obtain it after prices have risen - yeah -their savings are effectively transferred to the favoured ones who got the new money first

robbery, in other words.

Use of a commodity with a fixed supply - like gold - as money, prevents politicians and bankers from indulging in such theft

That is why there is so much anti gold propaganda (eg the derisive term "gold bug") around.

Anonymous said...

From the properties desirable for money, it should be clear that plenty of other goods can be used as a medium of exchange and as a store of wealth.

These have the advantage that they cannot be taken from you overnight - as a recall and re-issue of bank notes, or a freezing of bank accounts can.

Some examples;

Ammunition and ammunition components (lead, brass powder and primers).

small guns

high quality tools

bottles of whiskey

good quality blades

there are other goods too, which even now are only available on the "black" market.

when the new money from the various QEs escapes onto the market, expect very price rapid inflation.

If the politicians get the chance, they'll try to institute price controls.

If the control price is below the market price, that good will immediately vanish from the open market onto the "black" market.

at that point, things get very interesting

at that point, those with goods that state sector workers want (the state sector does not produce anything useful, like food, gas, heating fuel, car repairs, can decide what they'll accept in exchange.

The smart thing would be to demand works issue guns and ammunition as the means of payment.

can you imagine the panic in the corridors of power when it is realized that all of those stockpiles of new guns and ammunition just keep walking out of the door and into the hands of the despised "mundanes"

and no matter whom the powers send to guard those stockpiles, they just keep on going.