Currently Researching Paper Gold

Sorry for being slow answering comments these last few days. I will do so this weekend.

I have been distracted researching an important topic: Paper gold.


With gold now hitting $1,000 this Friday, I think we are soon heading for a “run on paper gold” so to speak. In other words, with gold prices spiraling higher, investors will begin to worry whether or not their gold ETF/certificates of (un)allocated gold/futures contract might not be backed by gold. After all, the higher gold prices go, the less likely those on the short side of COMEX contracts will be able to deliver.

As investor begin to redeem their paper gold for the real physical thing, some paper gold market (probably the COMEX) will default and fail to deliver. The instant this happens, all forms paper gold will come under intense scrutiny, with a large surge in redemption request. Paper gold not backed or redeemable for the real thing will collapse.

So right now I am focusing on investments like the GLD, whose gold isn't audited and makes me nervous.

Eric de Carbonnel

Market Skeptics

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