Gold price "premiums" mark the birth of a parallel market

Just as predicted, and written in the fictional story “Jews”, it is on its way a separation of the market of Gold. On much markets of real delivery there appeared so called “premiums” paid to actually obtain physical gold. The premiums now are low – between $6 per kilo and $25 per ounce. But the clear fact is that they appeared and this simply means a creation of a different and parallel market with a different price from the one on the official exchange. Now you have to pay the official price, plus the premium, to really obtain gold.

Such phenomena happen when there is a non-market intervention that manipulates the price of any asset. For instance if the government issues a decree that fixes the price of bread at $1, while a day before it was naturally fixed at $2 than an increased demand of bread and decreased supply will appear (happen). This will lead to deficits, coupon system, black market, etc.

The same is with gold. These “premiums” are an element of the parallel (de facto black) market where the correction between the official and real market price is accomplished.

The official market now is manipulated. Not by a government decree, but via means of financial engineering. The London and New Your Exchanges are true markets, but not markets of real physical gold. The so called “spot price” is a price of different types of gold derivatives, options, futures, i.e. the thing that is called “paper gold”. This non really existing gold can be created in unlimited quantity and bought and sold with no limits. Just like the fiat paper money in which the price is calculated. So by playing with the supply of paper money and the  quantity of paper gold you can make any desired price of paper gold, measured in paper money. But this does not guarantee you will be able to buy real gold at this price.

The governments and loyal banks can manipulate the official market in an attempt to save the devaluing fiat money, printed as a part of currency wars and trying to erase by inflation the government debts. But every time the official market is manipulated, an imminent birth of second unofficial market comes, and there is found the real price of the asset.

Today we are seeing just the beginning. The money print is with no indications of stopping. In addition gold has not yet absorbed even the up to now money print. The attempt of governments to suppress the price makes it lower than it has to be, and unreal. So with the time the premiums will increase. And then other things are expected – a legal repression against gold, confiscations, bans of possession. Gold is the natural and unbeatable competitor of government stupidity and this competitor will soon be attacked fiercely. The result will be a fantastic price on real market.

April 30th 2013

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