As the chart below shows – which is disturbing without any further context – the 40 million ounces of gold open interest and the record low 74 thousand ounces of registered gold imply that as of Monday’s close there was a whopping 542 ounces in potential paper claims to every ounces of physical gold. Call it a 0.2% dilution factor.
IOW, not only must a society eschew fiat and token money, but all deals must be cash on the barrel-head. Sounds an awful bit like Dark Ages Europe to me.
‘Credit’ has been a known part of civilization for ages and was even mentioned in the Old Testament story of the ‘Widow and her Pot of Oil’. (2 Kings 4:1-7)
It has been speculated that one of the main reasons that written language (specifically cuneiform, since many surviving ‘documents’ concern business transactions) developed was for the purpose of memorializing credit agreements.
Cash on the barrelhead is sufficient but not necessary. Paper works if it is fully backed by real money.
The real culprit, which you can see here, is fractional reserve banking, which is another way to say legalized inflation, a.k.a., legalized counterfeiting (for the favored).
While I don’t agree with Ms. Barnhardt on everything, I do on this:
“If you can’t stand in front of something and physically defend it with a firearm, then you don’t own it, and probably never did.”
Of course, I don’t think most of the folks trading on the Comex actually care about gold. This is like the stock market and ‘derivatives’. It’s digits on a spread sheet and playing arbitrage.
Heaven help them, if people start to actually want “Teh Physical”.
Most of those open interest claims will probably be filled with cash, not physical gold. Digit trading, you’re right.
And this is after the manipulation of gold prices by bankers became public knowledge about 10 years ago! Wow.