Gold Industry Shaken as 83 Tons of Fake Gold Bars Used to Secure $2 Billion Loans in China
Bitcoin.com
For anyone doubting Gold's value, reading about this latest scandal illustrates just how fast people will abandon ship if they find out someone doesn't have the gold they say they do.
At least some of 83 tons of gold bars used as loan collateral turned out to be nothing but gilded copper. That has left lenders holding the bag for the remaining 16 billion yuan [$2.3 billion] of loans outstanding against the bogus bars.
This discovery caused the stock of Kingold Jewelry Inc. to fall by as much as 40%.
Take a moment to consider the double standard that exists in markets today. The spot price of Gold and Silver are regulated through paper trading of GLD and SLV. It's easily estimated that the total market supply of paper gold and silver is greater than all of the gold and silver yet to be discovered and mined in the earth, yet people still trade these worthless shares.
Horror stories can be found across the web of paper metal holders trying to get delivery on actual physical gold and/or silver. The truth is, there isn't enough gold and silver in existence (on earth) to cover a fraction of the paper derivatives.
Somehow, this knowledge doesn't stop people from buying derivatives in the markets. Yet, when it's discovered that some of the gold being held by a company is fake, that tanks their stock price?
Does this mean that their jewelry is fake as well? Unlikely. What it does tell me is that gold is held in double standard by the markets. Paper gold is used to suppress the true price of Gold because everyone knows that trying to get a timely delivery on the real thing is next to impossible. GLD is nothing more than a game of musical chairs, yet many retail investors seem oblivious to this. But, when a company that holds a large amount of real gold is discovered to have some fake gold mixed in, confidence drops like a stone.
Maybe its a nothing burger, but it seems like this kind of market behaviour exposes just how double-minded investors really are. This discovery of Kingold Jewelry Inc's deception will no doubt push the price of spot gold up, and if the price of spot goes high enough we might see a lot of GLD holders rushing to the exit at the same time.
How much gold out there is fake? Could some of the gold in Fort Knox (if it's still even there) be gilded copper?
One things for certain; there is more paper gold in existence than actual physical gold. When the music stops playing, if you're not holding physical gold and silver, your paper gold and silver will be revealed for what it actually is. These paper promises are no different than fractional reserve banking practices over a century ago that led to bank runs and banks losing everything. History will repeat itself, and holders of paper metals will cry rivers once again.
Thanks for dropping by.