Quote:
Originally Posted by Udog
Gold is a good, safe bet. Problem is the gold market is acting strange, with quality gold being in demand, hard to find, yet being strangely undervalued in relative terms. The terminology is still foreign to me, but it appears finding quality certificates, or getting your hands on the actual gold, is really difficult, while it's easy to find certificates where you agree to let the bank hold onto the gold. Maybe I'm off here, but I just don't get warm fuzzies from all that... it's going to take alot more research before I'd be brave enough to enter the market. I mean, what is keeping the banks from selling more certificates than they have gold? * genuine question *
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A friend of mine was talking about this yesterday. He thinks there's a lot of manipulation going on, and I would agree that banks selling more certificates than they own would corroborate that behavior (it's like Short Selling, but in the gold market). Who knows though. Still smells funny.
As for what is keeping the banks from doing that... I'd like to hear the answer to this as well, but I have a sneaky suspicion the answer is "nothing."
edit:
Come to think of it, a simple google search had me reading at least one
article talking about big investment banks having a "short interest" in gold. I guess that answers your question--banks can short-sell gold all they want! If the raw material is hard to come by, then that tells me a lot of short-selling must be happening to keep the prices low as they are, and I think "manipulation" is an appropriate word to describe that behavior on a wide scale.