4 ms·

> I'm not sure if that's more or less than I'd expect. Most people "owning" gold in the world hold paper gold that isn't backed by physical gold. And the pape

> I'm not sure if that's more or less than I'd expect. Most people "owning" gold in the world hold paper gold that isn't backed by physical gold. And the paper gold volume traded on a daily basis is several orders of magnitude higher than the physical one. So even if it's less physical gold than one would expect (I didn't check you maths btw), there's "more" to it than just the physical gold.

deltree7 4y ago
This is a conspiracy, QAnonish take on securities
DoingIsLearning 4y ago
Perhaps a stupid question from a non-economics laymen: If people are holding 'paper' gold that isn't backed by physical gold, then doesn't that mean that gold as a product is more scarce than the market demand? Wouldn't it mean that by increase the volume of 'paper' gold assets we are artificially pricing gold incorrectly?
- jrumbut 4y ago
  But the market is for paper gold, so the price is for paper gold. Realistically, if you want some actual gold a lot of that price is going to be about delivery, storage, verification, etc, etc. The paper gold probably helps divert people who just want to bet on the price of gold away from the people who actually gold to do work (though inevitably the two groups will affect the price the other pays).
- homeland221 4y ago
  Bingo! We are artificially pricing gold incorrectly! USA has very little gold compare to others like Russia and China. Nixon realized this in the 70s and then we have fiat dollars. Most people don't know the price of gold other than what is being advertised on the market which is based on paper gold mostly. Having gold as valuable can undermine USA petroldollar dominance and bad for America in general as gold commodity USA has very little to influence worldwide order.
thesumofall 4y ago
Do you have a source for that? At least the major ETFs seem physically backed? And just because trading volumes exceed available gold, this doesn’t necessarily imply that this is just “paper gold”
- MerelyMortal 4y ago
  The term is 'rehypothecation'. This is just the first result in an internet search for gold rehypothecation: https://goldsilver.com/blog/what-is-gold-hypothecation-and-rehypothecation/ https://goldsilver.com/blog/what-is-gold-hypothecation-and-r...

deltree7 4y ago

This is a conspiracy, QAnonish take on securities

DoingIsLearning 4y ago

Perhaps a stupid question from a non-economics laymen: If people are holding 'paper' gold that isn't backed by physical gold, then doesn't that mean that gold as a product is more scarce than the market demand? Wouldn't it mean that by increase the volume of 'paper' gold assets we are artificially pricing gold incorrectly?

jrumbut 4y ago
But the market is for paper gold, so the price is for paper gold. Realistically, if you want some actual gold a lot of that price is going to be about delivery, storage, verification, etc, etc. The paper gold probably helps divert people who just want to bet on the price of gold away from the people who actually gold to do work (though inevitably the two groups will affect the price the other pays).
homeland221 4y ago
Bingo! We are artificially pricing gold incorrectly! USA has very little gold compare to others like Russia and China. Nixon realized this in the 70s and then we have fiat dollars. Most people don't know the price of gold other than what is being advertised on the market which is based on paper gold mostly. Having gold as valuable can undermine USA petroldollar dominance and bad for America in general as gold commodity USA has very little to influence worldwide order.

thesumofall 4y ago

Do you have a source for that? At least the major ETFs seem physically backed? And just because trading volumes exceed available gold, this doesn’t necessarily imply that this is just “paper gold”

MerelyMortal 4y ago
The term is 'rehypothecation'. This is just the first result in an internet search for gold rehypothecation: https://goldsilver.com/blog/what-is-gold-hypothecation-and-rehypothecation/ https://goldsilver.com/blog/what-is-gold-hypothecation-and-r...