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Gold/Mining/Energy : Gold Price Monitor
GDXJ 144.29-0.5%Jan 26 4:00 PM EST
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To: Enigma who wrote (57319)8/14/2000 4:01:08 PM
From: Zardoz  Read Replies (2) of 116925
 
Rons' comment: How much of the world's gold supply is held in the vaults of Central Banks and not available in the physical market? Sounds like a subsidy to me.

Enigmas' comment: Yes but it's an important distinction. Also to say that gold is subsidized because the CBs don't step up and sell all their gold - or more of it - ignores the fact that the situation hasn't changed essentially for decades.

Since countries can create the currency at will, then anytime they produce a Dollar and buy Gold to hold as a reserve asset; then they are creating a subsidy for the producers because it is an artificial manipulation of the demand supply equations. To suggest that holding such supply of gold for years somehow negates such action suggest that the selling of the same is having no effect. Nowhere does the selling of gold mean that they are loosing control of your currency. And although loans between countries are sometimes done with GOLD, those loans are by no means more effective then lending the actual currencies. In deed maybe lending a currency like the SDR {IMF buxs} would be better for most countries because that would have the effect of driving other currencies in correlation to your own.

Hutch
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