CHARTS: The gigantic paper market to price gold
The gyrations in the gold price in recent years should come as no surprise considering the paper market in the metal has grown exponentially.
The February issue of the World Gold Council’s investment publication shows that the gold market reached staggering numbers in 2016.
Source: World Gold Council
Gold is one of the most leveraged and liquid financial markets with trading volumes many multiples of annual mine output.
Roughly $180 billion worth of gold is traded each and every day in all its forms including futures markets, physically-backed ETFs and over the counter transactions.
Making a back of the envelope calculation using the average gold price for the year ($1,250) it means that some 140 million ounces exchanged hands each day last year.
That’s 40% more than annual mine output every single day. On an annual basis the volume of gold traded exceeds the estimated 190,000 tonnes of the precious metal that have been produced in human history.
The gold market dwarves turnover on the Dow Jones Industrial Index and that of the S&P 500 combined, German and UK government bonds and even some of the top currency pairs.
Click here for Gold Investor February 2017 which includes an interview with former Federal Reserve Chair Alan Greenspan and a report on how to maximize returns by going long gold and the US dollar
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3 Comments
Ray
Does this mean a gigantic gold bubble that is going to burst soon? Probably. I hope not!!
Rock Cabin
It means the opposite. Paper gold trading artificially LOWERS the price of gold because of the false supply. If trading required actual gold to do the deal, gold prices would be magnitudes HIGHER than today’s price.
Ray
Also it means are lot of people are selling fraudulently. I.e. selling gold they do not have. Just selling pieces of paper or numbers on a computer. Some government authority should take action and put the fraudsters behind bars. But they, the fraudsters, are probably among the elites and, as such, untouchable by any law.