Gold Coin Dealers Benefit from WSJ Article Posted by James Randolph on May 02, 2012
There has been a lot of speculation about the dynamics of the gold market for a very long time, but now an article in the Wall Street Journal puts gold coin dealers in a much better position relative to the paper market. Gold futures contracts are traded in many multiples of the underlying physical, which has created a great deal of debate and consternation, particularly in the last year. But, the market being the market, business goes on.
In an article titled “Gold Market Shakes off $1.24 Billion ‘Fat Finger’,” Tatyana Shumsky reports a relatively unusual trade volume that has prompted many analysts and journalists to raise an eyebrow. “The CME Group Inc.’s Come division recorded an unusually large transaction of 7,500 gold futures during one minute of trading at 8:31 a.m. EDT.”
The general analysis of the trading event is that 7,500 gold futures contracts in a single minute are substantial enough to warrant speculation as to price manipulation in the market itself. It is generally accepted on the Street and in the market that there is some degree of manipulation, at least officially through governmental working groups. It is partially acknowledged that large investment banks have enough influence in the markets to sway price, as well, though it is far from officiated.
This report in the Wall Street Journal marks a new kind of moment for the gold market, gold coin dealers, and analysts. We have been proponents of physical ownership for a long time, if not because of the fractional reserve basis and rehypothecation, then because of the relative ease with which banks and agencies can manipulate the paper gold market.
Gold coins have long been considered the best and most standard way to own gold. They are very recognizable in world markets and therefore authenticated. As well, they are relatively small compared to the size of many gold bars and thus more affordable for the typical investment portfolio.
This latest imbroglio, which promises to sink into the memory hole of the markets, is just another example of why the paper gold market is still relatively exposed and physical ownership of gold is the best strategy in this market. Gold coin dealers take this latest as the biggest official recognition yet of the manipulation in the paper gold market and the reason to own physical now.