I got a question from a friend today via e-mail, and I though I’d share our little conversation:
Q: The question is why would the comex run out of gold? When someone takes delivery, they have to pay for the gold, and why can’t more gold be purchased by the Comex to replace what went out?
A: The short answer is that more gold is traded on the Comex than there is gold. It is all derivatives. Paper. They can’t buy more because there isn’t that much for sale and then the gold price would sky-rocket and Main Street, not Wall Street, would set the price. This is where we are heading and at that point the price of gold is theoretical… If there is no gold to buy, what is the price? Gold will buy you land, silver will buy you bread.
