The gold price

A lot of people ask me about my opinion when it comes to the price of gold, especially as it recently had a very sharp drop of USD200 in a day or two.

First of all, we need to realize that this is the gold price expressed in USD. In other currencies, the story is slightly different. While gold in USD is well below the all-time-high, expressed in for example Japanese yen, Euros or British pounds, we are not that far from the very recent all-time-highs.

Secondly, the price of gold, as we see it reported, basically refers to the gold futures markets, where very seldom actual physical gold is involved. It’s more like paper gold in that regard, i.e. there is very little regard to the actual physical gold.

Thirdly, when it comes to the actual physical gold, if you would have been buying say a bar or a coin lately, you would have had to pay sharp premiums above the price you see in the newspaper. I have seen major websites with premiums of 25% for gold and even more for silver, as compared to the normal less than 5%. So the price of real physical gold has not dropped in the same way.

Finally, while many people seem to have lost track of what value is, even a value-investor like Warren Buffett, there are millions and millions of people that see the drop in price as a buying opportunity. The US mint is overwhelmed; shops in Hong-Kong, China, India and Thailand face long lines. In Bangkok’s Yaowarat shops have even had to temporarily close. See article below.

So there is more to it than what is reported in Western media.

Many gold shops in Bangkok have no gold left for sale, after the recent plunge in the price sparked a buying…