For over two and a half thousand years, goldhas been used as money.
Today every country and central bank investsin gold because its value is considered so stable – it helps to offset more volatileinvestments that succumb to financial crashes.
Currently, all the gold in the world is worthover $8 trillion.
In short, it is a hugely important part ofthe global economy.
But Chris Powell, Secretary of the Gold Anti-TrustAction Comittee, says 80% of the gold owned in the world simply doesn’t exist.
If he’s right, it is the biggest case offraud in history.
Is Gold The Biggest Fraud In History? Over 2,000 tonnes of gold are mined everyyear.
Around half of that becomes jewellery, a tenthof it is put to industrial use, and a third of it goes into bars and coins to be heldin monetary funds and central banks across the world.
Gold is traded on the market every day, boughtand sold by individuals as well as funds and banks.
Like any commodity, the price of gold dependson the demand for it.
As a mineral, there is a finite amount ofgold available.
So far in human history, over 170,000 tonnesof gold has been mined.
All the gold that has ever been mined couldfit into three-and-a-half Olympic swimming pools.
The remaining gold in the ground is expectedto run out shortly after 2030.
The trend over the last century is that theprice of gold steadily increases.
When it runs out, the price could skyrocket.
But the market could collapse even beforethen.
Tens of billions of dollars’ worth of goldis traded every day in special markets.
According to Chris Powell, sales of gold arebasically underwritten by the central banks.
In 2009, market analyst Paul Mylchreest calculatedthat bullion houses who buy and sell gold have only 15,000 tonnes of gold to trade.
He also worked out that 2,134 tonnes of goldwere traded every day on the London market alone.
At this rate, the entire world’s stock ofinvestment gold changes hands every week in one market.
But gold is bought as an investment, to holdonto as it steadily increases in value.
What’s more, all this gold is held by thebullion trading houses, not given to the people who buy it.
Analyst Adrian Douglas said this means thatwhen you buy gold, you’re really buying a document that just says you own it – papergold.
Douglas also argues that the amount of goldsold each day compared to the amount of gold that exists, means that every ounce of goldhas at least four owners.
In effect, they are selling gold that doesn’texist.
This might sound far-fetched, but there isa precedent for it.
In 2005, Morgan Stanley was sued by its clientsfor selling them non-existent precious metals.
For two decades, Morgan Stanley sold investorsgold, silver, platinum and palladium and charged them storage fees for holding it.
When the clients asked for the metals, nothingwas ever delivered.
Morgan Stanley settled the case out of court.
Meanwhile, JP Morgan Chase & Company is currentlybeing sued for manipulating the price of silver.
In January 2017, Keith Neumeyer, the CEO ofsilver mining company First Majestic, said the same manipulation is being carried outin the gold market.
If more gold is being sold than actually exists,it could have disastrous consequences.
If Adrian Douglas is correct that each ounceof gold is owned by four people, each one of those owners has a right to claim thatounce of gold.
If people simply asked to be given the preciousmetal they officially own, the banks and bullion houses would not be able to give it to anyof them.
They would become bankrupt.
The price of gold would then rise to stratosphericheights.
As Chris Powell put it, “There may not beenough zeros in the world to put behind the gold price.
” This could have the effect of devaluing currenciesaround the world, since a country’s ability to purchase one of the world’s most importantcommodities would be drastically reduced.
However, the effect might not be that cataclysmic.
Almost every country in the world has abandonedthe gold standard.
This means their currencies are not tied tothe value of gold, rather the value of money is tied to the worth of the goods and servicescountries provide.
Moreover, the price of gold is less stablethan its reputation suggests, yet economies have continued well in spite of this.
If the price of gold went sky high, it wouldcause the collapse of the gold market and the gold mining industry, but probably notthe economy.
Nevertheless, in recent years Russia and Chinahave been buying up gold – the real thing, not paper gold – and increasing their nationalreserves.
They seem to be doing this to strengthen theirown economies, in particular against the US dollar.
The balance of power seems to be shifting.
If Eastern nations decide to tie their currenciesto the value of gold, it could cause a collapse in the western economy.
If, after that, it were revealed that goldis far, far rarer than the markets pretend, the global economy would be seriously underthreat.
The USA still has by far the largest reservesof gold in the world, and is one of the biggest producers and third biggest consumer of gold,after India and China.
Yet China claims to have only half the amountof gold we expect it to have, from the quantity it’s been buying.
And it appears to be an open secret that thegold market is manipulated.
Perhaps the whole system is based on a lie.
And perhaps that lie will have consequences.