Let’s put it another way. For years the price of gold was set at $35 dollars an ounce until 15th August 1971 when the USA reneged on The Bretton Woods agreement. So, from 1944 to 1971 the price of gold was set by agreement:
Wow, is it still 1971? I need a new calendar!
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Yes! Yes! This is exactly the problem I’m talking about. If you continue reading that article, you’ll find that the market price of gold exceeded the $35 peg. Therefore, it was smart for various countries to take their dollar reserves and exchange them for US-held gold. As big as a global player as the US was back then, it still couldn’t defeat market forces when it came to gold. Gold was flowing out of the US so fast the whole system was about to collapse until the US cried “Uncle” and broke the peg to the dollar.
That’s the risk that any central bank gold-backed currency faces is if the gold price deviates too far to the peg. In today’s dollars, the US spent trillions trying to defend convertibility of the dollar and still couldn’t do it. So anybody who wants to create a new central bank gold-backed currency needs to be willing to spend at least that much. Any takers?
Here is the interesting part: The dollar was the world’s reserve currency and was convertible to gold for 27 years. Yet after the peg broke, the dollar has remained the world’s reserve currency for the next 51 years. Almost double, and still going strong. It is almost like you don’t need the peg.
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Why are we arguing over a paperweight?
The revaluation of gold reserves by central will do two things. Firstly solve the problem of them being insolvent due to the massive amounts of bonds that they are buying and secondly put a floor under the gold price. Gold will never go under this price but may well go above it as it has in the past:
The Governor of the Dutch central bank stated the gold revaluation account ensures the solvency of his central bank in an interview on television about prospective losses. The significance of this statement is that if any European central bank will cover losses by using its gold revaluation account in full, the ECB has to put a floor under the gold price. And if more losses need to be covered than the current gold revaluation accounts of European central banks allow, the ECB will need to revalue gold.
When I sold our gold I was offered one price in Washington, DC and a much better one the next day in NYC. Isn’t that the open market?
When Nixon closed the gold window the open market took over.
The Captain
There will always be local differences for coins and bars sold at dealer.
The important price for gold is the spot price and this comes from paper gold. You have a derivative setting the price of an asset that it is derived from!
The parties who have the most influence over the gold spot price are not for the most part exchanging the physical precious metal but instead using derivative contracts representing the underlying commodity to determine what the real world’s physical gold price is.
You wouldn’t be strange if you thought this situation didn’t make common sense.
https://www.jmbullion.com/investing-guide/pricing-payments/how-gold-spot-price-set/
I agree that this doesn’t make sense but that’s how it works
The number of derivative contracts vastly outweigh physical contracts. If the price of gold seems to be rising, they use the paper market to smash the price down (pump and dump). This system seems to be coming under increasing strain as do other derivate markets
In short, the gold derivative establishment is panicking. The swaps position on Comex shows why…
…One can begin to see why dealings between LBMA members are so significant, recently hitting 60 million ounces a day, the equivalent of 1,866 tonnes.
The article mentions over $600 trillion contracts outstanding. in its last quarterly report The Bank For International Settlements put this figure at $632,238 trillion. I suspect that it may be much higher than this as OTC derivative trades are not public.
I’ll stick with my physical gold 
More than one party is a market!
The Captain
Not when they are all working together
This. Right there. And a few more characters.
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