Steve Netwriter Posted October 18, 2007 Report Share Posted October 18, 2007 Having read these two articles: Rope-A-Dope? http://news.silverseek.com/TedButler/1192554014.php and The US Gold Reserve is Now in Play http://news.goldseek.com/JamesTurk/1192633380.php I'm trying to understand how the gold system works, because if I read the 2nd one correctly, it implies that the system is about to fail to work the way it has been. OK, I'll try and describe it, and hope you can improve on it. 1. There is a trading market where traders can bet that gold with go up (long) or bet that it will go down (short). 2. There is a physical market, where traders buy and sell physical gold. In order to cap the gold price, physical gold is sold (from countries stores) when the price goes up too high, which brings the price down and 'punishes' those who paid the higher price. The supply of physical gold that each country has may be getting a bit 'low' (specially the US). How does the physical supply get to the short positions ? If the capping is stopped, won't that suddenly reduce the downward force, and give the long positions more chance of winning ? Is it like a game of poker, where someone comes along and removes some of the money in front of one player ? As one of the articles says, "the commercial short positions have always won". But will they this time ? Link to comment Share on other sites More sharing options...
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