Panicky Greeks Paying Over $1,700 Per Ounce For Physical Gold

The difference between physical and paper bullion is becoming understood by a wider audience while availability is getting constraint. See extract:

"A central bank can lend gold to a major bank.  Under IMF rules, the central bank is able to continue to report loaned gold as still being in its vaults.  The bank then can sell its gold to the GLD exchange traded fund in return for shares of GLD.  This way, the bank theoretically has about netted its gold position. 

Then GLD can lease the gold, which is authorized under GLD’s operating documents, which means that GLD can still claim to have all of its gold liabilities covered.  It would be the lessee of the gold that would sell it onto the physical market, thereby putting some downward pressure on prices. 

In theory, the central bank, the bank, and GLD all have their positions covered.  However, if the lessee is unable to repay the gold someday, and rising gold prices increase the risk just such an occurrence, then there could potentially be a domino effect of multiple parties suddenly finding out they are in default of their liabilities to produce the physical gold they have reported as being an asset."

As each day passes, the risk is growing that owning any form of “paper gold” could turn out to be as worthless as the paper currencies used to purchase it.  While you still can, you should protect yourself by converting such “assets” into real physical gold."

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