[tim333]

Ok fair enough - I was unclear on the definition of paper gold. But the idea that

>There is a belief that there exists a lot more paper gold than actual gold. So when the run on the reserves starts, the price of gold will explode as billions of dollars worth of gold in the market disappears.

is probably not representative of what would happen. Derivative bets can come and go without really moving the spot price.

[cf141q5325]

While again i dont disagree with your conclusion, i believe your arguing here is flawed. The derivatives can and do move the price significantly. JPMorgan payed quite hefty fines for manipulating the precious metal markets (as well as treasuries) through spoofing¹. Thats now happening by dumping significant volumes of derivatives onto the market at times its especially thin. Which can be in the order of magnitude of yearly productions. Combining this with bots trading trends prices can be moved significantly.

But again, due to golds importance from the monetary perspective, significant price increases are not going to happen. It could be seen as currencies devaluing, thus lending out central bank gold reserved to achieve price stability is very much on the table. I believe it was Greenspan that talked about this in the past.

¹ https://www.reuters.com/article/jp-morgan-spoofing-penalty-i...