Silver Dollar Economy

We all know that there is more than we can see when it comes to the financial markets. It’s hard to know everything, which is one of the many causes of people losing their money when they invest in one instrument or another.
Also, there are too many interests focused on making us invest our money in the system. This isn’t some communist commentary but a truth that a banker would not simply accept. But we don’t worry about it because we know well that smart investing can translate into profits.
On Monday, Koos Jansen from Seeking Alpha released an interesting report about a theory he has about the gold market. According to him, both supply and demand are manipulated by the biggest companies in the financial media.
The Three Main Considerations
In his article’s summary, he pointed out three main considerations we should have before reading the rest of his ideas. The first one is clear and simple: both supply and demand data of the gold market that is published by the biggest media companies is misleading on purpose most of the time.
The second of his considerations points out that both supply and demand data are designed to represent the cash for gold relevance as a commodity and not as a currency. And finally, the third consideration is that the commodity image of gold that was crafted and maintained by the media is causing highly-damaging misconceptions among investors, leading to poor strategy effectiveness.
How Does It Work?
Jansen digs more and more, throwing at us a few clever ideas. It isn’t necessary to mention that firms could be doing this in order to protect the way their business model works. That’s quite obvious.
Now, the gold market is based on how much metal is produced versus consumed, which, according to the author, is a wrong approach. This precious metal is everlasting, so it isn’t consumed once it has a commercial application. Just imagine all the gold there is around in mobile cell phones, for example. That gold is not going to disappear any time soon.
Media companies do not reflect gold this way. Published data and analyses cast another image, one where gold is consumed and disappear forever, which is a terribly wrong approach.
Another key point of his analysis tells us that firms exclude institutional supply and demand from their reports, which is the bullion trading among high net worth individuals and institutions.
The Bottom Line
Jansen insists in his article that it will never be a gold deficit in the world, neither for trading nor monetary purposes. From his point of view, this is a great thing which differs from what Keynesian economists do think.
This is one of the many things ignored by big media firms, which also ignore institutional supply and demand. By leaving aside this highly relevant factor, says Jansen, the whole gold market is based on a misleading, wrong price. We are not seeing the true value of the yellow metal and, if things continue the way they are, we will remain working with a false price.