Gold Shortage, Real Estate Bubble, War of Cash, and China Circling the Drain

Just combing through some of the news of the last couple of months. 

Gold mining companies have not been exploring aggressively in the last several years because of declining prices. These prices are largely determined on the synthetic market.  Gold has a physical market (buying and selling of actual metal) and a synthetic market (buying and selling claims on metal). The physical market participants largely TAKE prices while the synthetic market traders MAKE prices. By manipulating prices lower, sellers into the larger synthetic market have depressed the price of the metal in the smaller physical market. Eventually the chickens will come home to roost. People will catch on to the truth that there is a shortage of the metal and sellers in the synthetic. For more, read the Bloomberg article at https://www.bloomberg.com/news/articles/2016-12-21/gold-miners-are-running-out-of-metal-five-charts-explaining-why.

An article in The Telegraph in the UK identified Canada and Sweden as two real estate bubbles.  http://www.telegraph.co.uk/business/2017/01/02/fears-massive-global-property-price-crash-amid-dangerous-conditions/. I expect that as interest rates rise, and mortgages renew with significantly higher payments, selling pressure will rise also. 

At http://gordonfeil.blogspot.ca/2016/11/the-war-on-cash-and-on-you.html we discussed the move to eliminate cash. At http://www.bbc.com/news/business-38377765 we read that Pakistan is doing so also just like neighbor India. The European Union, Australia and Venezuela are also going down that road.

At https://www.bloomberg.com/news/articles/2017-01-03/china-drills-down-into-forex-transactions-as-money-exits-abroad is an article about China’s slide into insolvency. I have written about that trend at http://gordon-feil-economics.blogspot.ca/2017/01/china-is-going-broke.html and at http://gordon-feil-economics.blogspot.ca/2017/01/china-is-going-broke.html.