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Alasdair Macleod Introduction In this article I want to discuss the recent slide in the price of gold, an event that has generated a strong demand for physical gold which will likely cause a financial disaster for both systemic and bullion banks and for central banks. To understand why, we need to examine their role, the reasons for the precious metals carpet steam cleaner markets and assess the current ownership of physical gold, while we place into context the sentiment of investors. In the West (which in this article I consider the North America and Europe), the financial community consider gold as an investment. However, based on the global basin of gold, which according to estimates by GoldMoney is about 160,000 tons, the actual carpet steam cleaner amount held by Western investors in their portfolios is a very small fraction. In addition, the behavior of the investor, which in itself is only a part of the demand for physical gold in the West, is clearly in conflict with the objectives of monopolists, who follow the tensions in the gold market. To compound the problem, analysts, whose objective incorporates theories and hypotheses on investment of portfolios, have little understanding of the economic importance of the precious metals, having been educated according to the neoclassical economic theories. These economic theories, along with the analysis applied to modern investment if gold prices do not include carpet steam cleaner the increasing human desire carpet steam cleaner to protect themselves against monetary union. The result has been the constant suppression of the gold price (capital markets) below its natural level of equilibrium carpet steam cleaner (determined by supply and demand). In addition, the value contributed to the precious metals from Western hoarders was lower than that of hoarders in other countries, in particular, the growing number of investors in Asia. These tensions, if you persist, will contribute to the final destruction carpet steam cleaner of paper currencies. The possession of gold The amount of physical gold that supports markets led the investment is not recorded statistically, but we are able to illustrate its importance relative to the total stock by reference to the oil crisis of the mid-70s. In 1974, the global stock of gold was estimated to be half that of today, about 80,000 tons. Monetary gold was about 37,000 tons, leaving 43,000 tons in the form of non-monetary bullion, coins and jewelery. Suppose arbitrarily, on the basis of the distribution of global wealth, which two-thirds are owned by a minority in the West, approximately 30,000 tons. This figure is probably grew up in the early '80s, spurred by the rising market and the growing fear of inflation, which has prompted investors to buy especially coins and mining shares. The demand for physical gold has been driven by the rapid accumulation of dollars in oil-exporting countries, as well as by some wealthy investors from around the world to Switzerland and London. The sharp rise in interest rates Volcker era, the subsequent decline of the threat of inflation and the subsequent bear market gold have inevitably led to a reduction in physical possession of gold by wealthy investors in the West. Swiss banks and other companies, which employ a new generation of fund managers and investment advisors trained in accordance with modern theories of portfolios, in the '80s they started selling the gold positions of their clients, leaving very little in the , 2000. In the latter stages of the bear market, jewelry sales in the West have become an alternative source of supply of physical gold, but it was not enough to compensate for the massive liquidation of portfolios. In 2000, the western possession of non-monetary gold has suffered severe attrition as a result of a twenty-year bear market and the reduction of inflation expectations. The portfolios, which until 40 years ago were routinely 10-15% exposure to gold, still have virtually no exposure. Given that the consumption of jewelry in Europe and North America was only 400-750 tons per year during that period, in 2000, the possession of gold in OR