DiscussWorldIssues - Socio-Economic Religion and Political Uncensored Debate - View Single Post - What would the effect on the economy be if gold became abundant?

**aquadayAquaks** · 06-12-2008, 01:01 AM

That's still trillions in gold out there, since it doesn't just evaporate. (I have no idea how much gold is held as investment rather than "in use". Anyone?) Also all the gold stocks and metal indices/funds would go into the shitter. It would do some serious damage. Much like the writedowns from CDO's. Only all at once since the stuff it would affect couldn't be hidden away in level 3 assets. Commodities and stock are mark to market. And in this case, the market would lose 99.9% virtually instantly.

You'd have investors and institutions getting margin calls... Fire sales on their holdings to pay for it, which can drive down the price of anything else they're holding. Sectors which go down or up strong tend to pull the rest of the market with them on sympathy anyways.

06-12-2008, 01:01 AM	#12
aquadayAquaks Join Date Oct 2005 Posts 379 Senior Member	That's still trillions in gold out there, since it doesn't just evaporate. (I have no idea how much gold is held as investment rather than "in use". Anyone?) Also all the gold stocks and metal indices/funds would go into the shitter. It would do some serious damage. Much like the writedowns from CDO's. Only all at once since the stuff it would affect couldn't be hidden away in level 3 assets. Commodities and stock are mark to market. And in this case, the market would lose 99.9% virtually instantly. You'd have investors and institutions getting margin calls... Fire sales on their holdings to pay for it, which can drive down the price of anything else they're holding. Sectors which go down or up strong tend to pull the rest of the market with them on sympathy anyways.
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