The Price of Gold in Greece
May 27, 2010
As currencies crumble, most traders have to keep jumping from one to the other as one falls faster than another. But virtually all of the paper currencies are falling in relation to gold.
In Greece the situation is particularly acute right now. Greeks are scrambling to take their money out of stocks and bonds and many are buying gold coins. Because of this, the price of gold in Greece is as high as $1700 per ounce.
Well, that's not exactly accurate. The "price" is still the same as the world market. But the PREMIUMS being paid on gold are so high that Greeks are often having to pay $1700/oz. And they are apparently willing to pay such a price just to get the stuff.
It all goes to show how official figures (in this case, prices) are often not in line with reality. When that happens, a black market develops, just as it did in the old Soviet Union. Government price fixing made it unprofitable for them to sell goods at the fixed price rates, so the shelves were empty. People then paid more on the black market just to get what they needed.
There are some restrictions on buying or owning gold in Greece. The price of gold remains the same, but no one will sell their gold for that official price. This creates a dual pricing system, the official price and the real price.
We could learn some lessons from this.