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Here in Bangkok literally every gold shop is out of physical gold. I went and bought 80% of one shop that had some, and the rest got bought immediately by other customers. If there is sell pressure you would see Thai people line up at gold shops and dump their gold. It's one of the main investment instruments here and I don't hear of any wide spread selling.

I think whats happening is china is buying up all the physical supply in the global markets.

I highly doubt the rare coiners and Costco bars can move a market this big. This is also not a US-only thing; it's happening worldwide.

> but the big buyers out there don’t actually want or need all this expensive physical gold. The price spike isn’t because all of a sudden there’s increased demand for physical gold - it’s just a financial instrument at this point that happens to have a physical counterpart.

The reason is well understood: Central banks around the world are increasing their supply of Gold. In particular, the one in China: https://tradingeconomics.com/china/gold-reserves

And no, big buyers expect deliveries: https://www.ft.com/content/86a5fafd-603e-4ee1-9620-39b5f4465...

> 1oz coins.

Amateurs:

* https://www.mint.ca/en/shop/coins/2025/lunar-year-of-the-hor...

* https://www.mint.ca/en/shop/coins/2025/heart-diamond-pure-go...

More 'pedestrian' items are available as well:

* https://www.mint.ca/en/shop/categories/gold

There's a simple counterpoint to your argument: there are places that were selling physical gold for $2000 a decade ago, that were selling it for $3000 back in 2024, and that are now selling it for $4000. I don't see any of them going out of business. Online, Apmex and dozens of others seem to be doing just fine.

So evidently, there is healthy retail demand for gold at these price points. Futures markets can get weird, but they're ultimately rooted in demand for commodities. I can't sell you futures on something that no one is willing to buy.

Oh for sure - APMEX is selling plenty of gold and they're doing great. But they buy gold too and ship it off to refiners just like any dealer. And yes there is plenty of demand for gold - but my only point is that demand right now is for Gold The Commodity (eg a hedge fund / government / etc.) who just want the financial instrument (that happens to be backed by physical bricks in a warehouse...they hope lol) as opposed to the retail buyer who wants gold the way they want Crypto or Pokemon cards.

For example, one dealer I know last month sold $5m in physical gold coins (to consumers who wants gold) but they bought $30m in physical gold coins to be shipped off and melted. They, like APMEX, make money on both sides so they're plenty happy. But a 6:1 buy:sell ratio is pretty wild.

It’s wild, but couldn’t we also explain this with a theory like “people have more trust in the institutions holding gold, and want better rates when they buy/sell?” Older generations seemed, to me at least, that they had some distrust in financial institutions, and maybe the newer gold buyers trust that their gold deposits work but don’t trust dollars or stocks as much.

Well gold is a healthy market and when there are opportunities for arbitrage people are happily taking them. There is not a disconnect if you can go to a physical dealer and get small margins on physical buying and selling compared to the spot price.

The cynical question then becomes: what part of the market is bearing the security costs of all that gold being shipped around as collateral? That's a transaction friction that doesn't show up in a commodities trade balance sheet.

A creative thief (or, y'know, scriptwriter) must be thinking about how to exploit that disconnect. If it's never been a better time to "own" gold, but not to "hold" gold... then surely this is also the best time to steal gold?

You pay a premium for futures. If you can't accept delivery, then you must sell before the contract settles. That's essentially the price for holding the gold.

What's the mechanism for getting that premium into the hands of the person operating the gold fortress, though? I get that there's a loss in the market, I don't see the closed part of the loop. Derivative markets are only efficient if you assume that the friction costs are actually borne by an underlying market of real goods. And as the upthread comment points out, there really is no such market. No one is consuming gold (for PCB contacts or jewelry, which are almost the only applications) in anything like the amount being traded by speculators. So there's no entity that naturally bears that cost.

And I'm further supposing that in such a situation, the people who end up with the actual junk to be stored are probably going to find ways to cheat and store it poorly, in e.g. a warehouse and not a fortress.

Most of the gold market is “paper” gold, with the physical quantities being stored in a handful of large vaults around the world. The physical retail market is tiny compared to the massive paper market and the hoards of physical gold (owned by nations and large financial institutions) that sit in these vaults. I believe the operators are paid for storage.

Much of the gold in vaults doesn’t even move once it gets there, even through multiple successive owners. China takes physical ownership of its gold, though, so recently there has been a lot of gold moving overseas.

Germany and Italy have recently considered repatriating their physical gold, as they are no longer sure about leaving it in overseas vaults: https://www.ft.com/content/e39390cc-ea02-4197-843a-1e4c24242...

> I believe the operators are paid for storage.

Which is to say, you don't know either. What I'm saying is that this huge boom in gold value has not been matched by an equivalent change in gold storage paradigms. And that... probably has some bad externalities.

We actually saw this in the 1990's. Intel had built its business on the back of regular shipping practices, sending pallets of chips to a small list of electronics manufacturers as needed on commercial vehicles. But as the PC market matured and the parts became more easily liquidated on a global gray market, people suddenly realized that you could hijack a truckload of 486's and dump the multi-million-dollar cargo into Taiwan at almost no risk. And there was a rash of chip pirates for a while.

This smells similar.

I am fairly certain that large amounts of gold in transit have extremely high security, as do the major vaults. If you’re talking about theft risk, smaller gold businesses or the couriers that transport for them are probably most at risk as prices rise, as they may not have the scale and resources to deal with sudden changes in the risk environment. But as dollar value increases I’m sure that insurance will require a commensurate increase in security. Basically, robbing banks (or anything similar to a bank) is never a good idea.

It’s not like the quantity of gold available has increased. With China buying and repatriating large amounts of gold, the big secure vaults surely have more space than usual. Some retail gold traders are concerned about issues in the paper gold market, as the total dollars traded is much higher than the total amount in existence, but this concern is just a misunderstanding about how the futures market works. Even so, to me it seems more realistic to worry about some kind of shenanigans in this often opaque “paper gold” market than a sudden outbreak of gold piracy.

> None of this is to say there’s a problem with this - it’s just fascinating that net result of this huge spike is lots of jewelry and old coins being melted into bricks of gold that will sit quietly in secure warehouses and vaults around the world.

Not really "around the world". There's been a huge influx of physical Gold from the rest of the world into the US this year. It kind of fucked over Switzerland, because the gold refining capacity of the world is really concentrated there. So they've been working 24/7 on the not particularly appealing business of importing gold in one size from London, re-casting it as bars of a different size, and exporting to the US.

And why is this a problem? Because this anomaly single-handedly made it look like Switzerland had a massive trade surplus with US, so they got punished for being the middle-man on the Gold exports with crushing tariffs on everything else.

> it’s just fascinating that net result of this huge spike is lots of jewelry and old coins being melted into bricks of gold that will sit quietly in secure warehouses and vaults around the world.

The next logical step in that process would then be for the price to further increase as the actual amount in circulation decreases, right? Doesn't this create a sort of vicious cycle?

Technically the gold is still in circulation, it's just in contracts on the market instead of in people's closets. If anything, this move probably increases gold market liquidity.

At any time someone could take delivery on their futures contracts and receive a shipment of the gold from the warehouses it is stored at.

Surely it is a problem though, since jewelry is at least some kind of 'use' and since this speculation competes with use?

Whenever the ruling class is threatened, the first thing they do is force their own people to give up their gold.

- In 217 BC, to survive the Second Punic War after Cannae, Rome passed the Lex Oppia requiring citizens to surrender gold and jewelry to the state treasury.

- In 1307, to survive debts from the Flemish War, Philip IV of France arrested the Knights Templar and seized their treasury, disrupting credit networks used by merchants and pilgrims.

- In 1536, to survive the Great Matter (his divorce) and break with Rome, Henry VIII dissolved the monasteries in order to melt down their gold and silver chalices, crosses, and shrines.

- In 1666, to survive the Second Anglo-Dutch War costs, Charles II "borrowed" gold deposits from London goldsmiths through the Stop of the Exchequer and never returned them.

- In 1797, to survive the French Revolutionary Wars, Pitt the Younger demanded "voluntary" Loyalty Loan gold contributions from British citizens, backed by threat of forced requisition.

- In 1917, to survive WWI and the October Revolution, Lenin's Decree on Gold confiscated all gold coins, bullion, and objects from "non-working classes."

- In 1933, to survive the Great Depression banking crisis, FDR signed Executive Order 6102 requiring all Americans to give up their gold.

- In 1934, to survive monetary reform, the Gold Reserve Act let the US Treasury profit $2.8 billion by revaluing confiscated gold from $20.67 to $35/oz (basically stealing 41% of the value)

- In 1959, to survive the US trade embargo, Castro's Revolutionary Government Law 851 seized all private gold holdings in Cuba, including jewelry and coins.

- In 1966, to survive foreign exchange crisis, India's Gold Control Act under Indira Gandhi banned private gold ownership above tiny amounts, forcing surrender to the state.

It's a wonder of our modern age that this classic form of expropriation is now happening through voluntary means: high paper prices drawing physical gold from millions of small holders into the vaults of institutions, without any guns, goons, or executive orders required.

You have ommited many other occurences I know of - in Roman Republic, Venice Republic etc. Most of these republics were oligarchic in nature and charged richest citizen substantial extra tax when in need or in danger. Roof tax in Rome is one example.

Upper classes paying for unusual/emergency expenses of the state. Unthinkable now.

Some notable examples, and likely many others exist throughout history.

Retail does not have the financial power to move any large market. The responsible parties, in either direction are institutional buyers. So your final point is worth consideration. Could it simply be diversification from US Treasuries? Or are there other geopolitical factors?

Yes that's a big part of it. Goldman said last month (when gold was at $3500):

> “We estimate that if 1% of the privately owned US Treasury market were to flow into gold, the gold price would rise to nearly $5,000 an ounce, assuming everything else constant,” the analysts said. “As a result, gold remains our highest-conviction long recommendation in the commodities space.” https://archive.is/2WjSc#selection-1491.0-1494.0

In terms of geopolitics, a lot of the demand has been driven by Asia, such as the Reserve Bank of India. The end of the petrodollar pact with Arabia hurt. https://archive.is/t2Ttm When USD went off the gold standard, that pact gave it oil as a leg to stand on. Now that's gone as of 2024. In 2020 the fractional reserve requirements for banks went to zero too. The only thing that gives the USD value is a faith in the American people, which is aged population that flouts its fiduciary duty to debt holders by debasing everyone's currency to fund their own retirements.

> the kind that’s sold at Costco in bars

Sorry, what? I don't shop at Costco because I don't really need anything in the volume they sell it at... but is this a real thing?

1oz bars IIRC, not like the bars you see in movies

Oh, yeah... that's definitely not what I had in mind lol. I don't own any gold, but I do have a single silver 1oz coin and imagining that in bar form only brings to mind Zoolander jokes.

https://www.costco.com/precious-metals.html

The only real use case for these is occasional chemistry usages.

But very very very very ignorant people still insist gold is some sort of useful store of value for the apocalypse or something.

People with large gold reserves in 1930s Germany did no better than any other Germans in an environment with failing fiat currency. Primarily because they were being put into camps and their gold was confiscated by a criminal regime.

I think some people like it for churning credit card bonuses, since you can buy it and then resell it for not that much less.

The way you hedge against collapse is with guns, mountain house, and medical supplies.

Then you provide protection, nourishment, and medicine to all the people in your community who have costco gold and jewelry.

Isn’t it just inflation. As time passes there is more fiat in circulation, which means fiat is worth less, which means you need more fiat to buy the same amount of gold.

That’s certainly part of it (and the argument most gold bugs make as to why we should all be buying gold), but gold has gone up 133% in the last 3 years which is wayyyyy beyond inflation tracking.

Gold can be an asset. But the way it functions as a financial instrument is more like a short against fiat currency. That is, when inflation starts (or at least when it comes to peoples' attention), gold will move by more than the amount of inflation. When peoples' awareness of inflation goes down, gold goes down, even if inflation is still greater than zero.

Note well: This is my impression. I have not tested this hypothesis against historical data.

If Gold kept pace with inflation (roughly $35 an ounce in 1970 dollars) it would be ~$279.98 an ounce in 2025 dollars.

So inflation has almost nothing to do with the current price of gold and the grandparent post’s speculation about the futures market running hot is far more likely. The price of gold isn’t attached to the dollar and hasn’t been for over 50 years.

The retail price index probably understates the effect of inflation. The amount of gold to buy a house say has remained fairly constant over time.

I would like to see that chart because houses have also spiked significantly in price especially since 2008. That maintaining a consistent ratio would at least eliminate the dollar from the equation showing value not just dollars.

A quick sanity check of my own house would show that it would cost something like 75 ounces of gold. It was built in the 70’s and originally sold for 45,000, or well over 250 ounces of gold in gold prices from around then. Doesn’t seem right…

There's a chart here for the UK https://auronum.co.uk/gold-vs-bricks-how-many-ounces-you-nee...

It fluctuates a fair bit but starts and ends at ~150oz/house

And the US https://www.longtermtrends.net/real-estate-gold-ratio/

The other way to think about it is that the price of many other things may have gotten cheaper (in terms of labor/capital) at the same time as fiat inflation.

But how can you untangle an objective production price from the fiat / economy it's produced out of?

If that were the case, you'd expect scarce but still produced assets (e.g. housing) to have both increased in price (due to fiat inflation) and decreased in price (due to production technology efficiencies).

Which one dominates to what degree likely depends on the asset.

Inflation has been masked and understated for decades. Some of the inflation was concealed by getting rid of domestic production in favor of cheap imports. These chickens are coming home to roost.

The fed doesn't even publish M3 anymore (which is what tells us how much fiat there is in circulation). So we really don't know. We do know that as of 2020 America no longer uses fractional reserve banking. The collateral requirements for banks are now zero. There's more kinds of inflation than just M3 growth. There's also loss of faith in the dollar. Loss of creditworthiness of the USG. But most importantly, the loss of people willing and able to work. Gold measures all of them. The value proposition of treasuries is they pay yields which means you can extract surplus value from American labor. However with such a sickly aged population, it's more of a risk that Americans will exploit the dollar to fund their own retirements instead. Goldman Sachs said a month ago when gold was $3500 that if just 1% of treasury holders decide that a rock which doesn't do anything is a safer better investment than the American people, then gold is going to go to $5000.

There are also more economically active people in the world sharing (I assume) the same amount of gold.

It seems that way to me, plus Trump's erratic tariffs behavior specifically targeting swiss imports and gold specifically was in the spotlight - the US seems likely in a gold bubble partly from that chaos.

isn't this inflation?

> Isn’t it just inflation. As time passes there is more fiat in circulation, which means fiat is worth less, which means you need more fiat to buy the same amount of gold.

Gold was absolutely flat between 2012 and 2022:

* https://www.apmex.com/gold-price

but USD money supply was increasing during that decade:

* https://fred.stlouisfed.org/series/M2SL

See also flatness of gold prices from 1982 to 2002 with an increasing money supply. An older article:

> Sure, there were periods when gold was rising in tandem with the money supply, e.g. in the 1970s and 2000s. However, the yellow metal was in a bear market during the 1980s, 1990s and since 2011, despite the rising money supply (as indicated by the orange rectangles). The price of gold has fallen since 2011 by more than one-third, while the monetary base has increased by half and the M2 supply has risen by more than 25 percent.

* https://www.goldpriceforecast.com/explanations/gold-money-su...

There is little correlation between the two.

I think you may have misread "fiat" as "flat" :)

Hmm, even the kerning on my browser makes them look fairly similar.

F-I-A-T versus F-L-A-T

Hope this helps!

> I think you may have misread "fiat" [with-i] as "flat" [with-l] :)

I did not. The data I linked to shows that there is no historical, long-term correlation between M2 and gold prices.

I'm surprised that no one is mentioning the direct effect of petrodollar (or lack thereof).

The gold price drastic increase and USD worst decline is to be be expected, and it's mainly due to the end of petrodollar agreement discussed on HN last year [1]. Somehow the Nasdaq news link is dead now but the Firstpost news is a similar one [2]. The top comment is a golden example of denial (pardon the pun), "This is itself inconsequential" [3]. This can be another Dropbox comment moment of HN. The comment also predicted that "Things will keep running as today probably for the next 20 years", and here we are in just after a year.

The negative effect to USD due to the end of petrodollar is imminent and the writing is on the wall for the gold price to increase sharply when there is no more petrodollar.

[1] U.S.-Saudi petrodollar pact ends after 50 years (325 comments):

https://news.ycombinator.com/item?id=40673567

[2] What was the US-Saudi petrodollar deal that lapsed after 50 years?

https://www.firstpost.com/explainers/what-was-the-us-saudi-p...

[3] U.S.-Saudi petrodollar pact ends after 50 years (top comment):

https://news.ycombinator.com/item?id=40674911

> As time passes there is more fiat in circulation, which means fiat is worth less

This isn’t always true. For one thing, the amount of fiat in ‘circulation’ isn’t just a matter of “count up all the bills printed”, but is affected by how much leverage exists in the world and many other things.

Second, even how much a fiat dollar is worth is also a factor of how much productivity there is in the world. To understand what I mean, let’s imagine a super simple economy with only fiat dollars and wheat. Every dollar is only used to buy wheat.

Say there is $1000 in bills and 1000 pounds of wheat. Each dollar is worth 1 pound of wheat. Then, we print an extra $1000 in bills; that would be inflation, and now you can only buy 1/2 pound of wheat for a dollar. That is what people imagine when we talk about printing more money causes inflation.

But what if new technology gains means we are able to produce 4000 pounds of wheat for the same amount of work; now, each $1 can buy 2 pounds of wheat. Even though we printed more money, the economy grew even faster than we printed extra money, so we didn’t get inflation and instead prices went down.

Inflation is always (generally) about the ratio between currency production and economic output growth. You can’t just look at one side of the equation.

Of course it is inflation. Has all stocks in the world and all commodities in the world and all real estate in the world increased in price? Or is it the currency that has reduced in price.

Massive inflation has reduced the value of all currencies, giving the illusion that everything has gone up in price. Well everything except for salaries that is.

It's also the weakening of the dollar. If the dollar is 10% weaker, an international gold seller now needs 10% more dollars to be willing to give you their gold -- which means the "value" in dollar terms is 10% higher.

Your observations are also a bullish signal for Bitcoin, as it sort of functions as a "digital gold". Cheaper to transmit, cheaper to custody, basically instantly auditable/verifiable, as a financial instrument. No need to inspect, ship and melt down to store in warehouses.

I chose Costco over Coinbase, and I'm happy with my choice. I trust Costco.

That's great. I also enjoy taking custody of my data and property.

Bitcoin mostly follows the S&P 500 now. No one actually cares about the technical merits. If they did, it'd probably be worth nothing because it's worse than our current financial system in every way: slow, irreversible transactions on a public ledger.

And how does it compare to gold?

Gold is a shiny, tangible thing that doesn't require electricity and it doesn't put all your transactions on a public ledger. Oh, and it lasts basically forever plus it's malleable so you can get it down to quite small denominations.

Ah, so gold is a shiny rock that doesn't have a decentralized transmission network (the internet).

Mining and smelting gold requires quite a bit of electricity. But Bitcoin the network undoubtedly uses more.

As for small denominations, Bitcoin goes down to a single unit of Satoshi (1/100 millionth of a btc) and since its digital, subdivision is trivial.

So despite this, there are far more retail and commercial opportunities to exchange your btc for goods and services, where as I don't know of any place I can trade gold coins for things.

Gold is the best thing which has ever existed in the universe, mind your tongue.

Gold has the issue that you can mine a lot more of it. The supply of bitcoin is capped.

The supply of Gold is capped too, it's just further out.