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Where does the money for gold go?

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  • Where does the money for gold go?

    i think i need help following the flow of funds when purchasing physical gold. does the currency every actually leave the system? When buying gold from a place like APMEX how does cash actually flow up the system? Here's what i have mapped out

    1. Cash transfer to APMEX for the purchase
    2. APMEX takes a cut which goes to their bank account. The rest of the cash (and the majority) covers their inventory.
    3. APMEX's inventory comes from the US Mint (as an example). So effectively the cash has worked its way up to the US Mint
    4. But the US Mint had to source materials to make the coins - assuming it comes from a miner.
    5. In the end the miner gets the cash and it's profit is the differential between the spot price and the extraction price.
    6. the miner's profit stays in it's bank account. its costs are in someone else's bank account (workers, oil companies, heavy machinery companies etc...)

    i'm having trouble figuring out where exactly the fiat is removed from the system, or is it?

  • #2
    Re: Where does the money for gold go?

    Fiat is not removed from the system unless a bank loan is repaid.