Thanks for everybody's clueful answers to my possibly clueless question. They'd all be interesting to grapple with, but since Luc Van den Borre and Jim Ray both challenge me to justify an assumption others seem to take for granted, let me see if I'm up to that.
Specifically, Luc asks: "Why would there be a relationship between the price of gold and the number of goldbars e-gold holds for its customers?" And Jim, less delicately: "the price of gold has NOTHING to do with how many grams of e-gold are in circulation." Well, now, dangit, Jim, you may be right. You usually are. But help me out here. The reason I'm assuming the price of gold in fact has PLENTY to do with the circulation of e-gold goes something like this: Let's say I want to know whether e-gold and "gold itself" are effectively the same commodity. To know this, it would help to know if the demand for e-gold moves in tandem with the demand for gold. To know the demand for gold, it would help to look at its price. To know the demand for e-gold, however, I would have to find something else to look at, since e-gold's price is pegged to gold's. So where do I look? Not at the velocity. That could be big whether people are selling or buying. Not at the number of accounts. That never goes down! The circulation, though, is pretty unambiguous. If it goes up, more e-gold is being bought than sold. If it goes down, more e-gold is being sold than bought. Kinda the way the price would act, if e-gold had its own price. Therefore: the circulation of e-gold is the handiest metric to compare to the price of gold. Right? Now, admittedly, it's a rough comparison. But I don't think it's apples and oranges. More like oranges and tangerines, maybe. I mean, granted, it's possible that in the last three weeks 1 to 5 random e-gold users got it into their heads to redeem some bars for reasons that in no way reflect how anybody else feels about gold or e-gold. But the possible isn't the probable. If I read the Examiner correctly, there are precisely 12 accounts with enough e-gold in them right now to redeem a bar, and if one of them chooses to do so, I wouldn't guess it's likely to be on a whim. In fact -- and here, Jim, I invite you to chop down the limb I'm about to go out on -- what I *would* guess is that all those bars were redeemed by Omnipay (which I understand to be the MM of last resort -- correct?) and sold to cover a net outflow representing a whole lot of smaller sales of e-gold. Maybe even a whole *statistically significant* lot of smaller sales. So that yes, in the end, I think it might make plenty of sense to compare the recent drop in e-gold's circulation to the rise in the price of gold. OK. Luc: You reckoned it would be interesting to see my reasoning, and I hope it was. Jim: Lock and load. You may commence shooting holes in my argument when ready. Everybody else feel free to pile on. Julian PS: Jim, I wouldn't worry too much about trying to head any of this off before it gets into Wired. The whole topic is probably too abstruse to end up in my article anyhow. (Why else would I spend so much time thinking about it? :-P) --- You are currently subscribed to e-gold-list as: [email protected] To unsubscribe send a blank email to [EMAIL PROTECTED] Did you know that e-metal is a wonderful holiday gift? Avoid the hassle this year!
