Backwardation of Gold

Here is a set of interesting articles, all written by Antal E. Fekete. He is of the opinion that we are heading towards a situation where gold will disappear from the market, in particular from the supply side; prices of 6 or 12-month gold futures will continuously be below the spot price; and that gold will become unavailable at any price; and that the gold exchanges and markets will stop functioning.

Read these articles carefully:

• The Enormous Significance Of Gold Backwardation (from 2004!)
• Red Alert: Gold Backwardation
• Dress rehearsal for the last contango
  

Or in Spanish:

• La desconfianza en el dolar causara un colapso monetario
  
• Ensayo general para el ultimo contango de oro
  

I read all these articles at least twice. It was initially kind of hard to understand the logic, but after re-reading a sufficient number of times I think I slowly understand. On initial reading I found contradictions. I thought how can the gold price go down and gold lose value and at the same time gold is unavailable for purchase at any price. That seemed impossible. But I get it now. One has to clearly differentiate the gold future price and the value of gold. The future price might go down while the value of gold goes up. How so? If people are afraid that the future gold cannot be delivered they are not willing to pay a high price because there is high risk, the risk being that there is no physical gold available in the future. At the same time the perceived value of available gold goes up. So, the situation of backwardation of gold and the increase of gold value at the same time is possible.

If paper money becomes to worthless (imagine Zimbabwe-like worthless) nobody will want to sell their gold. The exchange and market close down because there is nothing to trade, there is no supply. Nobody sells gold at any price.

What the article does not say, but what I think is that people while not selling gold, people will be trading gold for things they need or want (food, gas, heating material, etc.).