This reminds me of the silk road.
There was a seller who's name I long forgot, but he owned the Black Tar Heroin (BTH) market on the website at a point in time. He drove the price up to $200-$250 per GRAM of some very pure BTH (I'd never bought it online, though I know where I can buy it here in Los Angeles for $45-60 a gram, same quality). Then some competition came in, and in the Seller's ONLY section of the forum (very hard to get into, you must be a reputed seller with experience and money), the seller of this heroin (who also ruled the fishscale cocaine market) made a thread proposing a Seller Monopoly/Cartel of sorts. The sellers who are undercutting him don't need to, they can agree upon a price and never sell their product for less than it and everybody wins. Instead of competition driving the price down (think auction house), all the sellers agree on this ridiculously inflated price and get rich.
Needless to say it didn't fly. This is a website founded with Libertarian ideals to the core, and this Laissez-faire capitalistic cartel wasn't gonna fly. Someone leaked the entire thread, the seller was bashed on, the cooperating sellers were bashed on, the guy who blew the whistle was even bashed on by some people, but ultimately there was no cartel. The site administrator and alleged owner and creator, Dread Pirate Roberts, otherwise known as Ross Ulbricht (currently being held in custody in New York) came out during this week of stupidity and had this to say, on the subject of cartels forming on the Silk Road
DPR said:
“Cartels are nearly impossible to maintain without the use of violence, especially in an environment as competitive as Silk Road. [OR THE GLOBAL, MUTLINATIONAL GOLD-SELLING INDUSTRY] There is also nothing morally wrong with them. If a cartel were to form, I would not attempt to break it up unless its members were breaking other rules. If you want an explanation for why cartels are nearly impossible to maintain in a free market environment, please read “Man, Economy and State” chapter 10, part 2, section D.” [3/21/2013]
Here:
https://mises.org/Books/mespm.pdf
is the full 1,500+ page BOOK he is referencing, specifically chapter 10, part 2, section D beginning on page 651 entitled "The Instability of the Cartel" and ending on 654.
I want you guys to see this applies the SAME here in the gold selling business, unless we gather up the 1,000,000 who are a part of simply distribution and sales alone, we would still have to have a consensus of YES from every single member of the party, and it is quite likely to work if it were to ever happen. That is, until one person of the million becomes unhappy because all of a sudden they were the best known website but because they have the same price as other websites, people go elsewhere and thus the top of the top lose business and the low of the low gain business. While this sounds fine for someone who fits neither category, it does not work out for every single one of the hypothetical 1,000,000 people. The guy who lost sales will lower his prices within a week in order to be back on top again, and the cartel has dissolved.
Also you know you can not trust anybody in this industry unless you already do. And even then, if it's only a well-developed online friendship that has no physical connection, it could still end with betrayal. What if you make a deal for $10,000 and they bail from Skype? What recourse do you have?
