OTCPK:LSLCF - Post by User
Post by
goldpigon Jun 06, 2013 9:51am
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Post# 21491773
Sprott says POG sell-off very bullish
Sprott says POG sell-off very bullish
Post says Sprott founder sees gold sell-off as bullish
2013-06-06 09:14 ET - In the News
The Financial Post reports in its Thursday edition Eric Sprott, founder and chairman of fund manager Sprott Inc., believes the massive outflows from SPDR Gold shares are due to shortages of physical gold and investors taking advantage of arbitrage opportunities. The Post's John Shmuel writes that Mr. Sprott points out that while the biggest drops in gold prices occurred in April, SPDR redemptions started in the second week of January. The answer to what is happening here, Mr. Sprott said, lies in Asian demand for gold and a shortage of supply there. "It is clear that demand for physical gold in Asia is strong and that the price of gold in these markets is well above the 'Western' price," he said, referring to the Shanghai premium. "This creates arbitrage opportunities for market participants that have access to large and cheap quantities of physical gold in the West. The bullion banks happen to be the only ones able to redeem GLD shares for gold, and the GLD, with its 1,000 tonnes of inventory, acts like a large physical gold bank," Mr. Sprott said in a letter to investors Wednesday. If that is correct, then all that money seemingly flowing out of gold is simply a relocation of gold from west to east.