RE: RE: RE: RE: Gold Price SuppressionRattle – that sounds like a theoretical scenario which could lead to a reduction in the price of gold. Indeed, it sound like an explanation that John Nadler at Kitco could adhere to. However, the gold market today is far more stressed than in the 1970’s:-
The major commercial shorts (which include JPM GS & HSBC) could add shorts, almost to infinity in order to attempt to suppress the gold price in order to cover their already outrageously large short positions. However, if that was a practical reality they could have prevented gold from rising above $400 in the first instance.
A major problem in attempting to depress the price now is that the banks have had enough of annually selling 500 tons of their gold, over the last ten years or so, under the Washington Agreement, in order to supply the market with physical gold. Indeed, in recent years some banks have taken advantage of price take downs by entering the market to buy. Also, price take downs are more likely to bring investors with paper gold to sell, but that is not what is being demanded by the savvy buyers now – they want physical, not ETF’s or derivative paper.
The shortage of physical gold will likely be the straw that breaks the price manipulation. The market always wins and the suppression in the 1990’s (leased sales etc) resulted in the contraction of mine output which has fallen almost every year whilst the price has risen from $250 to $1250. SA gold output was over 700 tons pa, but I believe that it is now in the 200 ton level. Most people recognise the takedowns but observers such as James Turk, Bob Chapman & David Morgan all adhere to the policy of accumulating physical, as it is dangerous for amateurs to trade against the banks (but some on this board may be professionals?). The history of gold prices has been a rising stair step, as the CB’s have to give way to the demand for physical gold. The banks had difficulty in holding the gold price down when they were selling gold, but now that task will be more difficult.
Occasionally, bubble messages are sent out – George Soros recently went on record that gold is in a bubble, but he was buying [on the cheap]. Similarly, it is unwise to listen to bubble calls from the Chinese – instead, do what they do – buy physical gold and mineral resources. With regard to bubbles, I do not see a mania in gold, there are no queue’s around bullion banks; I see mine supply falling heavily short of physical demand; the POG is less in inflation terms than it was 30 years ago. A bubble may occur when gold approaches the $5,000 to $10,000 level, but then the popped bubble may leave gold prices at $3,000. The bubble to be concerned about is sovereign debt.
In summary, any take downs may be short lived and a greater danger may be being out of physical gold & silver, if there were to be a major currency or bond crisis. The gold losers could be holders of unallocated gold.