RE:Go 2024Believe it or not that is a good thing. The only central bank shorting paper gold is the Federal Reserve in an attempt to counter the recent rise of the gold price determined in the physical market trade. Gold in the Shanghai Gold Exchange is trading at a premium to the paper gold price set in the COMEX.
The premium is because of the overwhelming demand for physical gold in China and also around the world.
Today's knock down is a clear signal the Fed is losing the battle.
The Federal Reserve is the only central bank offside with shorting. To take the price down today they are digging themselves into a deeper hole as the clock ticks is down on the Federal Reverve having to become Basil III net stable funding ratio compliant at the begining of the year, that is they have to back up all their gold bets with 1:1 with cash.
Gold is draining out of the COMEX vaults as it is on sale relative to the price of gold in the physical market. That means the amount of physical gold backing up overleveraged paper gold is dwindling.
The Fed is going to have to revalue gold to pay out its paper shorts or cash out all their shorts and if they do that they will pretty welll shut down the COMEX.
It looks like it is crunch time.