12 January 2010
Gold Shortage?
The always provocative Tim Price recently juxtaposed a couple of very challenging thoughts about gold scarcity “on average there is more than one ownership claim on each gold bar conforming to London good Delivery.. Essentially, the market operates on a fractional reserve basis..If it is true, the next phase in the gold bull market will be a religious experience for anyone unfortunate enough to be short of gold.”
- Paul Mylchreest, ‘Thunder Road Report’, 15th October 2009.
“Expect other nations, including those in the Middle East, to follow the lead of Hong Kong in bullion repatriation. This is a slow-release earthquake in both bullion and currency market terms.. Taking delivery is just not the done thing in bullion ownership. If it were to become a trend, then life in the COMEX warehouse coordination office and at various custodial banks in London is likely to become quite interesting.”
- Ned Naylor-Leyland, Cheviot Asset Management, October 2009.
It certainly adds more grist to the gold mill although prices still feel as though they’re higher than they should be at this part of the cycle.