Monday

Can Gold Manipulation Go on Forever?

It can’t go on forever because some people do demand delivery of gold. That’s why I look at the delivery side. COMEX inventories have fallen from 11 million ounces (11 Moz) to 7 Moz. Most of the dealer gold that’s owned on the COMEX has already been nominated for. So there’s really no gold held by the dealers anymore. I think the physical market will win out.

We have also seen what’s called the gold forward offered (GOFO) rate. It is negative today, which means there is a tightness in the gold market. That’s only happened five times. It happened in June of this year. It happened in October 2008 after gold had a big decline. It happened in 2001 at the bottom of gold, and it happened in 1998, when we had the World Gold Agreement, and all of a sudden the price of gold shot up. Every time it has happened, gold has been followed by a very large rally.


- Eric Sprott via: