The Phaserl


Gold flows and their huge potential market impact

by Lawrence Williams,

Maybe we are building too much reliance on this, but it does seem that the rundown in stocks of physical gold in the West and the build-up, for the most part, into stronger hands in the East, has to lead to a severe supply imbalance in the availability of gold bullion. If this flow continues at anything like the current rate – and there’s no evidence yet that it is slowing significantly – then the ensuing short squeeze on physical gold could be devastating for that part of the gold trade which is heavily short gold.

Chinese demand alone seems to be running at somewhere close to the global total of newly mined gold. Gold which can be sourced from the big gold ETFs, assuming there are still any willing sellers, has diminished drastically and there is little doubt that much of what remains after the big sell-offs of the past two years is firmly held. And it can only be a matter of time before the really big players – Soros, Paulson et al – start accumulating big holdings again, if indeed they are not already doing so, as the trend towards diminishing Western stockpiles becomes more and more apparent.

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