Yes, the sales of cb gold is channeled thru a variety of entities. A significant amount of that gold is funneled into the market as forward sales from the producers which is colateralized by their gold in the ground. Yes, in the agregate it is a zero sum game as is all leased gold. Unfortunately, as the cb gold is filtered into the market, as has been demonstrated, it has upset the equilibrium price of gold. The gold must be repaid at some point in the future, however, because of the system of rolls, that date is not fixed and could remain into perpetuity unless the cb behind the loan calls the loan, not likely. On paper it is zero zum, in reality, it is a methodical method of releasing gold into the market at propitious times with the effect of creating an artificial pricing in the gold market. Make no mistake about it, with the participation of the producers in a largely reactive roll, this policy would fail.
Ken |
