I have no doubt - whatsoever - the value of gold would be proven to be greater(in only a short time) were all governments Required to sell their last ounce and forbidden from all future activities - OF ANY SORT - in the gold market.
Well, you may have no doubt, Richard. But were the CB and governmental treasuries to cease all trading activities in the gold market, what would be left would be merely a commodity.
You can't have it both ways. If you desire the CBs to continue to support the gold market (and the price of gold) by maintaining it as a monetary asset, then you must permit them to manage their reserve allocations with regard to Euros, Yen, Dollars, and Gold. That means permitting them to lease it for interest, issue derivatives against it, or sell it outright based upon whether the asset is considered overvalued/undervalued with respect to other assets.
And since other monetary assets have outperformed gold, it is easy to see why such a huge short position might result due to the perception that the POG is far above its average cost of production, or rather, its inherent value.
Regards,
Ron |
