George, is not CB leasing gold out in actuality a sale of that gold? I think that GATA is right in one respect, there is a conspiracy to cap the price of gold, and various instruments are used by CB to that effect. Since gold is a commodity like any other, it is priced at the margin, and while typically only 400 tons are sold in a given year, it is simply because more sales will depress the price more than the CB's want that price depressed. If for one reason or another, real shortage in gold might develop due to the constant "creep" in gold demand which at a given time might not be matched by increased supply, the CB's will get back to Washington and change the Agreement. Congress might even finally allow some of the Fort Knox gold (if memory serves some 7000 to 8000 tonnes?) to be sold. Like any other commodity, gold price will put in a bottom when capacity shut downs due to low prices will cause it. The same process has been in force now for some time in aluminum, including an unusual agreement, a cartel in essence, with the Russian not to dump their excess capacity, at ;least, not yet. (g).
Enjoy the coming short term rally.
Zeev |
