That means the situation now is that the derivative gold short position is equal to all the gold held by all the central banks outside of the Washington Agreement. You now know why the Washington Agreement came into place in order to prevent just what is happening. Those Central Banks, seeing the figures, hoped to slow down the gold derivative trade by freezing their participation in it. Now you know why traditional gold dealers are leaving the gold market and expunging these instruments from their books.
If all Central Banks in the world sold all the gold they held in a derivative melt-down, they would make the following offer: All Central Banks = 890,579,485 ounces of gold held to a Short Derivative Position forced to cover of 900,000,000 oz. Assuming that central banks then held no gold at all, the gold price would be in the hands of Dr. No and Hung Fat who would more than likely sell a segment for over $2000 per ounce with the attendant negative effect on the U.S. Dollar, making gold even more valuable. Thus, it is reasonable to assume Central Banks will not sell all or even a large part of their remaining gold. It will then be their primary reserve asset, growing in value, and like the 70s, they are more apt to buy then sell regardless of silly rhetoric. |
