The pattern of behaviour with the commercials is pretty obvious. They think that they have the speculative longs figured out, and can crush them by the shear weight of their resources to perpetually short gold. It's easy to understand why they might think this, when central banks stand ready to lease gold to them at practically 0% interest. But what happens if one of these times, someone with similarly deep pockets -- say an Asian central bank with hundreds of billions of dollars of foreign reserves -- China, or even Russia, India or Japan -- decides to enter the game and matches the commercial shorts ounce per ounce with purchases of their own until the commercials have effectively subsidized for them a massive purchase of gold, just at a time that the fundamentals support an explosively higher price? To go further, what if a global financial crisis then ensues, one that could even be easily triggered by the same central bank dumping US dollars or bonds at a critical point, and then the global demand for gold REALLY takes off, taking the price of gold up in an updraft that even all the resources of the commercials and western central banks couldn't contain? Possible?
Whenever someone is artificially suppressing market prices, they have to face the eventuality that someone with deep pockets can clean up at their expense. But is the world of gold supply and demand foggy enough for someone like a foreign central bank to secretly accumulate vast amounts of gold without the word getting out to everyone? I don't know enough about the gold market to say, but if one looks at the Chinese government allowing banks to sell gold to private citizens, it would be easy for them have a company or companies acting as their agents to secretly buy up gold for them ostensibly with the purpose of selling to Chinese citizens. There might be many other possibilities. Dealings in the world of gold are very murky... |
