John,
Your article refers to the production of gold, not the amount of gold held by the central banks. The article I am referring to talks about countries with reserves that they could dump into the market. Outside of the EMU countries and the U.S., there are only 8 countries with 5 million or more ounces of centrally held reserves. The list includes
India 12.78 mm/oz, China 12.70 mm/oz, Russia 12.89 mm/oz and Japan with 24.23 mm/oz.
Some key points in this article include:
1) The gold price is depressed by unsustainable flows of borrowed gold from the central banks.
2) The current flow of central bank official gold to the market is taking place in three ways: a. Outright official sales b. Producer hedging using borrowed official gold and c. Fund short sales.
3) The combined total of gold short sales exceeds anything that the gold market has ever seen, including the huge amounts of short sales in several similar periods over the past 20 years.
4) To put this short position into perspective remember that 2,000 tonnes of gold is roughly equal to the total volume of all producer hedges outstanding. In addition, it approximates the net total of all published official gold sales over the last ten years. It is indisputable that the current speculative short position in gold is like nothing ever seen before. Consider this: The total gold reserves of China, rapidly becoming the world's greatest economic power, is only 1,000 tonnes of gold - less than one-half the funds' present short position.
John, I cannot verify this for accuracy, but it does put some perspective on the short position in gold. The bottom line is, one day this will have to be covered.
Hopefully you will have some insurance (gold bullion) when this does happen.
Good Luck,
- Jim. |
