John: I am still gathering information, learning and slowly making up my mind. There are so many variables and theories of all description.
One thing seems sure, the leases have to be repaid at some point, and law of supply and demand will take over. However, in the meantime, the demand side is low, definitely not helped by the CB's actions. One might surmise that those banks with large holdings would be interested in keeping the price up. So why are they leasing (at low rates) and selling? This gold must be returned by the leasee in the future, and with producers pre-selling their production years in advance, it makes one wonder how this will all balance out.
If the banks want to earn interest on their gold leases, why sell any gold at all, why not just lease it out? I can't think of any reason why the lease rates are not as high as the bond rates. A lease after all is a debt, to be repaid.
I agree that the US gov't does not want Japan to redeem their US securities, as it could set up a period of dollar devaluation and interest rate hikes such as seen in third world economies. Affect on stock market in that case is obvious, and this scenario will be avoided or postponed with all the resources available. We are in the avoidance period now. The big albatross is debt. Will the national debt be repaid (in time) thereby avoiding a catastrophe?
Phil. |
