Alex,
Someone, who can afford to wait is buying the massive amounts that are being sold into the market. The sellers/lenders are exposed in several ways. The speculators who want to see the price down, are selling as much borrowed gold as they can, and investing the proceeds to earn a positive yield, which is compounded with the price dropping. If the price turned the other way, most of these speculators, would go bankrupt, and the lenders would be out the gold, all for 3-4% yield, a lot less than supposedly risk free treasuries. The central banks, therefore can't let the price go up, or they will lose a lot of gold. As production dries up the imbalance gets worse. Demand just might increase too. The central banks, as lenders, are between a rock and a hard place because the overhang is huge, and at some point it has to correct. Cutting their losses now would make more sense, but hey, the Japanese have been able to postpone the grim reaper for a few years, why not them.
Sincerely,
Al Cern |
