I suppose some 'speculators' actually borrow the gold and sell it while they and/or their allies simultaneously short the metal. (Of course, it is perhaps too risky to short gold at current price levels).
To be sure, any sale of gold drives its price down. Mind you, although the gold is supposedly 'leased', it is seldom returned. All that the borrower does is keep on paying the interest to the CB, perhaps for an indefinite period which I guess is possible in the case of an institution or corporation.
IMHO, many investors now refrain from buying gold because they have become savvy after seeing that CB sales of gold drive the price of gold down. They will buy in earnest once the price is right. Like all other careful investors, they want to buy low and to sell high later!!! If the CBs have not been playing 'games', I am sure the situation would have been quite different.
Simply because investors are refraining from buying now, for a good reason, does not necessarily mean there is no demand. I am sure there is a lot of potential demand which will eventually become mind-boggling demand later on! |
