teevee, although some of your explanation, regarding the gold in question and what it is etc. is accurate, you have still missed the point as to what the short is and why it may be relevant to gold pricing. Yes, the Central Banks do indeed loan and/or leverage the stockpiled gold in their held assets. However, what is being argued that has happened, is that there is significantly more on loan than exists in those stockpiles.
There have been some problems recently with the owners of deposited gold, in some of these banks, being stonewalled when/if they attempt to sell it to a party who does not wish to leave it on deposit with the current institution. They DO NOT have it, is what is being suggested. If the banks are called on their gold stores it is possible that they will have no choice but to buy the bullion on the open market. If the shortfall projections are accurate this would indeed have a an impact on the price of gold.
My apologies if this is not as clear a description as I would have liked, but I was in a bit of a hurry. Other business you know.
Salut,
Leigh McBain |
