Saturday, June 23, 2018

The battle between paper and physical markets to control the gold price may soon be coming to a head

On June 22, long time precious metals broker and analyst Andrew Maguire spoke in an interview on the state of the physical gold market and their growing decline in supplies to be able to meet global demand.  And in a dichotomy between the paper markets which use derivatives to control prices and the physical markets which are finding themselves without stock to keep up with demand, Maguire believes that very soon the tensions between the two markets will be very much coming to a head.

“The Dollar Index to foreign exchange gold conflict is reflective of a paper to physical battle, and given the absolute certainty that the physical kilobar market (as Swiss gold refiners have told me) is now backlogged 2 months out and extending, this battle will be resolved to the upside and soon… 
Andrew Maguire continues:  “All Swiss refiners are now fully booked out on all gold kilobar production until the end of July. Also, there is reliable feedback that China has been quietly forward purchasing (large) tonnage of refinery production since May and utilizing spot index positions to settle at delivery. With refinery order books now full for 2 months out, each day gold stays below $1,300, more tonnage orders are spot-indexed for delivery. And with order books already full, this backlog was already threatening to extend out into August.King World News
While last eight days saw the gold cartel severely crush prices to back below their 200 and 50 day moving averages, demand from central banks and institutions for gold at these discount prices have created shortages at the world's largest refiners.  And when there are no longer sufficient supplies of any commodity or currency to satisfy demand, as seen over a year ago when India decided to eliminate their highest denominations of currency, the results are more often than not a sharp and rapid rebound of the price to the upside.

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