Or it means that the folks you mention, Goldman, Credit Suisse, BOJ, China Development etc etc are all still deleveraging and know they will have to sell their gold to stay alive in this market as they unwind their leverage.
Heck, back in the summer what was the hedge fund favored trade pair - long oil and short gold, right ? What a shock that we now see the reverse - short oil and long gold.
I don’t think it’s any more complicated than that.
In a deflationary depression, the price of gold and silver is just that of another commodity, and they will be treated the same way. There’s not one currency on the gold standard anymore.
.it is true that a radical deflationary environment would bring backwardation pressure. However, the point at issue is that the arbs will ALWAYS step into the gap for the short term locked in profit......, if they can find someone to lend them the gold. As you are aware, there is an active leasing market for gold as there is for all commodities, and a more extensive one for gold and silver because of their monetary use. So, what is keeping me from BORROWING the gold (leasing it), selling it, and buying the discounted futures? Easy 3% return, right? Only if you have confidence you will be able to get your gold back that you sold. Look at the leasing rates for gold. Look at the amounts leased. Why is no one running into the gaps here?
It looks an awful lot like a confidence thing to me.
Thank you for your reply, though. The longer I am in the markets the more convinced I am that I don't know a thing.
Or it means that the folks you mention, Goldman, Credit Suisse, BOJ, China Development etc etc are all still deleveraging and know they will have to sell their gold to stay alive in this market as they unwind their leverage.