Saving for later to have someone much smarter read and then explain to me.
:)
Pretty easy. You sell the same thing to as many people as you can find and tell them all they own a hundred percent and then they all do the same thing to infinity. You're a big guy who in the past had a good reputation and a lot of guns. (aircraft carriers) They don't feel the need to ask you if they can have the thing because you probably have it and are holding it for them. Besides, they're scared to ask because you'll probably kill their ass and the people they sold it to will find out you've pulled a scam too. In addition your friends who have printers' ink convince the sheeple dupes that you can do no wrong. What could go wrong. Then, a bunch of slant eyed devils, who bought the thing at a low, public relations price start asking for it. Better grease the catapults on those aircraft carriers.
I’m assuming you’re not very familiar with the futures market, so let me fill in a few details.
We normally think of selling something only when we have possession of it. Not in the futures market. People can sell futures contracts at any time if they anticipate the price of the underlying to fall, so they can buy back the contracts at a later date at a lower price and make a profit. It is the same as buy low and sell high, only in reverse: sell high first and buy low later.
Each gold futures contract obligates the seller to deliver a specified amount of physical gold to the buyer on the contract date, usually a few months away. (A seller can always buy back the contract before the contract date to avoid making delivery. In fact, that is what most speculators do.)
When the Fed sells massive amounts of gold contracts, which is akin to dumping a lot of supplies on the market, prices will fall and those who have bought gold contracts will begin to lose money. Fearing further losses, most of them will get out before the contract date at a loss (by selling their contracts thus depressing price even further). As a result, most of the contracts are ultimately settled financially with the Fed making some nice profits in dollar terms, and the Fed never has to actually deliver most of physical gold it sold…until now.
With the Asian buyers, even though they incur massive losses when gold prices fall, they are able and willing to withstand the losses (in dollars) and hold their contracts to the contract date, thus obligating the Fed to deliver the physical gold per the contracts. Physical gold is apparently what they are after but who can blame them?
In a sense, it is incorrect to say the Fed prints all the QE money out of thin air. We are actually paying for it with our gold reserves; and if the dollar collapses, there won’t be any gold to back a new currency.