If the central banks, the BIS or the bullion banks have lent gold out at 1% interest, those borrowing must do two things --sell the gold and get an interest multiple of at least four. They should also delta hedge in case gold soars. For the last 5 years gold has been going down or down often enough to buy back the gold at a lower price. No doubt some of these people probably didn't hedge.
The big problem as I see it is if they sold the gold it was not put in a vault (at least not a large part) since we have been consuming more gold than we produce in a given year. This means a good deal of the gold has gone into jewelry, computers or whatever. Now to get that gold back is not going to be easy as its price rises. Further, there can be no doubt there a great many naked shorts out there that further complicate matters --sometimes these are actual miners who know they can eventually deliver gold to avoid bankruptcy; however, what happens when gold soars, delivery is demanded and your mining supply doesn't cover for five or six years?
In any case the chart tonight is a nice steady slope up with no gaps. As I said befoe, big dollars are changing hands tonight and by morning the whole world will either have to be put at ease with an easing of gold prices or a potential melt-up with financial uncertainty and worry will occur. Will see in the morning.
I couldn't agree with you more. Many on this thread haven't been keeping up with changing events -- all they can do is repeat baindead sayings like "goldbugs are crazies" while missing the whole point. The rising price of gold indicates that there are going to be big changes in the financial markets that will eventually affect everyone. Something is cooking. It'll be interesting to see who steps in to put the fire out.
Richard W.