Gold, Silver, Mining Stocks: Get Ready For A Huge Ride Higher
- Gold, Silver, Mining Stocks: Get Ready For A Huge Ride Higher
by Dave Kranzler, Investment Research Dynamics
Bullion Star released a graph Tuesday that showed Switzerland exported 90 tonnes of gold to the London gold market (U.K.) in July, which dwarfed exports to India and China. Bloomberg’s spin on the data was that the gold was needed for ETFs. Of course, as is typical, the Bloomberg “journalist” likely regurgitated “information” that came from a source rather than fact-check.
But fact-checking shows that the number of tonnes of gold in GLD, by far the largest gold ETF, increased by only 23 tonnes during July from 800 to 823. Assume the much smaller gold ETFs took in the same amount collectively – an estimate that is more than generous, and ETF gold flow accounts for less than 50% of the gold exported to London.
Alternatively, a more likely explanation is that large quantities of physical gold are needed on the LBMA to feed an enormous buyer or buyers in London. This would explain what has become routine “V” shape moves in overnight gold futures trading, as the price of gold shrugs off repetitive attempts to push the price lower after Asia closes and LBMA forward and Comex futures trading replaces the physical gold markets in the eastern hemisphere.
This amount of gold imported by the London gold market also reflects the tight supply that has persisted for quite some time. The presence of a large physical buyer(s) would explain the relentless move higher in the price of gold (and silver).