“But having seen this vast amount of physical being sought, you realize that it’s physical, one to one. It’s not leveraged. Whereas you are essentially trading against an unlimited synthetic supply of paper gold (in the paper market).
There is a lagging period where you’ve got these vast quantities of fresh leveraged supply coming in versus this unleveraged physical demand. Leverage works in two ways. It also works against the sellers. I think you saw that last Wednesday with what I believe looked like a bottom.
The key thing is the physical wholesale markets, and I’m seeing the same thing now. I’m not seeing any letup in physical demand. The central banks, the sovereigns, they were buying at $1,800, $1,700, $1,600. But when you take a dip to this kind of level where we actually start to approach break-even cost of mining (gold), well, obviously that was an act of desperation (on the part of central planners).
As Russia, or China, why not just pick it (gold) up and ship it over? It’s quicker (than mining it). So you’ve reached a point where the lines cross, and the physical market diverges. I have checked the numbers now and we are very close to 1,000 tons of deliveries just this year into Shanghai. ...