I've got to believe that a physical shortage will manifest itself somewhere soon. There's only 162,000 tons of it out there -- and I don't know anyone selling it. Someone's going to try to buy a bar of gold sometime and it won't be there.
I have been conveying this message to anyone that will listen. Straight out introductory level economics – shortages develop when price does not reflect a balance between supply and demand. This also explains why the secondary market (black market) price is higher (and will get higher) than the official markers. Either official markers must be released higher to ease some of the strain, or the free physical market will strip away the paper control.
It will be some derivative of this scenario that will bring down one of the many precious metals ETFs.
Source: thestreet.com
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