I've previously noted Frank Veneroso's theory that central banks have been offloading gold to keep its price down, a ploy that obviously cannot work forever. Now here's Paul Mylchreet saying the same thing:
"Central banks have 10-15,000 tonnes of gold less than their officially reported reserves of 31,000" the Chevreux report announced. "This gold has been lent to bullion banks and their counterparties and has already been sold for jewelry, etc. Non-gold producers account for most [of the borrowing] and may be unable to cover shorts without causing a spike in the gold price."
In other words, "covert selling (via central bank lending) has artificially depressed the gold price for a decade [and a] strongly rising Gold Price could have severe consequences for US monetary policy and the US Dollar."
The conclusion? "Start hoarding," said Paul Mylchreet...
2 comments:
Vital post and your conclusions [as indicated by your running of the quotes] are sound, as far as this humble blogger can see.
Thank you, your Grace. The caveat is that Veneroso thinks gold has been heavily backed by smart money, including via options, so the price could drop sharply if there's a credit crunch, as the former backers scramble to realise cash.
See my earlier post:
http://theylaughedatnoah.blogspot.com/2007/09/frank-veneroso-elaborates-on-gold.html
My guess is that when that has happened, the price could run up again in response to further attempts to reflate the economy. It's only a guess, but I hope I'll have a little money available to back it when the crunch comes.
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