Take a look at the right-hand end of the chart above, which shows the gold leasing rate.
In the middle of September, just as the SNB announced that it was going to engage in unlimited money printing, thus destroying the one last ‘safe’ fiat currency, the gold lease rate plunges into über-negative territory.
In a natural free market, this would mean that suddenly people prefer oodles of paper money to hard cold bars of gold in the hand.
Just as the last ‘safe’ paper money disintegrates?
Or is it that the western central banks have dumped tons (if not hundreds of tons) into the coffers of their bullion bank friends, and paid them for the privilege, and then these bullion banks have dumped these tons of gold into ETF custodians in return for ETF share certificates, which have then brought down the price of gold, just when it should have shot up?
Well, let them try.
I’m sure the Chinese and the Indian gold bug community will keep soaking up this largesse and keep redeeming their paper gold certificates for physically-delivered gold, until all the western central banks have ‘leased’ all of their gold and there’s nothing left.
At that point, theoretically the bullion banks will owe back all of these many tons of gold back to the western central banks. If they can find them, of course, buried as they will be under many feet of Chinese and Indian soil (and the sands of the Middle East).
Obviously, the central banks will let their bullion bank friends off this hook, but this time they will be stuck, because they’ll have no more gold and they won’t even be able to confiscate it back again, due to its disappearance overseas.
The same thing happened to the Roman Empire. The Romans pillaged the whole of Europe for gold, from Wales to Dacia, and then used this gold to buy Chinese silks and other exotic oriental goods via Indian middlemen, until all the gold was gone.
History is rhyming again.
It cannot last, so enjoy the dip.