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Dear Fellow Investor,
The gold price has been in the dumps in recent days.
That’s figuratively and literally, as traders in the COMEX futures markets, dealers in so-called “paper gold,” have been dumping their contracts when they get the chance to drive the price of the metal down by doing so.
As to why they would want to give gold positions worth hundreds of millions, even billions, in notional value the old heave-ho — with no regard for maximizing their returns — is, well, open for speculation.
The more-immediate issue is that these concerted gold sell-offs have driven the price back below $1,300, and into the $1,270s.
A Short-Lived Impact
Now, we’ve examined the impact of these paper-gold sales in great detail over the years, both in Gold Newsletter and these Golden Opportunities letters.
But one of the best analyses of the issue was penned by Trey Reik, Senior Portfolio Manager for Sprott Asset Management USA, in last week’s Sprott Gold Bulletin.
Trey compiled some fascinating statistics showing in stark relief how COMEX trading of gold contracts dwarfs the volumes of physical gold trading...and how ephemerous is the connection between the two markets.
Moreover, Trey was able to show how any impact from paper gold trading is short-lived, with the physical trading factors always having the long-term say in pricing.
That’s good news when you consider that physical gold demand is surging around the world.
But don’t take it from me — I urge you to read Trey’s analysis now.
I read just about everything published on the gold market, and an awful lot on the broader markets and economy as well. So believe me when I say that Trey’s piece is outstanding and well worth the read.
Just click on the link below to read it now, courtesy of our friends at Sprott Asset Management.
All the best,
Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference
CLICK HERE
To Read “Paper Tiger”
By
Trey Reik
Senior Portfolio Manager
Sprott Asset Management USA
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