Physical Gold Shortage

Although the price does not reflect it, there is a severe shortage of gold at the refiner’s level. If one looks closely at the movement in the spot price, you might see when the feds raised the interest the price drop was not sustained. Normally after an interest rate hike, the dollar rises and precious metals go lower. Another tell tale sign is large amount of paper contracts required to force the price of the precious metals to go down.

Jim Rickards has discovered on recent trips to China and Switzerland that the refiners are experiencing difficulty in sourcing the raw metal, so much so that they have a waiting list of buyers. Recent news article reveal that the amount of gold mined is falling and some mining companies have been forced to shut down due to financial troubles. This will exacerbate the supply of the metal, compounding the shortage.


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