Comex gold inventories fall 32% in five months in bullish shake down

Posted on 26 June 2013 with 5 comments from readers

The day when gold is priced by the supply and demand of the physical metal rather than paper future prices in the Comex trading pit is coming closer, and with it a return of much higher gold prices.

We are indebted to SRSrocco Report for the chart below. For readers unfamiliar with the Comex futures market, you need only to appreciate that this is the price setting mechanism for gold. Its contracts are supposed to be backed by the physical metal which should always be available for delivery.

How can it do this if its inventories are down 32 per cent to 7,520,000 ounces? Well it still can but project this forward and it cannot. Our colleagues at Agora Financial are opening predicting a day of reckoning when gold prices cease to be set by the Comex.

Gold’s still going up!

Their thinking is that gold prices will move far higher if set outside of the futures market. That and QE to infinity are the main reasons to think today’s gold sell-off is a mid-summer madness that cannot last for long.

All the world’s major central banks are following an ultra loose monetary policy that will end in inflation, and they dare not give it up because higher interest rates would cripple their debt-laden economies. What they must have, at all cost is inflation to erode this very high nominal debt.

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For gold the only way is up, not that many will believe it after the worst fall in 34 years!