10 July 2013

Costs To Borrow Physical Gold Rise Sharply Across All Timeframes


I thought this quote from a recent report by Ned Naylor-Leyland was quite to the point.
"...I find it extraordinary that investors do not notice that the Gold price is presently defined by a market which operates using around a 90:1 leverage ratio. This cannot, and will not, end well for holders of synthetic Gold, or the banking system overall.

Indeed, the recent raids on the spot price have just brought forward the day of reckoning for the present price discovery mechanism by stimulating yet further drawdowns on physical inventories."

Ned Naylor-Leyland, Cheviot Management

How can this be true? Is the market not efficient?

How do the journalists remain so indifferent? How can the vigilant economists miss something so obvious? And where are the regulators in all this? Tut tut, looks like rain.

So many questions, and so few answers. lol

As I write this, the talking heads on financial TV are touting the COMEX as a great place to go and short gold in the futures market in anticipation for further declines to $1,000. Get some. Get some.

Dave from Denver informs us in an email that in his recent search back to 1999 "there were only 4 instances when GOFO went negative: Sept 1999, March 2001, Nov 2008 and now. In all previous cases, the negative rates lasted two days AND coincided with market bottoms forming."

Thanks very much to Mr. T Ferguson for making this report from Cheviot available.  His site is a trove of information.

Chart from Sharelynx.com, the place for precious metals charts.  Also found as goldchartsrus.com