Monday, July 22, 2013

Gold: Physical Demand Vs Paper Supply

by Tyler Durden

From the huge demand for physical gold from Asia to repatriation demands, and from the draining of COMEX gold inventories to the excess supply of paper gold, there is an increasing 'gap' between the perceived 'price' of gold and the cost to get one's hands on the precious metal. Santiago Capital's Brent Johnson provides a brief but complete summary of the various conundra (which we have described in detail) occurring currently in the manipulated metals market. Perhaps the most telling phrase comes towards the end when Johnson notes, "I don't know how to say 'Hunt Brothers' in Mandarin, but it might not be a bad idea to learn."

Chinese demand for physical gold has been surging...

"I don't know how to say 'Hunt Brothers' in Mandarin, but it might not be a bad idea to learn."

as it seems highly coincidental that so much is being drawn down as China's demand rises...

Regardless of the derivative inventory, the fact remains the demand for physical gold from China alone is a huge percentage of global YTD production

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