In the last 20 or 30 years, Asia has been a powerhouse. So there is an enormous ability to buy physical gold out here, and this is coupled with a great desire to own gold. That’s a very, very dangerous thing if you are trying to sell gold in order to try to keep the price down.
It’s fine when there aren’t any buyers because you can frighten people and move the price lower. But right now I think anybody who is holding gold and is selling it for any other reason than to raise cash, because they have an immediate forced-need for liquidity, is playing a very, very dangerous game.
We have a supply of gold that only increases by about 2.5% each year. The scrap numbers move around a bit, but they are pretty consistent. So if you increase the amount of sales that these central banks are making, that’s going to have an effect, but only for a short period of time. They will quickly run out of gold because of the massive demand, and I really get the sense that this is what is happening right now.”
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