World Just Witnessed Massive Shift In Physical Gold

Maguire:  “Just off wholesaler calls.  Most are too busy to talk at this time, but today (Thursday) will be the largest volume day this year and possibly 2 years.  Central bank purchases are almost certainly far in excess of paper sales.  We are so close to the marginal cost of production that my contacts are saying the gates are wide open here to purchase all physical that is available….

Continued paper market supply saw another + 45 tons sold into the rise ahead of Thursday’s fix and then in size directly post the fix.  These were immense amounts of paper gold hitting the market, yet there is absolutely zero physical gold for sale and nothing but buy orders in the wholesale market.

This is 2001 type of spike bottoming action with hot money bearish sentiment off the scale.  I still expect that Thursday marked a historic bottom.  We are below the true costs of production for both gold and silver and it makes a good deal of sense for the central banks to be taking all that is offered.  Fundamentally this will have a significant catch-up impact.

Needless to say we are getting reports of extremely large allocations of gold, but also far larger direct producer deals being struck outside the paper markets.  The one question is, just how long this paper market selling can continue to drive price when such a massive transfer of physical is underway?

It is also important to understand why this divergence has been able to extend to such extremes given the hundreds of tons of reported bullion transfers, and how this recent capitulated move has enabled an irreversible global balance shift in physical gold.

I still maintain we marked a historic bottom on Thursday and aside from some misplaced margin gaming, the risk now is actually to the shorts.  The power (to move prices higher) is all in the bullion banks’ hands and will be exercised at a time of their choosing, which, given the structural shifts and global imbalances, I believe is imminent.”