With the paper price of gold pulling back, today
billionaire Eric Sprott told King World News that the shortage of
physical gold is now reaching extremes. Sprott also discussed the
implications of this, as well as Western central planner desperation.
This is the first in a series of interviews with Sprott that will be
released today. Below is what Sprott, Chairman of Sprott Asset
Management, had to say in part I of this remarkable series of
interviews.
It
all started with the Germans saying they wanted their 330 tons back,
which is a mere 4% of what the U.S. theoretically owns, and they (the
US) announced it would take seven years to deliver it back (to Germany).
The
central planners have arranged all of these things. I think it’s just
been one big scheme to try to get people dissuaded from owning gold and
to cause supply to come out. As you mentioned, because of it (central
planner actions) we have the gold forward rates (for gold) being
negative, backwardation, and inventories plunging, all of which have
been manifested because there is a shortage of gold.
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Sprott: “I
have now written three articles titled, ‘Do The Western Central Banks
Have Any Gold Left?’ I think we have seen some things develop in the
last eight months that tells you there is a bona fide shortage of gold.
“Then we had ABN AMRO
where they said that people wouldn’t get their allocated gold. We
already started to see depletion in GLD at the beginning of the year,
not just with the April and May smashes, and it was obvious to me that
there was a shortage (of gold).
In my
mind what happened was the powers that be thought, ‘What are we going
to do here? We can’t have people find out that the central banks don’t
have any gold because it’s all been leased and sold to Asia. So, what
are we going to do? Well, let’s go bomb the COMEX (price), and maybe
everyone will see their GLD, and we will go in and buy the GLD and
redeem the (physical) gold.’
As
you know, 600 tons of gold was redeemed. 600 tons is a big number. So
we’ve had a 30% increase in supply because of the GLD liquidation. Of
course during this time period, all of the investment advisors who told
people to sell were the same people that covered their shorts. So they
(bullion banks) have gone from being short gold to being neutral on the
COMEX.
We
have seen the COMEX inventories decline rapidly. We know that all of
the dealer inventory on the COMEX has already been spoken for by
delivery notices, so essentially there will be zero (inventory) if they
ever make the delivery.
And
the central planners (also) went to India and said, ‘Look, you’ve got to
do something about all of this gold buying in India.’ So we’ve had ten
different steps by the Indian government to try to curb demand -- a 2%
tax, a 4% tax, a 6% tax, an 8% tax, and a ruling that banks couldn’t
lend money for people to buy gold.
They
also convinced the Jewelers Association that as of July 1st they
couldn’t sell gold bars and coins. Just last week there was a new rule
implemented that if you are importing gold you have to prove that a
certain amount is being re-exported. We’ve probably had ten or twelve
things (restrictions) happen in six months, all of which is a huge
attempt to get the second biggest buyer of gold in the world, after
China, to decrease consumption because the gold isn’t around.
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