In all honesty the fall in the gold price has nothing to do with...

In all honesty the fall in the gold price has nothing to do with the supply of physical gold, its all to do with the paper market. The paper market can turn over 20m+ oz per day and doesnt take more than a few days to turn over the total yearly global production of gold.

The buyers of physical gold are many central banks and the huge retail markets of Asia and the Middle East. The sellers – on recent evidence – are big investment banks and, according to whispers, the Federal Reserve. However, the sellers work in the paper (derivative) markets, which are heavily geared.

For example, London is supposed to be a physical gold market because you can buy gold from the bullion banks. But unless the buyer insists, he doesn’t get physical gold. Instead, he gets a piece of paper entitling him to that much gold. When he turns up at the bank to collect, the bank reserves the right to settle in cash.

So the bullion banks are really selling paper instead of gold and the paper may represent 10 times the amount of gold they have in stock.