Commercial banks have a massive 63.3 billion US dollars tied up in gold derivatives as of the end of last year. The bulk of these positions are actually 'shorts'.
Apparently, a sudden run on the gold price would spell disaster for these banks and possible financial ruin so the feeling is that central bankers will not allow the gold price to get out of hand in a short period of time so as to allow the financial system to re adjust to a higher gold price.
It is believed that the central bankers are in favour of having the gold price return to 'equilibrium' which in gold markets today equates to around $400/ounce, but prefer to see this happen gradually.
either way, it spells good news for good quality small miners. If you can find them that is!
skippa
POG Price at posting:
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