"Have We Reached The Breaking Point?", page-54

My view is that sooner or later (likely sooner) the physical / paper markets will simply have to part ways.

The evidence of physical demand and shortages are putting stress on the paper market as demonstrated by factual evidence (not emotive spin):

- August 2015: Indian imports 126t
- August 2015: SGE withdrawals 302t
- August 2015: Margin on bullion vs. spot is steadily increasing
- August 2015: Some bullion dealers now have nil supply for retail customers (source: Bullionstar)
- August 2015: Speculation that latest London export numbers (low) indicate supply is non-existent in London
- August 2015: Keep an eye out for Russian CB purchases
- August 2015: HSBC and Goldman both independently buy c. 9t of physical gold for their own accounts
- August 2015: Stanley Drukenmiller reports c. US$320m GLD added to his Family Office Portfolio
- August 2015: 2 analysts I read noted the above and recommended GDX as a play on SD being right
- Augst 2015: PBoC reported "additional" 16t (signal to others)
- July 2015: PBoC reported "additional" 19t (signal to others)
- June 2015: PBoC reported "additional 600t (signal to others)
- Gold repeatedly in backwardation

And the possible keystone: given the back drop of this physical demand COMEX claims have surged to 228 : 1 indicating that (a) there is little physical gold left available at COMEX, and (b) to keep the paper prices where they are is taking more and more paper sales to achieve it.

Several analysts predict that a failure to deliver at the COMEX (only require 0.48% to stand for delivery) will be settled by cash payments and only then will real price discovery start in all currencies. I don't think you want to miss that 'event' by beind out of the market when ever it plays out.

In a 2013 interview where Kyle Bass explained why he repatriated the University of Texas's gold back to Texas (he is a fiduciary) he relayed a conversation he had with COMEX employee discussing this mismatch between claims and available gold (much lower at the time). The employee was quoted "... in the event of a failure to deliver price will solve everything..."

Vis a vis the discussion about POG. For most investors here the USD price is irrelevant except that the market continues to price ASX listed miners as if it is relevant. Simply look at the latest HY and FY accounts from the Aussie based producers. Often triple digit % profit improvements for HY and FY and, in most cases their average selling prices were c. A$1,430 - $1,480. If A$ POG stays where it is then the miners are likely to repeat this next HY and FY.

Cheers
John