News came out yesterday that India may lease the 200 tons of gold that was purchased from the IMF some 4 years ago. This speculation has come about because India’s Rupee has crashed and the central bank has tried everything to stop the implosion. They have pressed on the gas, stomped on the brake yet no slowing of their currency meltdown. The thought process is that the money received from these 200 tons could be used in the FOREX market to support the Rupee…good luck as they will be steam rolled.
So, why didn’t the price of gold get smashed? Why didn’t the price even go down…just a little? This is a whopping 200 tons! I say “whopping” because in reality it is only a ham sandwich in the scheme of things. If you recall, Cyprus blew up and was “bailed in” back in March-April. They had (have?) 13 tons of gold…and this 13 tons to be sold was used as the reason for gold going down $300+ in VERY short order! We of course know for a fact that the reason gold went down was because paper contracts flooded the market, this “13 tons” was merely cover and may not have even been sold.
My point is this, for gold to have been “collapsed” back in April based on the potential sale of 13 tons and then rally on the day after an announcement of a potential 200 ton sale has to tell you that something has changed. My guess is that “something” is the state of or availability of gold inventories to meet demand. The market is telling you this if you are listening, the monkey hammering of the gold price simply backfired. As a side note, how long do you think a 200 ton load of “gold booty” would hang around before the Chinese (or Russians) gobbled it up in its entirety? As another and more humorous side note, how long would this 200 tons take to deliver? 1 month? Maybe 2? Would the Germans be ticked because their 300 tons will take 7 years? Like they say, it’s not the first 200 tons that’ll get you, it must be that last 100 tons that’s “extra heavy.”