Prelude To A 2008 Event: Paper Gold Manipulation Intensifies
And has anyone checked gold lease rates lately? Currently the lease rate curve for gold and silver in London is inverted. In fact, lease rates gold from 3 months to a year are negative. Negative lease rates mean the Central Banks will pay bullion banks to lease gold and silver. Long-timers like me know that this means there’s an immediate and anticipated shortage of physical gold and silver available for delivery, where “delivery” means the metal is removed from the London vaults and shipped to the entitled buyer.
Both gold and silver are backwardated. It took 11 iterations in the LBMA p.m. fix on Tuesday to balance out the heavy demand for physical gold from bidders. 11 iterations is rare occurrence. 5-6 iterations is rare. 1 or 2 is typical. Metal is tight in London.
If you are monitoring the Comex Hong Kong kilo bar vaults, you are aware that the movement in and out of the vaults there suggests that metal is also tight in Hong Kong, which means it is likely tight in Shanghai.