GOLD BULLION SHORTAGE Worsens with a 45 Year High

www.zerohedge.com

Huge lockdown news again for the physical silver and gold market hit yesterday, as anywhere from 1/3rd to over 1/2 of the world’s entire yearly physical gold supply, is now on pandemic lockdown.

Valcambi and PAMP Suisse stated they would be shutting down for a minimum of one week and two weeks for Heraeus (all massive gold bar producers). The South African mining industry is also shut down and it can be surmised that the Rand Refinery is either already too shut down or on the cusp of also calling it temporary quits.

Ah... if you have been watching this viral outbreak, and especially the underestimation trends ongoing. It would not be wrong to fear that these large gold bullion refinery shutdowns may last well longer than a mere few weeks.

This morning we woke up to see that this worsening physical gold bullion shortage situation forced COMEX futures prices violently upwards, touching near $1,700 oz this morning.

The ‘over the counter’ gold spot price and COMEX gold futures contract prices blew out to 45-year record high divergences.
-
It appears traders have begun selling spot gold to escape to Comex futures front-month derivative contracts.

Perhaps many are thinking they will be able to demand physical gold bullion deliveries from the COMEX as the spot gold price market is not cooperating with physical gold bullion at those spot prices.

Ole Hansen, head of commodity strategy at Saxo Bank stated this morning that, “There is no price discovery in the market right now. If you need to borrow gold in the OTC [over-the-counter] markets right now, you are going to pay a king’s ransom.”

Adding to the refinery shutdown trend, are logistics problems as this pandemic has decimated supply chain shipments across the world.

The gold market is drying up because almost no traders working from home in London have access to ‘for sale’ or deliverable physical gold in the approved forms.  

So I would like to give you the viewer out there a better context as to the size and scale of the physical gold refinery shutdown now in place.

Let me they and put the now 50 to 80 million ounces or 1/3rd to more than 1/2 of annual gold supply capacity on shutdown into context.

Here is the most popular gold ETF called GLD which if it were to get back to its 2010 to 2013 all-time high levels of supposed gold bullion held in its trust, would require the entire gold COMEX warehouse at the moment and a million or more ounces on top.

Both this highly leveraged derivative gold futures market called the COMEX and that unsecured shareholder exchange-traded fund called GLD, they combine to together hole only 1 ounce for every other 159 of physical gold in the world.

As more gold bullion demand comes into this market, we will keep seeing the price of gold bullion products fully diverge higher in both bid and ask prices above gold spot, futures, and certainly, the ever diverging lower GLD fund as unsecured shareholders pay 0.4% percent per year for the privilege of perhaps trading pr worse holding a derivative that is not real gold.

Only just about one month ago here at SD Bullion, we warned our followers about $2,000 oz gold destiny denominated in fiat Federal Reserve notes was inevitable given the inputs.

Physical gold bullion shortage price premiums will likely be hitting $2,000 oz soon given the high disconnect between supposed spot prices and the real bullion buying selling world (gold silver ratio bullion shortage reality).

Both gold bullion’s bid-ask spreads (price you pay and can sell them at) are going to likely keep rising compared to supposed spot and futures prices.

As for the gold ETF GLD, only trade within it what you can stomach having either fully frozen and or devalued further to the real precious things.

That is all for today, stay safe out there.