Worsening physical gold bullion shortages forced COMEX futures prices upwards touching near $1,700 oz this morning.
This just after gold news broke yesterday that three major Swiss gold bar refineries will be shutting down their operations due to the viral pandemic growing near their northern Italian border region.
Valcambi, PAMP, & Heraeus announced they will be shutting down for a minimum of one week (Valcambi, PAMP) and two weeks (Heraeus).
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Anyone watching this ongoing virus spread, and the underestimation trends ongoing, would not be wrong to believe these large gold bullion refinery shutdowns may last well last longer than just stated.
The annual gold bullion refining capacity between all three businesses is stated to 2,600 tonnes while reports they have been processing 1,500 tonnes collectively during recent years. That is a range from over 83 to 48 million ounces of gold [ How much gold is a ton? ].
So anywhere from 1/3rd to over 1/2 of the world’s yearly physical gold supply industry is now on pandemic lockdown.
Remains to be seen for how long this lasts, but it is already affecting both the derivative and physical gold market big time.
Add in the recent Royal Canadian Mint shutdown and the just-announced South African freeze of its mining industry and the physical gold bullion world has a real gold supply shortage problem active and worsening.
This morning the ‘over the counter’ gold spot price and COMEX gold futures front-month prices blew out to 45-year record high divergences.
45 Year Difference in Spot Gold vs COMEX Futures Price
Derivative gold prices reflect gold traders have begun selling spot gold to escape to Comex futures front-month derivative contracts.
Perhaps traders 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.
Gold expert 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 this recent silver and gold refinery shutdown trend, shipping and logistics problems worsen too as this pandemic has decimated supply chain shipments across the world.
Public Relations 101: Pretend Control over this Gold Bullion Shortage Escalation
LBMA Price Transparency in One Chart with Video Explainer
The London gold market is drying up too because almost no traders working from home in London have access to ‘for sale’ or deliverable physical gold in the approved formats.
What about all the gold bullion supposed held by the popular ETF called GLD and too within the combined Comex gold warehouse system?
Further physical gold context vs gold derivative dwarf show below.
CONTEXT on Swiss,
— James Henry Anderson (@jameshenryand) March 24, 2020
world's big#gold #bullion
refiner shutdowns
Valcambi 1,600 ton
Heraeus 500 ton
PAMP 500 ton
83.6 million ozhttps://t.co/S7B9ET8B5t
[ not yet Metalor 800 ton ]
if the $GLD just moves back to 2010-13 levels
it would need the entire #COMEX frac smoke screen pic.twitter.com/jIyBykuWdU
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.
Almost no one could have guessed it was perhaps coming this fast.
Priced perhaps first by a promise to maybe allow contract betters to maybe withdraw some gold from a Comex warehouse if they can get around to it. Oh sorry, Force Majeure due to ongoing pandemic so ready to read soon that the Comex delivery system may be closed too.
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 GLD, only trade within it was you can stomach having frozen and or devalued further to the real thing.
With counter-parties like these?https://t.co/HUniOgfkXe
— James Henry Anderson (@jameshenryand) March 23, 2020
Only swing trade what you completely afford losing with $GLD folks, similar story with the $SLV slush fund
Bullion is going to have both bid and asks
higher than ongoing spot prices for the foreseeable.
Good luck out there, stay safe.
