"Physical Gold Demand Is Through The Roof," Jim Rickards

Tangent Capital Partners Senior Managing Director Jim Rickards told Bloomberg Television recently that he just returned from Switzerland where he met with gold storage experts and refiners who he claims are working “triple shifts” to produce gold, including one refiner who’s been in the business since 1978 and for the first time ever is having difficulty sourcing gold, implying that it is all going to China. 

Rickards asserted that the floating supply of gold is disappearing. He says it is coming out of the GLD (gold-backed Exchange Traded Fund) and is going directly to the Chinese, who are redefining the global gold market. China, he added, is making the Singapore Gold Exchange the center of world gold trading and have turned their backs on the London Bullion Market Association (LBMA).

He also believes China is acquiring all of the gold it can both through overt means, such as imports via Hong Kong, as well as covert means, such as smuggling and through military channels. Gold, then, is set up for what Rickards calls a “huge technical rally.”  

Rickards added that every time the GLD has drawn down it has set up a “major rally” in gold, since it means physical gold is scarce and if the banks want to cash in their GLD units for the physical metal it might require them to look at sources other than the GLD storage warehouse.

Rickards’ intermediate-range price target for gold is US$7000 to $9000 per ounce and possible higher but “not right way.” He concludes by saying that as confidence in the U.S. dollar begins to collapse, the U.S. Federal Reserve, Treasury, and other central banks will have to return to gold to restore that confidence.

The entire interview can be seen here