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
