by Alasdair MacLeod
As our headline chart illustrates, gold and silver suffered sharp falls this week, though in yesterday’s trading (Thursday) prices staged a partial recovery. In morning trade in Europe today, gold was trading at $1947, down $87, having hit a low point of $1864 on Wednesday. Over the same time frame, silver is at $26.65, down $2.18 on the week, having seen a low of $23.40, also on Wednesday.
The underlying problem is lack of liquidity in London. The rapid expansion of physical ETFs has driven the market into emergency measures, with the GLD ETF reporting the Bank of England as sub-custodian to the tune of 70 tonnes, which can only be leased gold from a central bank’s earmarked account. The table below gives an approximation of the problem.