Thursday, October 17, 2013

James Rickards About Central Bank Manipulation of Gold and Silver Markets

Fabrice Drouin Ristori (FDR): Mr Rickards, thanks for accepting this interview. How long the manipulation of the precious metal markets can last ?

James Rickards: Central bank manipulation of gold markets can and will last until physical shortages become so acute that banks and exchanges can no longer deliver on futures and forward contacts when requested by customers. At that point, contracts will be terminated and exchanges will order that trading be conducted "for liquidation only" which means that futures customers can close out or rollover contacts, but they cannot receive physical delivery of gold.

FDR: What will put an end to it ? Physical demand ? Geopolitical event (BRICS) ? 

JR: Physical demand will remain strong until the world returns to a gold standard. Once the world is on a gold standard, gold may move from country to country in settlement of balance of payments accounts, but there will be no reason to acquire extra gold because the value of gold will be fixed in terms of each major currency. When you are on a gold standard, gold and currency are freely interchangeable. However, gold will continue to be in demand until a gold standard is implemented. This is because the market price of gold is considerably less than the implied non-deflationary price of gold under a gold standard. As long as this situation prevails, there will be an arbitrage motive to exchange currency for gold....more here

Gold in New Zealand dollars: $1522.85 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)
Low since previous high: $1532.30 (28 June, 2013)

Silver in New Zealand dollars: $25.43 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)
Low since previous high: $23.51 (28 June, 2013)

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