Still Pounding Away
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In moves that are increasingly disconnected from physical reality, paper metal is under siege again today. Whatever.
You see, here’s the deal. Quite literally tonnes of precious metal are leaving London and heading east to China, Russia, India, Turkey, Iran, Saudi…you name it, they’re buying and taking delivery. This is metal that won’t be coming back! The foolish bullion banks think that they are just playing another round of fun and games with paper metal, leasing and hypothecation. They’re not! This time it’s for real and they don’t seem to get it.
Think of it this way. I am a car dealer with a fleet of vehicles that I own. I lease these vehicles to borrowers who use the vehicles in their business. These borrowers routinely return the vehicles to me, only to release the same or other vehicle out of my inventory at a later time. I, the dealer, continue to recycle leases from one customer to another, moving cars from here to there based upon demand. As long as the cars are returned to me safe and sound, I can continue to run this program.
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