On Thursday, we finally had a chance to catch up again with Andrew Maguire. After making waves two weeks ago with his forecast of a pending "reset" in the price of gold, this podcast allowed Andy to go into greater detail regarding the condition of the physical versus paper markets and why he is so confident that a breakdown is inevitable and coming soon.
The podcast begins with Andy giving background information on how the wholesale, physical market operates and he provides an update on the current global supply/demand conditions:
- "We're talking about rock-solid gold bullion in demand from central banks, sovereigns and institutionals which are looking to hedge risk."
Next, Andy describes the process of placing physical bids and relates it to the trading orders that often trail the paper price:
- In periods of paper price weakness, we have the luxury to "just sit back and wait for the price to come to us" but there is still "competition to get physical orders filled."
Andy next discusses how the paper price was able to be raided once it extended above $1222, all the way to $1264 two weeks ago:
- "The Banks knew that with the level of wholesale bids at $1222, anything above that level could be freely naked shorted".
To the idea of a pending price reset and paper market collapse, Andy states:
- "The physical market is quickly sucking the liquidity out of the paper market."
Andy also discusses the paper silver market dynamics and addresses the questions of how and why the silver price is relatively unchanged over the past several decades:
- "The lifeblood of paper market liquidity must be translated to the physical market, instead."
Much, much more is discussed here so I encourage you to carve out some time this weekend to give this podcast a thorough listen. I promise it will be time well spent.