Les Davis says industry remains concerned that the millions of ounces of gold that were dumped on the market and caused the drop was so-called ‘paper gold’. Paper gold is the name given to exchange traded funds, ETFs, that are shares issued against physical gold bullion.
That bullion should be stored in vaults, but Mr Davis says the numbers don’t seem to ‘add up’. “There appears to be a huge delta on the amount of paper gold out in the market at the moment with physical backing.
“And I think there seems to be a lot of smoke and mirrors on how much gold is actually out in the big wide world. And where it is. And who’s got it.
On Friday April 12 this year, the 12-year bull run on the price of gold came to a spectacular, screaming halt.
It peaked at US$1,900 an ounce two years ago, and drifted lower from there. Then shock waves rolled through the sector with the biggest one day price drop in 30 years.
Gold is a particularly volatile commodity, but a drop of $200 in one day caught many by surprise.