The gold market has largely recovered after the sharp sell-offGold prices have been suppressed, but this is about to end as supply is tight and gold flows out of London and the US could re-price gold.
Andy Schectman - President of Miles Franklin Precious Metals said that one of the most worrying problems in the current gold market is that it is increasingly difficult to find and buy physical gold. "Currently, the LBMA takes six to eight weeks to deliver gold - in essence, this is almost a form of default," he said.
In China, some major banks have announced they have run out of gold products due to strong demand. In South Korea, the country's mint has temporarily stopped selling gold bars because of tight supply.
The world's largest gold ETF - SPDR Gold Trust (GLD) has just withdrawn 16 tons of gold. He said this could be a sign that institutional investors are withdrawing physical gold from the fund, reflecting a loss of confidence in the "paper gold" market.
