Traders in the gold markets have their views that we are in deflation or in some kind of economic recovery where the dollar is going to strengthen. I think that what will break this perception is the recognition by the market that there is a gold shortage.
Of course, a kind of recognition has already occurred. The GOFO (Gold Forward Offered) rate has recently gone negative, as it was at the June low in the price of gold. It has only been negative 5 times in the past 15 years, and is generally linked to strain on the physical gold supply.
- Eric Sprott:
