Rob Kirby (Kirby Analytics) provides financial advice and sometimes helps broker the sale of tons of gold for big buyers and big sellers of physical gold.
Kirby was recently interviewed by Greg Hunter (video below).
In that interview, Kirby implicitly admitted that the Asian price for relatively small quantities (ounces or pounds) of physical gold is still consistent with the West’s price for paper gold seen in markets like COMEX. That’s no surprise.
However, Kirby expressly declared that the Asian pricing mechanism for large quantities (tons) of physical gold has divorced itself from the western world’s pricing mechanism for paper gold. According to Kirby, tons of gold are hard to find in the Asian market, but if you can find tons of gold that are for sale in the Asian markets, you should expect to pay at least 50% more than the spot price of paper gold.
For example, if the spot price of paper gold in the western markets is $1,200 per ounce, you can expect to pay at least $1,800 per ounce for tons of physical gold in Asia.
• Kirby does not clearly explain why the Asian price per ounce of tons of physical gold is enormously different from the Asian price for ounces of gold. On the face of it, that difference seems irrational. I.e., everyone expects to buy for less whenever we buy in mass quantity. Therefore, if anything, we should expect that if we buy tons of gold, we’d pay a lower price per ounce that if we only bought one-tenth or one-half of an ounce of gold. But according to Kirby, in Asia, you currently pay less per ounce for small purchases of physical gold than you would for buying tons of gold.
Why would this seemingly irrational price inversion take place?
I suspect the answer might be something like this:
Asian “insiders” believe that the price of all gold is about to rise by at least 50% in the near future. Therefore, the “insiders” want to buy tons of physical gold now, while the paper-gold price is artificially suppressed, in anticipation of an imminent upward spike in the price of gold.
Current circumstances (an artificially low price for paper-gold and an expectation for a sudden, significant rise in the price of physical gold) certainly favor those who would like to buy gold cheap. Right now, physical gold (in small quantities) is spectacularly cheap. That’s great for buyers of physical gold, but not good for sellers.
China is a net buyer of tons of physical gold. Current cheap gold prices (as set by the West’s paper gold markets) are great for China because they allow China to buy more gold for less money. Therefore, so long as China is a net buyer of tons of physical gold, China doesn’t want the West’s price/ounce of paper gold to rise.
Why? Because the West’s price for paper gold is being used to calculate selling price of the tons of physical gold purchased by China.
Therefore, it would make sense if China kept the Asian price for small quantities of gold (ounce or pounds) equivalent to the West’s price of paper gold since that artificially low price allows China to purchase tons of gold from the West at fire-sale prices. I.e., the continued buying and selling of small quantities of gold by the “little guys” in Asia would help to suppress the price of tons of physical gold purchased by Asia’s “big boys”.
Written by: ALFRED ADASK – continue at ADASK’S LAW