Peter Hambro, Chairman of a London-based gold mining company Petropavlovsk, supposes that London metal exchange has practically run out of physical gold.This attributed to the fact that during the latest years, India and China have been buying real gold.
Mr. Hambro expressed his concern about the situation, “China and India have been buying in enormous quantities. It’s virtually impossible to get physical gold in London to ship to those countries. We get permanent requests from Russia to sell their physical gold to India and China as there is no physical metal, only endless promises. And I really worry that the market, that paper market, could be stamped on and people will say “sorry we’ll have a financial close out”, and it’s all over.”
Specialists from A-Mark, the leading precious metals trading company, said that they have to stop taking orders for a number of popular gold and silver coins. The company’s representatives reported that they still have most products in stock as they have stocked up as massively as they could in the last weeks. However, they will be unable to replenish their reserves when they run out of them. The dealer’s experts suppose that a sharp deficit growth in wholesale and retail markets can throttle financial markets.
The cost of borrowing physical gold in London has significantly risen in recent weeks. That was driven by dealers’ needs to deliver gold to refineries in Switzerland before it is melted down and sent to places such as India. Analysts noted that such a rise in the cost of borrowing physical gold was caused by “physical tightness in the market of gold for immediate delivery.”