Eric Sprott of Sprott Asset Man­age­ment is one seri­ous play­er and you would do well to lis­ten to him when­ev­er he speaks.

The man him­self on Bloomberg TV

He was just on Bloomberg TV dis­cussing his recent­ly pub­lished paper to which the con­clu­sion is The West­ern Cen­tral Banks can­not pos­si­bly have any Gold Bul­lion left in their vaults.

The expla­na­tion is sim­ple — gold sup­ply has remained con­stant at approx­i­mate­ly 4,000 tonnes per year. This has remained con­stant since the year 2000 — no doubt about that. How­ev­er the annu­al amount that is being pur­chased on the open mar­ket is going up, with almost 500 tonnes over the amount mined in a year. So how his this pos­si­ble? Where is the extra 500 tonnes of Gold com­ing from?

Sprott alludes to the fact that the cen­tral banks are “lend­ing” it out for cash into the mar­ket. This should real­ly be called “sell­ing”, because this gold is nev­er com­ing back. The trick is in their accounts and book-keep­ing. The banks are enter­ing this as “Gold Reserves and Gold Receiv­ables” — Receiv­ables being code for we sold it, but we still want to keep it on our books.

If we were to try that kind of cheap trick we would be locked-up and they would through away the key…But a cen­tral bank? No prob­lem — That’s ok boys!

You need to watch this inter­view — there are a lot of good nuggets of info in there…

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