| The slide in precious metal prices has done much to undermine investor confidence, yet the indications are that demand for the physical metals remains strong. This leads many observers to comment that paper gold and silver and not bullion are driving prices. The current sell off is a combination of long paper positions capitulating, new short positions being opened by trend-chasers, and importantly, bullion banks squaring their books.
A better way to differentiate between futures and forward markets and physical demand is to regard the former two as used by speculating investors and the latter by buyers seeking financial protection from systemic risk. In the middle there are those who buy futures to take delivery, but they are a minority...............................................Full Article: Source
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