A Canadian hedge fund has published a report claiming to prove that the gold derivatives market "has been subjected to severe price manipulation over the past several years." Sprott Asset Management's chief investment strategist and report co-author, John Embry, followed up the findings with calls for exchanges including New York Mercantile Exchange (Nymex) to act to restrict manipulation.
According to evidence collated in the report, central bank gold lending has resulted in a physical short position of 4,000 tonnes, compared with aggregate annual mine supply of 2,600 tonnes. The report claims that deliberate large volume shorting has forced the gold price 25-50% below where its fundamentals suggest it...