Curious where all the demand for (immediate) physical gold (delivery) is coming from (as detailed here first in April)? As it turns out, so is JPMorgan.
From this week's Flows & Liquidity:
SEC filings showed that the largest hedge fund holders of the gold ETFs liquidated most of their positions in Q2, although the single largest holder commented that they had simply switched their exposure from ETFs to the OTC derivative market as the current downward sloping forward curve makes it cheaper to be long gold through futures than via the ETF. Figure 7 shows the annualized % difference between the 1st and 2nd COMEX gold futures contracts going back over the past 30 years on a weekly basis. As the figure shows, a backwardated (downward sloping) gold forward curve is very unusual. This is an indicator of how strong physical demand is, i.e. spot is bid up relative to forward prices due to strong demand for immediate delivery of gold.
Ostensibly, this means that until the Bundesbank and/or PBOC finally issue a relevant 8-K, the "confusion" will continue.