Supposing a country with a very large but informal gold mining business and an urgent need for US Dollars suddenly stopped being able to supply large quantities of gold to a dollar rich country with a very strong demand for gold (particularly jewelry) from its citizens and people who go to visit the place.
Let’s say, just for argument’s sake, Venezuela and United Arab Emirates.
The sudden failure to sell gold wouldn’t be the fault of the producer country either. More the way in which third parties (for right or wrong reasons) decide to play hardball geopolitics and close down the supply route of the informal gold (or illegal if you prefer, the vocab doesn’t bother me) via its transit country. Let’s say, for example, The USA having a quiet word in the ear of Turkey.
That Venezuela can’t shift its gold is neither here nor there to me (and frankly, if it hastens the demise of Maduro then so much the better) but that doesn’t suddenly mean the UAE demand dissipates. Quite the contrary, all of a sudden it finds itself needing to fill a supply gap and in a hurry, too.
So let’s say that the UAE rushes to its friends in the market and asks them to cover its unexpected gold supply shortfall with an order from the spot market. Then once the rush order is covered, things go back to normal. What would the result of that look like? Something like this, perhaps?
And all while the inventories of GLD remain unchanged on the gold move. And silver hardly budges an inch.