Gold Running in Short Supply

EJ: You've made a point that the Canadian government sold all its physical gold a few years ago at market lows. Which countries are best positioned in terms of owning gold?

ES: I would guess Switzerland, Germany, France, and possibly Italy are good, in terms of having gold. I haven't checked the data. Russia's coming on. China's trying to accumulate gold, but per capita, they don't have much.

We all debate whether the U.S. has their gold. That's the real debate. Was the physical gold supplied by the central bank surreptitiously? That's the question that nobody has the answer to. But, when you realize that all this new demand should not have been easy to supply, I wonder who is selling the gold.

EJ: Does it make you nervous when you see people hawking gold on late-night TV infomercials? Is it a crowded trade?

ES: Some of these guys on late at night are buying gold and some selling it. The ones buying it make sense. It's a statement of demand for gold. And they're ripping people off. They turn right around and sell it and there's a huge market for it. I think a lot of desperate people in the U.S. have now sold their gold trinkets because they needed the money last year. It's stunning to think a little gold ring someone's got stashed away could be worth $1,000.

What I keep wondering -- when you think of all these new buyers of gold today vs. 10 years ago -- is where's the gold coming from? I can't think of anyone who would be selling gold now. You think the guys in the Middle East are selling gold now? No way. Not is this environment.

Part II of this interview will be printed tomorrow in TheStreet. [Jackson held no position in the stocks mentioned at time of publication.]

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