How do you depress the physical gold price? It’s quite easy… you throw $10 trillion paper dollars at it:
Just like the artificial paper markets in New York and London that are used to keep the price of gold and silver from rising, the western stock markets are prevented from falling by a web synthetic derivative securities and fraudulent financial reporting applications.
Never before in history have stock market valuations been more disconnected from the underlying fundamental economic reality.
John Hathaway of Tocqueville Funds says the physical gold market will defeat the paper gold market leading to a much higher price for the monetary metal in the coming months and years in his Tocqueville Gold Strategy Investor Letter (Fourth Quarter 2016 Investor Letter):
Maybe you live in Greece or Cyprus or some place where they shut down the banks.
I think that activity is coming to the US sooner than later…
“This Is Where It Gets Interesting…”
Legendary gold trader and manipulation whistle-blower Andrew Maguire joins us this month to discuss the global physical market for gold and what might finally cause a disconnect between the paper and physical price:
If you “own” precious metals under certain types of arrangements, you may be shocked to find that you’re in a legal limbo where ownership and possession are hazy at best.
It’s not a place you want to be…
Buying gold in paper forms like GLD or Xetra-Gold is nothing more than an investment in a paper claim to the rate of return on gold during the period in which you own the security. If you don’t hold your gold in your own possession, you don’t own it:
After decades of manipulation laced market making, is the LBMA about to be made obsolete!?!
The ‘trend is your friend’, until an epic reversal occurs…
Overnight, CME Group Inc., the world’s largest futures market, halted all of its Globex electronic trading markets, including gold and silver, for four hours due to a “technical glitch.”
All other Globex electronic trading markets, including U.S. Treasury’s, oil, gold and U.S. stock indexes were affected with many markets having order routing problems.
(Editor note: the question is where will GLD find the physical gold to replace the inventory that was sucked East in 2013?)
The mighty GLD gold ETF’s bullion holdings have remained stable in 2014, an impressive feat. Last year they suffered an epic outlying record plummet as the Fed’s stock-market levitation sucked capital out of alternative investments. (and as the East sucked every ounce of AU out of the vaults)
This year’s resiliency in the face of the ongoing stock-market melt-up almost certainly means the bottom is in. GLD’s holdings are set to surge as weaker stock markets entice traders back.
“I just think that the COMEX data is corrupted. It’s very hard to make any sense of it all. The fact that there’s no deliveries from the dealers is incredible. You’d think there’d be some change in the inventory. I don’t care whether it’s up or down, but at least you’d think there’d be some change.” -Eric Sprott
Legendary gold trader Jim Sinclair sent out an email alert to subscribers Monday night regarding the manipulative dump of $1.3 billion in paper gold on the week’s COMEX open.
Sinclair, who called the top in the last gold bull market to the day, stated that Monday’s gold take-down was to allow the bullion banks to cover their shorts, and to initiate and expand long positions in advance of gold’s coming bull rally.
Sinclair, who has long stated that the entities that will make the most during gold & silver’s massive secular bull markets are the very bullion banks who have been naked short throughout the duration, warns that the bullion banks are GOING LONG HERE AND NOW!
Sinclair states that long term cycles in gold are turning positive and that this was likely “the last take down before gold trades at new highs“.
Sinclair’s full MUST READ alert is below:
With an unallocated account the customer doesn’t have an entitlement to any specific bullion bars, and is a creditor of the bullion bank. So long as the customer is happy with the counterparty risk, this is the cheapest way for him to have exposure to gold. F
rom the bank’s point of view, there is no need to hold more gold than required to meet customer withdrawals. Furthermore, even this gold doesn’t have to be bought, merely leased from a central bank, remaining in the Bank of England’s vault unless needed.
There can be little doubt that the increase in the quantity of gold held in the Bank’s vaults between 2006 and 2013 reflected, among other factors, physical backing for increasing unallocated accounts during the 2000-2012 bull market.
In the past a bullion bank’s risk to a rising gold price either went unhedged, or was managed through derivatives, using forwards futures and options. Therefore, so long as systemic risk is not regarded as a material factor, the bullion banking community can absorb significant gold demand from investors by expanding unallocated accounts without any physical buying required.
However, the investing public’s greater awareness of risk to bank deposits from bail-ins could change this in future.
India’s central bank said on Wednesday it has sought quotes from banks to swap gold in its own vaults for international-standard gold, aiming to improve the management of its reserves.
The Reserve Bank of India said the operation would “standardise the gold available with RBI in India with respect to international standards” and the gold acquired would be delivered to its overseas custodian, the Bank of England.
By holding gold reserves in London, the RBI would gain flexibility to mobilize them if needed to defend the currency.
It appears the Indian government has finally realized they can’t stop their citizens penchant for gold, so they have decided to dump central bank gold onto the market in exchange for gold of the rehypothecated paper variety .
What is incredible to me is that they are justifying this with a so-called “swap” into phantom gold at the Bank of England.
While many precious metals blogs and investors have proclaimed an imminent COMEX default since 2008, we have long maintained that the COMEX is more likely to fade into irrelevance than to outright default on gold or silver bullion as physical Asian demand would facilitate the development of physical exchanges in the east.
It appears that the CME decision makers have seen the light and agree with us, as Reuters reports this morning that the CME plans to launch a physically settled gold futures exchange…in Asia.
Stock-market capital finally started flowing back into the flagship GLD gold ETF for the first time in 14 months in February!
Though this buying was small, this is truly a momentous event. Extreme gold-ETF outflows were the dominant culprit behind last year’s epic gold selloff. Without that massive influx of additional supply weighing on the global markets, gold is going to surge on strong physical demand.