Gold Crashes Most in 30 Years (20%) … What Does It Really Mean?

[Vitalux]

Posted by PathWalker (here)
Gold Crashes Most in 30 Years (20%) … What Does It Really Mean?

It means that Gold is going out of style and perhaps the hula hoop is going to be the thing of value

[ThePythonicCow]

Posted by Paul (here)
In other words, over the last nine months (mostly over the last month, actually), the paper price of silver has departed from the real physical price by some 21-5 == 16 per-cent, or actually more, if you take into account the difficulty in finding any silver now.

If you follow the work of Antal Fekete, whom some (such as Hugo Salinas Price, here) think the greatest economist alive, then this difference between paper gold and real physical gold, which just got 16 per-cent bigger, is equivalent to the recognition of permanent backwardization in the price of gold -- where the price for gold promised for delivery next month is substantially cheaper than for gold actually delivered today. In his recent article Who Said the Hydra Would Take It Lying Down (TheDailyBell), Antal Fekete considers this the death knell of the current world's monetary system.

Antal concludes this article with these words:

If Bernanke thought that his attacks on the gold price would stem deflation, well, his efforts were counter-productive, to put it mildly. They have, in fact, made the flight into physical gold accelerate. Permanent backwardation of gold, and its concomitant, the re-invention of barter – the ultimate in deflation – will be the result.

There is no reason to fear that the Fed is pushing the world into hyper-inflation. In fighting the gold price the Fed unwittingly pushes the world into hyper-deflation.

All the same, it is destroying the dollar and the international monetary and payments system.

Antal is describing a pyramid of kinds of money. Would you rather have a $1000 in gold, $1000 in one-hundred US Dollar bills, or $1000 in derivatives on pork-belly futures sold to you by your friendly Goldman Sachs customer representative? If you reside in Cyprus right now, would you rather have 1000 Euro in your wallet, or 1000 Euro credited to your bank account?

The US Federal Reserve (Fed) cannot "print" and issue unlimited real paper currency Dollars. As Antal explained here back in 2007, The US Treasury prints US Dollars for the Fed in exchange for U.S. Treasury bills and Federal Agency securities. The Fed can issue unlimited bank credits, by taking any debt paper (say a million dollar mortgage on my cat's sleeping blanket) it dang well chooses to take from member banks, in return for "crediting" their accounts with more lendable electronic money. So bank credits, which form the basis for further lending, are nearly unlimited, but bank cash, available for withdrawal, is actually limited by US federal debt (not much of a limit, but still.) In hard times, when banks are worried about their own bankruptcy, and potential customers are worried about unemployment and a collapsing value on their home, unlimited lending capacity is of little use, and few loans will be issued.

When a monetary system unwinds, as is happening now, the easiest to create money becomes worth less and less, as people and institutions no longer trust it. There is a rush to the harder to generate forms of money. As the people of Cyprus learned last month, cash in your wallet is harder to generate, hence worth more, than deposits at a bank. When this happens, the easy money experiences inflation (lots of it around, but increasingly worthless) while the harder money experiences deflation (not enough of it around, hard to get and hoarded.)

We are seeing this now in gold futures and promises, whether COMEX futures, GLD, the stock of gold mining companies, or so called allocated gold in some foreign banks vault. When Bernanke and associates crammed a huge additional amount of such paper gold into the market last month, selling COMEX futures (on gold no one has), he aggravated a "run on the gold banks" that was already in progress. The price of COMEX futures fell, but the price of real physical delivered gold and silver held much closer to even, with supplies of such real physical metal increasingly scarce.

The currency pyramid, from most abundant (least certain) to most scarce (most certain):

Derivatives: The major Western banks (the systemically important international too big to fail banks, such as HBCS, RBS, JPMorgan, Citi, BofA, Goldman, ...) are deeply invested in derivatives. These are bets on things like Foreign Exchange (FOREX - foreign currency exchange) rates and interest rates. They are totally unregulated and exist in the 100's of trillions of dollars worth. Derivatives are at one end of the pyramid of kinds of money. They will be the first thing to really blow up in the face of these big banks; counter party banks won't trust them anymore and demand immediate payment in something more solid (and scarce) such as quality debt paper.

Debt paper: Debt paper is created when someone or some company or nation has borrowed money. Debt paper is the promissory note or mortgage or bond held by the lender, which the borrower promises to pay off. Debt paper includes mortgages, student debts and corporate and national bonds. Such debt paper is more scarce than derivatives, and will be preferred over derivatives when this unravels. You might get some of your money back on debt owed to you by a big bank in bankruptcy court; you haven't got a prayer of seeing anything from a failed derivative contract you had with them. Bank deposits with a bank that is much larger than the US Federal Deposit Insurance Corp (FDIC) insurance fund are essentially the same as lending the bank money. You will stand in line with the creditors of the bank on the steps of the bankruptcy court when such a bank fails (if you're a small fry, you won't actually be allowed inside the court -- take what they give you.) The highest quality debt paper used to be US Treasury bonds, but now just Canada, Australia, Hong Kong, Singapore and some (mostly northern) European countries have AAA rated bonds (see here.)

Paper gold and silver: The GLD EFT (gold exchange traded fund), COMEX futures and other claims on gold in someone else's vault, perhaps far away and poorly audited have been the favored investment of those who didn't trust the big banks and the Fed. These are more limited than debt paper. There is much less paper gold issued than say mortgage debt paper or student debt paper. However the take down of paper gold last month has opened a serious crack, that cannot, in my estimation, be repaired. Those who have not already gotten their real physical gold and silver are finding it increasingly difficult to do so. Reportedly (from my Jim Willie CB newsletter) if you want to purchase gold in large quantities (tons) the price of real gold is now on the order of $2000 per ounce, even as paper gold has just been driven down below $1400 per ounce.

Hard currency: Hard currency from any nation whose central bank only issues currency in exchange for national debt (such as is the case in the US, Euro, UK and its "colonies", but is not the case in Zimbabwe) is more constrained in supply and less subject to risk in times of economic collapse. Just ask the Cypriots. So long as the central bank is not literally running the printing press without limit, hard currency in your wallet beats deposits in a "too big to fail" bank. People will more likely accept hard currency in trade for their goods than they will a check or other demand on a suspect bank.

Real Silver and Gold: The most certain currency to survive even the collapse or major reorganization of nations is actual physical gold and silver.

At each step of the collapse, we will see inflation (over abundance of monetary units) at one level, as it becomes overly abundant and worth increasingly less while people shun it, and deflation (scarcity of monetary units) at the level below as too many people rush to the safety of too small an amount of available "safe" currency.

Inflation at one level accompanied by deflation at the next level down -- remember that pattern.

The price differential that opened up in silver where the real price is now 16 per-cent higher (and supply scarce) than the often quoted paper price, where the paper price of silver I bought nine months ago fell 21 per-cent, but the real physical price fell only 5 per-cent (if you can find it), is a clear example of exactly what Antal Fekete has been telling us about for many years now.

[ThePythonicCow]

Some good papers by Antal Fekete.

[ThePythonicCow]

Posted by Paul (here)
You might get some of your money back on debt owed to you by a big bank in bankruptcy court; you haven't got a prayer of seeing anything from a failed derivative contract you had with them.

Oops -- wrong.

From the latest Jim Willie HAT TRICK LETTER:

The 2005 bankruptcy reforms made the counter-parties to derivative contracts senior to unsecured lenders. The reform was a vicious attempt to impoverish the nation by stripping the people of wealth. The irony is sickening. The actual posting of partial collateral (like 2% or 5% or 10%) by a derivative counter-party makes the creditor Secured, while the depositor who puts up 100 cents on the dollar is deemed Unsecured.

[Ron Mauer Sr]

Gold and silver are certainly a way to safely store wealth for future use, but food and clean water are absolute necessities to get through the rough times ahead, however long they last.

Without sufficient food and clean water to last through the crash and recovery, the gold and silver will be useful only to someone else.

[ThePythonicCow]

Posted by rmauersr (here)
Gold and silver are certainly a way to safely store wealth for future use, but food and clean water are absolute necessities to get through the rough times ahead, however long they last.

Without sufficient food and clean water to last through the crash and recovery, the gold and silver will be useful only to someone else.

My guess is that things will fall apart to different degrees, at diverse times and places. So I have a variety of stuff, including food, water, water filters, clothing, shelter, tools, medical supplies, backup power, ... and even had enough left over to get a few silver coins and enough cash to get through a short bank holiday. Not all of it will be used, and some of it will be useful at different times.

But, yes, without food, water and (depending on the weather) shelter, you won't last long.

[kanishk]

I have taken students loan, therefore I want to know,

What will happen to the loan taken by people?
What banks will do to people who had taken loans?
Will people be able to pay their debts?

[ThePythonicCow]

Posted by kanishk (here)
I have taken students loan, therefore I want to know,

What will happen to the loan taken by people?
What banks will do to people who had taken loans?
Will people be able to pay their debts?

I don't know, but I know some others who have substantial student loans as well.

So long as the current bastards in power have their say, student loans will be onerous, at least in the US. Unlike almost any other kind of debt (US law, again), they cannot be discharged in bankruptcy. Instead they pile up interest and penalties forever unless you are fortunate enough to land a high paying job that enables you to pay them off. If the current regime holds, then many young Americans now will have payments for their student loans being deducted from their Social Security checks when they retire, decades from now.

I've got to hope that something gives between now and then, but I wouldn't be surprised if it got a bit ugly during the breaking process.

[ThePythonicCow]

Posted by Paul (here)

Posted by Lost Soul (here)
Only in the West do we discuss the "volatility" of gold. Other people, the Chinese in Particular, are buying as much as they can. Their gold exchange ran out of the stuff. 25 tons is shipped from London daily.

Nine months ago, in July 2012, I purchased a few American Silver Eagle coins for $29.70 per ounce (final total bill). Currently the price of silver is supposedly $23.32. That's a nominal price drop of 21 per-cent.

The same silver, from the same dealer, in the same quantity, that I paid $29.70 for, is now listed for $28.08 per ounce, but is OUT OF STOCK . If it wasn't out of stock, the real (cash and carry price for real metal) price only declined 5 per-cent over these last 9 months, not 21 per-cent.

In other words, over the last nine months (mostly over the last month, actually), the paper price of silver has departed from the real physical price by some 21-5 == 16 per-cent, or actually more, if you take into account the difficulty in finding any silver now.

A further update on this, further confirming the break between the "spot" (COMEX futures) price of silver and the real physical price of silver.

Current prices for silver ($US/ounce):

• $ 23.30 - spot (COMEX) price.
• $ 24.30 - what my silver dealer (same as above) will pay me to purchase back the coins I have (if I had a monster box).
• $ 28.29 - what my silver dealer would charge me to sell me more silver.

All prices are per ounce, and the coins in question are American Silver Maples.

Currently my dealer is only buying and selling full monster boxes (500 coins to a box), not individual coins. Normally, he handles individual coins, but supplies are short and demand is high.

The key item to note above: he will purchase from me silver at $1 above the COMEX spot price for silver.

This is irrefutable evidence that the physical price of silver has divorced itself from the COMEX spot price (well, actually the New York CME Globex electronic trading platform price, as the COMEX trading floor in Chicago is closed at this hour, but they track together.)

[ThePythonicCow]

Posted by kanishk (here)
I have taken students loan, therefore I want to know,

What will happen to the loan taken by people?
What banks will do to people who had taken loans?
Will people be able to pay their debts?

I see you've already noted that there is also a good thread on student loans at The College Debt Trap.

[kanishk]

There is a site www.bullionindia.in who provides home delivery of gold and silver. There people can buy and sell units of 0.1gram of gold and 1 gram of silver according to the market prices. They are inclusive of VAT and import duty. 10gram silver is the minimum quantity of redemption they allow and for gold it is 1 gram.

When I redeemed 300 grams of silver for physical delivery,They are taking too log for dispatching the parcel.Then I asked them on phone why are they taking so long for courier to dispatch they told me 'you have ordered too much, that's why' then again second time when I requested redemption of 700 grams of silver they told me the same thing that 'because your order is large it is taking time, and because of our rules and regulations we even can not attend the redemption request of other costumers because of you order'.

One day one boy meet me, he told me his father is a jeweller and he himself handles silver trading. He told me 'you can buy 1kg of silver from MCX directly, now the rates are very low as 45000 rupees per kg and I will earn only 100 rupees on 1 kg. He told me that other traders earn 200 to 400 rupees'.

My father was also telling me 'if you want to buy silver, buy it from jeweler in your hometown, jewelers buy it from MCX spot'. I thought premium will also be there and the cost will be too high. As i know if i buy silver from HDFC bank it will cost about 88000 rupees per kg. Therefore I didn't listened to him carefully.

Well then after knowing this I came to know about existence of 'MCX silver 1000' in India.

In september 2012 Multi Commodity Exchange of India Ltd (MCX), launched Silver 1000, a first of its kind and innovative deliverable 1 kg silver contract.
From: http://www.commodityonline.com/news/...2-3-50543.html
http://www.mcxindia.com/Uploads/News...contracts-.pdf


MUMBAI (Commodity Online): India’s largest commodity bourse, Multi Commodity Exchange of India Ltd (MCX), will launch Silver 1000, a first of its kind and innovative deliverable 1 kg silver contract on Thursday.

The delivery centre will be New Delhi as it is being one of the largest consumers of silver in India, this contract will cater to the needs of small jewellers and retail investors, who wish to take physical delivery of 1 kg silver bar in demat or physical form.

Mr. Shreekant Javalgekar, MD & CEO, MCX said: “MCX’s contracts have always tried to meet the varied needs of all the stakeholders of a commodity’s value chain. The Silver 1000 contract is a unique contract that will go a long way in meeting the needs of physical market participants and retail investors as it will enable them to take delivery of 1 kg silver bar at lower margins as compared to the hitherto 30 kg bars. With the festive season fast approaching, this contract is an ideal offering from the Exchange to the market participants.

At present MCX offers standard Silver futures (trading unit 30 kg), Silver Mini (5 kg) and Silver Micro ( 1 kg) and is one of the leading exchanges for silver futures trading in the world.

Before this jewelers have to import silver by trading in outside markets, and it was very lengthy process and amount of silver must be huge in quantity.

http://articles.economictimes.indiat...odity-exchange

[ponda]

Hi all,

I stumbled on these posts whilst browsing an article at zerohedge.com at this link: http://www.zerohedge.com/news/2013-0...ck-turns-anger

The comments can be found here:

http://www.zerohedge.com/news/2013-0...omment-3410842

and here as well: http://www.zerohedge.com/news/2013-0...omment-3411112

I found this posters perspectives interesting and they might fit in with the discussion on this thread so i'll cut and paste them below for anyone who is interested.

cheers

A mate of mine asked me what's going on in Cyprus and Europe as a whole....kind of a pointless question without the Big Picture.

Here is my response;

Yeah, the more I read the bigger this whole game is…and it really is a game of winner takes all.

You have many factions woven into several layers within the game. There are the countries around the world, there are the major financial infrastructures, there are the superrich entities, and there are the banking entities which stitch the layers together…which makes sense.

The best way to think of them and how they interact is by way of a Venn Diagram (below), then this will all make much more sense.

Take a simple Venn Diagram with 3 overlapping circles (A + B +C). Note that there are a total of 8 sectors including space outside the circles.

http://upload.wikimedia.org/wikipedi...agram_cmyk.svg

Let’s say that;
A = Are the countries of the world
B = Are the major financial infrastructures of the world
C = Are the banking entities of the world

The next layer is where just two of the major players overlap;
A/B = Military Industrial Complex and Major Corporations
B/C = Central Banks
C/A = Major Banks

You can now see how every entity is affected by every other entity, to varying degrees!

There is also another sector, right at the centre. This is the Superrich entities who own most of the real assets on the planet, such as a vast majority of Military Industrial Complex, the Major Corporations and the Major Banks, as well as most of the natural resources. Since the Major Banks own the Central Banks, then the Superrich own the Central Banks as well.

Now here is where it starts to get a little grey…..

Who is at the centre?

Well, there are at least three types of Superrich entities, they are;
1. The ultra-wealthy families who have had money since at least the 1700s’. These families are well known historically but they are very well hidden today, so too is their money (Gold and something else).
2. The Oil wealthy such as the Arab states. These are newcomers to the centre and their future is tied-up with the prosperity of their countries; if the country falls, so do they.
3. The Oligarchical wealthy. More newcomers who have recently emerged from the end of the Cold War. These include most of the families which prospered from the Military Industrial Complex, like the [George] Bushs’, and Mafia type Oligarchs like Putin and his KGB mates.

Ok, so that paints a picture of how all the visible entities fit together…..but there’s another layer. This is a very, very well hidden layer.

Imagine that the Venn Diagram (the whole world) is drawn on a single piece of paper, well, who owns that piece of paper???

I believe that the next and final layer doesn’t really have a name…but I’ll call them the Custodians! The Custodians essentially won 80% of the world between the 1300’s and 1700’s. They comprise of many or most of the Ultra-Wealthy entities dating back as far as the Black Venetian Nobility, the Templars, the Teutonic Templars, the Vatican, and later entities such as the Rothschild family.

On the Venn Diagram these Custodians own most of the paper as well as the entire centre sector of the Venn Diagram.

These Custodians own vast, vast sums of wealth, accumulated over centuries. I believe the sums would be in excess of $700 Trillion. HOWEVER, this figure is not a Dollar figure, or a Yuan figure, or even a Euro figure and this is why…

When Rothschild created the Central Banking System he also created a layering of the system where, the Major Banks in each country owned the Central Banks from whom they borrowed the money. BUT, as with all systems it is built upon a network, and in the case of the Banking System and the entire Global Financial System it is built upon a framework (network) which is 100% owned by these Ultra-Wealthy elite families. It has been this way since the end of the Napoleonic War, where, Napoleon threatened the entire European Banking System as he believed in a Bank of France which lent money at 0% interest…he hated Banks, and Banks hated him!

So the real question is, what is the framework, what is the network???

The Custodial Framework
United Nations - Global Police
World Bank - Global Lender
International Monetary Fund - Global Debt Collector
Intelligence - Custodial Eyes & Ears (Mi6, Mi5, CIA, MSS, Mossad, FSB {KGB}, SIS, CSIS, ASIS, DCRI, BND etc)
Power & Control Centres - US Council on Foreign Relations, European Council on Foreign Relations, Club of Rome, Bilderberg Group, Royal Institute for International Affairs, Trilateral Commission etc.
Main Stream Media - Global Propaganda
Hollywood - Global Propaganda and epicentre for Alternative/Pagan/Kabbalic/Ancient Mystery Religious interests.

The Custodial Network
Bank for International Settlements - Global Banking Computer Network for the movement and transfer of Global Currencies (the Back Bone)
London Bullion Market Association - Physical distribution and controlling agency of Gold (real wealth)
Central banking Network - Physical distribution and controlling agency of Global Currencies (medium of exchange for services, goods and labour)
Organization of the Petroleum Exporting Countries – Global distributor and controlling agency of Global Oil (consumable real wealth)

What you must understand is that Currencies are merely a medium of exchange but Gold is real wealth and Oil is consumable real wealth. Oil is a type of hybrid between Currencies and Gold, this is why Oil States sell Oil in Currency (US Dollars) but there is always a payment in physical Gold as well. Oil has a usable function, Gold has a storable function, currency is merely a rate of exchange. You can think of Currency in terms of energy, Currency isn’t the fuel, Currency is merely the calorific value of the fuel being burned.



By the very nature of both the framework and the network, we can have a complete and total collapse of the Global Financial System and the Custodians don’t lose a single penny as they can simple create a brand new system at the click of a finger…new Currencies, new Bonds, new Banks, new Political systems….new everything….a brand new farm! This is because they own the machinery to make farms as well as the technology to do so.



People talk about a coming New World Order. If you believe what I have written you will see that it’s not coming at all, it’s already here, and has been here for perhaps 300 years. What they are talking about is merely the next cycle within the existing NWO…nothing more!



If you believe this, then for you the truth is revealed; that the threat of a coming NWO is a False Flag event. It is a deliberate misdirection to distract you from the truth hidden in plain view. If you believe that a NWO may be coming, then by definition, you believe that a NWO cannot currently exist. This is precisely what they want you to believe. They do not want you to realize that the NWO has already been implemented incrementally over the past 300 years and especially since the propagation of the Global Central Banking Cartel whose greatest achievements were the Bank of England, the United States Federal Reserve System, and the Eurozone (including European Central Bank).



There is of course one thing which they cannot create at the click of a finger…Gold!



When financial systems collapse the wealth transfer goes into Gold, which then becomes the store of wealth until a new system is put in place, then, the wealth transfer goes back into the new financial system. So, owning Gold is owning a piece of the next financial system, not the current financial system…get it? This is when Gold is most potent.



http://politicalmetals.files.wordpre...ies1.png?w=595



For this reason, every time the financial system becomes fragile, every entity always runs to Gold. Often they don’t really understand as to why, but they do nonetheless.



The real reason as to importance of Gold is very, very simple. Gold doesn’t sit within the Global Financial System itself, it sits outside the system (outside the Venn Circles), resting on the blank white paper which is mostly owned by the Ultra-Wealthy. In visible terms it is like the ‘Construct’ in the movie the Matrix, something which underpins the false reality which is created upon it.



To own Gold is to own both a commodity which is assigned a Currency value as well as a piece of the next framework, a piece of the next network. Everything else is which is going on is just noise and distractions to the masses….’Bread and Circuses’.



Currently, we are seeing suppression in Gold. I believe the reasoning behind this is to buy-time, enough time so that the framework and network have sufficient Gold reserves to restart the system and a long enough period of time so that the Gold buying is invisible to the general public, so as to avoid a panic or ‘run’. In any case, the next cycle is inevitable and it is coming whether we like it or not, or whether we are prepared or not.

Post WWII, but perhaps earlier, it was realised that Gold must be removed from the financial system. The excuse given was that it impaired the Banking Systems' ability to expand and therefore protection 'US' from future crises (Keynesianism). A lie which even the bankers bought into...why wouldn’t they?!

The real reason Gold was systematically removed from the financial system (Globally) was to place it even deeper into the financial system (LOL). A Gold Standard is akin to Gold acting like the mortar between the financial bricks of the Global Economic Building however, removing the Gold simply meant that Gold then flowed into private vaults of the same entities who owned the Gold within Central Bank vaults in the first place. They merely relocated the financial strength.

The Gold was replaced by 'Promise To Pay' and it flowed into the foundations on which the entire building is built (BIS etc). In this way, the building can be knocked down and rebuilt, using the foundations over and over again. The Gold never left the structure at all, it was merely reassigned.

So, instead of Gold being used as the mortar between the bricks of the Global Economic Building, we have 'Good Will', and good will can be expanded easily...but it can also erode just as quickly (faith). This is why we will either see a Global Financial Reboot, or, they will push Gold back up into the Mortar (Bond backing).

In essence, the removal of Gold meant that the nature of the system transformed from 'Fixed' to 'Recyclable', so long as the foundations are retained.

I don't envisage Gold as money, or currency, or even wealth, that's too rigid. It's like a Stem Cell; it can be grown into other things.

Just because Gold may re-enter the system doesn’t mean ownership changes.

Also, don’t think that Central Bank Gold Reserves being leased out is criminal, because the entities who own the Central Banks are the same people who are leasing the Gold, as well as all the intermediaries in-between.

So what’s happening in Cyprus? Well, Cyprus is the very first indicator of two things, they are;
1. That currency really isn’t owned by the depositor and is in fact owned by the representative Central Bank, and in turn, by the owning Banks, and in turn again, by the mob I discussed originally.
2. That the Global Central Banking cartel has blocked all the exits by taking over every other Central Bank in the world, or is very close to it.

“Give me the power to issue a nation's money; then I do not care who makes the law”

And that about all there is to it.

I wonder if a ‘Promise To pay’ includes food rations?

For anyone who is interested the poster who made the above comments has a blog.Here is the address: http://twoshortplanksunplugged.blogspot.com.au/

[PathWalker]

No Bear Market In Gold
http://www.prisonplanet.com/no-bear-market-in-gold.html

Paul Craig Roberts
Prison Planet.com
May 21, 2013

You know that gold bear market that the financial press keeps touting? The one George Soros keeps proclaiming? Well, it is not there. The gold bear market is disinformation that is helping elites acquire the gold.

Certainly, Soros himself doesn’t believe it, as the 13-F release issued by the Securities and Exchange Commission on May 15 proves. George Soros has significantly increased his gold holding by purchasing $25.2 million of call options on the GDXJ Junior Gold Miners Index.http://bullmarketthinking.com/soros-...ns-on-juniors/

In addition the Soros Fund maintains a $32 million stake in individual mines; added 1.1 million shares of GDX (a gold miners ETF) to its holdings which now stand at 2,666,000 shares valued at $70,400,000; has 1,100,000 shares in GDXJ valued at $11,506,000; and 530,000 shares in the GLD gold fund valued at $69,467,000. [values as of May 17]

The 13-F release shows the Soros Fund with $239,200,000 in gold investments. If this is bearish sentiment, what would it take to be bullish?

The misinformation that Soros had sold his gold holdings came from misinterpreting the reason Soros’ holdings in the GLD gold trust declined. Soros did not sell the shares; he redeemed the paper claims for physical gold. Watching the gold ETFs, such as GLD, being looted by banksters, Soros cashed in some of his own paper gold for the real stuff.

The giveaway that Soros is extremely bullish on gold comes not only from his extensive holdings, but also from his $25.2 million call option on junior gold stocks. This is a highly leveraged bet on the weakest gold mines. With high production costs and falling gold price from constant short selling in the paper market, Soros’ bet makes no sense unless he thinks gold is heading up as the short raids concentrate gold in elite possession.

In previous articles I have explained how heavy short-selling triggers stop-loss orders and margin calls on investors in gold ETFs. Scared out of their shares or forced out by margin calls, investors’ add to the downward price pressure caused by the shorts. Bullion banks and prominent investors such as Soros are the only ones who can redeem GLD shares for physical metal. They purchase the shares that are sold in response to the falling gold price, and present the shares for redemption in gold metal.

Insiders familiar with the process describe it as looting the ETFs of their gold basis.

In my last column I described how the orchestration of a falling gold price in the paper market protects the dollar’s value from the Federal Reserve’s policy of printing 1,000 billion new ones annually. The other beneficiary of the operation is the financial elite who buy up at low prices the ETF shares sold into a falling market and redeem them for gold. Like all other forms of wealth in the West, gold is being concentrated in fewer hands, while the elite shout “bear market, get out of gold.”

The orchestrated decline in gold and silver prices is apparent from the fact that the demand for bullion in the physical market has increased while short sales in the paper market imply a flight from bullion. As a hedge fund manager told me, it is a Wall Street axiom that volume follows price. Bull markets are characterized by rising prices on high volume. Conversely bear markets feature declining prices on low volume. The current bear market in gold consists of paper gold declining steadily while demand has escalated rapidly for physical metal. This strongly indicates that demand for physical gold continues to be in a bull market despite the savage attacks on paper gold.

If the orchestration is apparent to me, a person with no experience as a gold trader, it certainly must be apparent to federal regulators. But don’t expect any action from the Commodities Future Trading Corporation. It is headed by a former Goldman Sachs executive.

And don’t expect any investigation from the financial press. The financial press sees a bear market while supplies of bullion decline, premiums over spot rise, and even publicly declared bears such as George Soros make highly leveraged bets that will fail in the absence of a bull market in gold.