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

[PathWalker]

http://www.washingtonsblog.com/2013/04/why-is-gold-crashing.html

You will not read this in the MSM. Put extra attention the red marked sections.


Why Is Gold Crashing?

Gold has fallen off a cliff. It has fallen faster than at any time in the last 30 years.

Zero Hedge notes:

Adding insult to injury, the Shanghai Gold Exchange overnight announced that following the tumbling precious metal prices and limit down drop in early trading, it may raise trading margins for its gold and silver forward contracts.

(Margin calls tend to trigger further selling.)
Some Say It Is a Good Time to Buy

While most financial advisers are screaming “sell!”, there are some well-known contrarians.

For example, Bill Gross still recommends buying gold.

Marc Faber says:

“I love the fact that gold is finally breaking down because that will offer an excellent buying opportunity” …. “The bull market in gold is not completed.”

John Hathaway of Tocqueville Funds (with $10 billion under management) says that the selloff in gold is “a contrarian’s dream scenario”:

The evidence shows strong macro fundamentals for gold, investor sentiment at a negative extreme and compelling valuations in the mining shares. It seems like a contrarian’s dream scenario to us.

And Zero Hedge notes that – from the perspective of technical analysis – gold is the most oversold it has been in 14 years.
The Bearish Explanation

But why has gold crashed?

Bloomberg blames:

“Optimism that a U.S. recovery will curb the need for stimulus”; and

“The prospect that beleaguered members of the euro zone might be forced to sell gold to raise part of the funding, and there are much bigger holders in that category than Cyprus.”

Citigroup opines:

Gold decline may have been related to some break in technical levels and the general improvement in global risk appetite.

CNN theorizes:

Monday’s broad decline was sparked by slowing growth in China. The world’s second biggest economy grew by 7.7% in the first quarter of the year, down from 7.9% in the fourth quarter of 2012.

The growth number was higher than the Chinese government’s target for 2013 but much weaker than the 8% most economists were expecting.

Other China data also raised doubts about the health of the global economy – industrial production slowed to 8.9% in March against economists’ forecasts for about 10%.

The weak China data could mean reduced demand for commodities from the world’s second biggest economy and subdued inflationary pressures. Gold is often viewed as a safe store of value when prices are rising.

Larry Edelson writes:

You have to realize that sometimes gold is money … and sometimes it’s not.

Right now, gold is not money. Just consider what’s happening in Japan. The wicked and aggressive devaluation of the Japanese yen is setting off a massive stampede OUT of gold and into cash and other assets.

***

Why are the Japanese dumping gold, especially when their currency is being devalued?

It’s simple. The fall in the Japanese yen caused the price of gold in yen to spike sharply higher. So Japanese investors are cashing in their profits.

In addition, Japanese investors want to either spend their gold proceeds, or move it into other assets. They need liquidity. And holding on to gold is not a liquid situation.

It’s very easy to understand. This sort of thing is also happening in Europe, where gold demand is also down.

Why? Because if you have money in a bank, Cyprus has proven that European leaders will stop at nothing to try to solve Europe’s crisis, even if it means confiscating your money from your bank.

Gold’s not going to do you much good in that situation. If you take your money out of the bank and buy gold, how are you going to pay for the basic necessities in life?

Moreover, how are you going to move your gold out of the country, if that’s what you wish to do (which many Europeans are indeed doing)?

Moving physical gold around isn’t so easy either. It takes time and money to move your gold. And even then, you won’t know how safe it is, because in the back of your mind there’s always that fear that your gold could be confiscated.

The bottom line: While gold is indeed the ultimate long-term store of value against depreciating currencies and failing governments, there are times when forces that are seemingly bullish for gold are actually bearish.

Business Insider argues:

[Gold's price collapse] vindicates the economic ideas of the economic elites.

***

To respond to the economic crisis, economists and mainstream policy makers have favored highly unusual policy measures (massive Fed balance sheet expansion, massive stimulus, etc.). These ideas are usually based on years of traditional economic research (Keynesianism, monetarism, etc.).

All of these ideas have been slammed by heterodox types like Austrian economists, who have warned of hyperinflation, and gold going to $10,000.

So the collapse in gold is not about gold, but about vindication for a large corpus of belief and economic research, which has largely panned out. It’s great that our economic elites know what they’re talking about, and have the tools at their disposal to address crises without creating some new catastrophe.

Things aren’t great in the economy, but the collapse/hyperinflation fears haven’t panned out, and the decline in gold is a manifestation of that.

Barry Ritholtz writes:

History shows Gold trades differently than equities. Why? It comes back to those fundamentals.

It has are none.

This is not to say gold is not affected by Macro issues. But that is very different than saying Gld has a fundamental value, an intrinsic worth. It does not. That led to this heretical advice: Gold is not, and can never be, an investment. It has no true intrinsic value, no cash flow, no earnings, no coupon. no yield. What people call fundamentals are nothing more than broad macro analysis (and how have your macro funds done lately?). Gold is the ultimate greater fool trade, with many of its owners part of a collective belief theory rife with cognitive errors and bias.

I do not want to engage in Goldenfreude — the delight in gold bugs’ collective pain — but I am compelled to point out how basic flaws in their belief system has led them to this place where they are today.

Gold does trade technically, and is especially driven by the collective belief system of the crowd. When that falter, well, you know what happens . . .

Gold Bug View

Gold bugs, on the other hand, see things quite differently.

Andrew Maguire says that the crash is solely in the paper gold market … and that there is actually a shortage of physical gold. Many other sources make the same claim.

Egon von Greyerz – founder and managing partner at Matterhorn Asset Management – argues:

They shouldn’t be concerned about the temporary pressure on gold. This decline has nothing to do with the physical market because enormous demand for gold continues.

The paper market in gold is not a real market, and at some point in the near future paper gold holders will wake up and realize they are holding are worthless pieces of paper. This is when the world will witness one of the greatest short squeezes in history as investors panic in to physical and the price of gold explodes to the upside.”

London bullion dealer Sharps Pixley thinks that the crash was largely initiated by a single entity:

The gold futures markets opened in New York on Friday 12th April to a monumental 3.4 million ounces (100 tonnes) of gold selling of the June futures contract in what proved to be only an opening shot. The selling took gold to the technically very important level of $1540 which was not only the low of 2012, it was also seen by many as the level which confirmed the ongoing bull run which dates back to 2000. In many traders minds it stood as a formidable support level… the line in the sand.

Two hours later the initial selling, rumoured to have been routed through Merrill Lynch’s floor team, by a rather more significant blast when the floor was hit by a further 10 million ounces of selling (300 tonnes) over the following 30 minutes of trading. This was clearly not a case of disappointed longs leaving the market – it had the hallmarks of a concerted ‘short sale’, which by driving prices sharply lower in a display of ‘shock & awe’ – would seek to gain further momentum by prompting others to also sell as their positions as they hit their maximum acceptable losses or so-called ‘stopped-out’ in market parlance – probably hidden the unimpeachable (?) $1540 level.

The selling was timed for optimal impact with New York at its most liquid, while key overseas gold markets including London were open and able feel the impact. The estimated 400 tonne of gold futures selling in total equates to 15% of annual gold mine production – too much for the market to readily absorb, especially with sentiment weak following gold’s non performance in the wake of Japanese QE, a nuclear threat from North Korea and weakening US economic data.

***

By forcing the market lower the Fund sought to prompt a cascade or avalanche of additional selling, proving the lie \; predictably some newswires were premature in announcing the death of the gold bull run doing, in effect, the dirty work of the shorters in driving the market lower still.

Gold Core’s Mark O’Byrne agrees.

James Rickards thinks the Fed is manipulating the gold market (and every other market).

Former assistant Treasury Secretary Paul Craig Roberts says:

Rapidly rising bullion prices were an indication of loss of confidence in the dollar and were signaling a drop in the dollar’s exchange rate. The Fed used naked shorts in the paper gold market to offset the price effect of a rising demand for bullion possession. Short sales that drive down the price trigger stop-loss orders that automatically lead to individual sales of bullion holdings once their loss limits are reached.

***

According to Andrew Maguire, on Friday, April 12, the Fed’s agents hit the market with 500 tons of naked shorts. Normally, a short is when an investor thinks the price of a stock or commodity is going to fall. He wants to sell the item in advance of the fall, pocket the money, and then buy the item back after it falls in price, thus making money on the short sale. If he doesn’t have the item, he borrows it from someone who does, putting up cash collateral equal to the current market price. Then he sells the item, waits for it to fall in price, buys it back at the lower price and returns it to the owner who returns his collateral. If enough shorts are sold, the result can be to drive down the market price.

***

Bullion dealer Bill Haynes told kingworldnews.com that last Friday bullion purchasers among the public outpaced sellers by 50 to 1, and that the premiums over the spot price on gold and silver coins are the highest in decades. I myself checked with Gainesville Coins and was told that far more buyers than sellers had responded to the price drop.

***

In addition to short selling that is clearly intended to drive down the gold price, orchestration is also indicated by the advance announcements this month first from brokerage houses and then from Goldman Sachs that hedge funds and institutional investors would be selling their gold positions.

***

I see the orchestrated effort to suppress the price of gold and silver as a sign that the authorities are frightened that trouble is brewing that they cannot control unless there is strong confidence in the dollar.

Roberts also says:

This is an orchestration (the smash in gold). It’s been going on now from the beginning of April. Brokerage houses told their individual clients the word was out that hedge funds and institutional investors were going to be dumping gold and that they should get out in advance. Then, a couple of days ago, Goldman Sachs announced there would be further departures from gold. So what they are trying to do is scare the individual investor out of bullion. Clearly there is something desperate going on….

Indeed, this may tie into the Federal Reserve leak of insider information. Specifically, Roberts writes:

The Federal Reserve began its April Fool’s assault on gold by sending the word to brokerage houses, which quickly went out to clients, that hedge funds and other large investors were going to unload their gold positions and that clients should get out of the precious metal market prior to these sales. As this inside information was the government’s own strategy, individuals cannot be prosecuted for acting on it. By this operation, the Federal Reserve, a totally corrupt entity, was able to combine individual flight with institutional flight. Bullion prices took a big hit, and bullishness departed from the gold and silver markets. The flow of dollars into bullion, which threatened to become a torrent, was stopped.

As Congressman Grayson pointed out in a recent letter, right after the Federal Reserve’s Open Market Committee leaked valuable inside information to big banks, Goldman told its clients:

We recommend initiating a short COMEX gold position ….

[ThePythonicCow]

The interested reader can also find further comments on the crash of the last few days in gold and silver prices scattered on three other threads:

How The Gold Price Is Being Manipulated (http://projectavalon.net/forum4/showthread.php?58139-How-The-Gold-Price-Is-Being-Manipulated)
Major gold, silver and copper mine in Utah shutdown by landslide (http://projectavalon.net/forum4/showthread.php?58152-Major-gold-silver-and-copper-mine-in-Utah-shutdown-by-landslide)
Doug Hagmann's DHS insider update: “IT HAS BEGUN.” (Post #80 and onward) (http://projectavalon.net/forum4/showthread.php?57144-Doug-Hagmann-s-DHS-insider-update---IT-HAS-BEGUN.--&p=661834&viewfull=1#post661834)

[giovonni]

me thinketh this might perhaps be the real false flag event of today ?

[ThePythonicCow]

me thinketh this might perhaps be the real false flag event of today ?

Perhaps this one isn't false ... perhaps it's real ... someone who is buying a lot of gold keeping the price down?

From Zerohedge (http://www.zerohedge.com/news/2013-04-15/monday-humor-and-question-everyone-should-ask):
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/04/20130415_whosbuying_0.jpg

[Prodigal Son]

Lol... didn't the annunaki create the human slave race to mine gold?


PS - I aint selling mine anytime soon.... let it keep "crashing", excellent buying opportunity. Want to beat them at their game? Learn the game, do the opposite of what they want ;)

[Tesseract]

Gold and silver have been way over valued for some time, IMO. I shorted silver derivatives the last few days, starting before the Friday carnage, and made about 100% profit before closing my position. I should have waited longer, but still, it was a nice return. Beat that, stackers! :)

[crosby]

here's a story that i just read from goog news.

http://www.forbes.com/sites/afontevecchia/2013/04/15/hedge-fund-billionaires-john-paulson-and-david-einhorn-lost-640m-in-gold-bloodbath/

"Hedge Fund Billionaires John Paulson And David Einhorn Lost $640M In Gold Market Collapse



John Paulson took a big hit on his gold holdings

The gold bloodbath that hit the market over the past two trading sessions has definitely caused a dent in the portfolio of billionaire hedge fund managers. John Paulson and David Einhorn suffered combined losses of more than $640 million since Friday, according to their latest SEC filings, with the bulk concentrated in the former’s massive position in the SPDR Gold ETF. Einhorn’s Greenlight took a big hit on its holdings of the gold miners ETF."

im crying crocodile tears for these creeps!!!!!!!
regards, corson

[gripreaper]

Be greedy when others are fearful, and fearful when others are greedy.

The massive fear in the last few days, with the subsequent unprecedented collapse in the metals markets, the likes of which we have not seen in 30 years, means...

If you have any dry powder laying around, go buy some metals.

[Tesseract]

Be very careful about buying any metals right now - there may be a spike up sometime this week, but it will probably be short lived. There are a few ways to try and play this - if there is a slight rebound, going short may be the thing to do.

[Jeffrey]

I'm not worried about making money on the metals. I'm counting on buying the silver cheaper and stocking up for the time when people would much rather have the silver to pay for goods and services than the dollar.

[Tesseract]

More money --> buy more silver

[Jeffrey]

More money --> buy more silver

True, true. I also don't have the money to take any risks! :p

[Prodigal Son]

More money --> buy more silver

True, true. I also don't have the money to take any risks! :p

The problem with silver, is that when TSHTF, you're not running anywhere very fast with the forklift required to transport it.... i might as well use it to fortify my bunker ;)

[Jeffrey]

A few sacks of silver dimes aren't difficult for me to carry. I travel light.

[thunder24]

http://www.coinflation.com/coins/1946-1964-Silver-Roosevelt-Dime-Value.html

http://www.coinflation.com/coins/1916-1945-Silver-Mercury-Dime-Value.html

how big are those sacks?

[Tesseract]

More money --> buy more silver

True, true. I also don't have the money to take any risks! :p

Yes, stay away from derivatives in particular if you can't afford to take a risk. I'm currently getting destroyed on a particularly stupid currency trade I started a couple of weeks ago.

[Jeffrey]

http://www.coinflation.com/coins/1946-1964-Silver-Roosevelt-Dime-Value.html

http://www.coinflation.com/coins/1916-1945-Silver-Mercury-Dime-Value.html

how big are those sacks?

I'm banking on the prospect that the historic (price) ratio between silver and gold will be restored along with the rising price of the metals.

Yet, maybe I should hedge my bet and invest in s'more sacks ... and one of these:

http://www.santons.net/images/animals/P01_28368880028236.jpg

[Sidney]

Thats why they say invest in physical gold, not paper. Lets face it. Paper is not gold. its black ink on shredded wood pulp. Only really expensive wood pulp.

[donk]

Be greedy when others are fearful, and fearful when others are greedy.

The massive fear in the last few days, with the subsequent unprecedented collapse in the metals markets, the likes of which we have not seen in 30 years, means...

If you have any dry powder laying around, go buy some metals.

Agreed...this seems to be a grab of the real stuff. You can't purchase large amounts of it without it being relatively traceable. I think people are scared of what we were talking about here:

http://projectavalon.net/forum4/showthread.php?58052-The-real-value-of-Gold

People fear "confiscation" of their contracts (as the precedent has already been set), and these days I'm sure large enough to bother with stores of the actual metal could be easily jacked if the Feds were so inclined...this whole thing reeks, history repeating itself, the same sick bloodline profiting from panic it probably completely manufactured again.

I'm not pretending to have any idea what's going on, but we'be been in no-man's land for awhile, and the only thing consistent is that someone's profiting from disinformation, lies, panic, and fear.

[donk]

And remember, nothing is ever more valuable than tangible useful things. You can't count on any "markers", be it paper, precious metals or gems or other shiny things holding their faith based value forever.

The only thing more valuable than stuff you actually use is personal relationships, which I find to be the wisest investment choice for my time, energy and resources...much love my friends

[Selene]

Well. What a great discount sale on silver today…! I bought a few bullion coins this morning at my local bank/ScotiaMocatta. The line was long, some freaked gold holders were selling. But most of my fellow metals buyers were Asians, Indians, Europeans and savvy.

Buy when all others are selling, for sure.

Coupla good indicators of a panic washout: Kitco.com’s site was down, Scotia’s own quote system was slow, the retail/public line was long, instead of the usual three tellers there were eight on duty. Busy day. Good indicator of (quiet) panic. So always buy/sell against a panic. That’s for sure. There may be a very few ‘good days’ of further discounts – but this wave could bounce upward. Or if it collapses into the $12 range – I will toss my credentials overboard (and keep the bullion!). But I love a bargain.

I can’t give any kind of financial advice; you are on your own. Think for yourself. Formulate your own strategy. I’m happy with a good deal; haven’t bought bullion at a decent price in a few years. Loving this.

Cheers,

Selene

[gripreaper]

Be very careful about buying any metals right now - there may be a spike up sometime this week, but it will probably be short lived. There are a few ways to try and play this - if there is a slight rebound, going short may be the thing to do.

Did you see the VIX?

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/04/20130415_EOD3_0.jpg

[Ron Mauer Sr]

If one has not already stocked up on dehydrated food, garden seeds, a water filter, soap and simple garden tools then precious metals is a foolish investment.

As the system collapse becomes more severe, when food riots start in the cities, does anyone expect food to be restocked on grocery store shelves?

When grocery store shelves are empty:


How easy will it be for the PTB to manipulate the hungry to give up freedom for a false promise of security and prosperity?
How many gold coins will it take to barter for one stale loaf of bread, if a loaf can be found?

These are the most important yet uncomfortable questions we should be asking.

In a planned and designed financial collapse, a debt free hobby farm may be the best investment of all. If there is any fiat currency remaining after that, then purchase precious metal to preserve whatever wealth is left.

We all need to deprogram, understand the tactics used to enslave us and start thinking out of the box.

I hope there will be a happy ending for all this and we experience a system of freedom (with our precious Bill Of Rights), well being and joy in this lifetime.

[Jeffrey]

Be very careful about buying any metals right now - there may be a spike up sometime this week, but it will probably be short lived. There are a few ways to try and play this - if there is a slight rebound, going short may be the thing to do.

Did you see the VIX?

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/04/20130415_EOD3_0.jpg

Is that a sign that the S&P 500 will drop in a similar fashion as the CBOE Volatility Index? It looks like it.

I'm new to this. Help me learn! Please?

----------

VIX is a trademarked ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market's expectation of stock market volatility over the next 30 day period.

[...]

Despite their sophisticated composition, critics claim the predictive power of most volatility forecasting models is similar to that of plain-vanilla measures, such as simple past volatility. However, other works have countered that these critiques failed to correctly implement the more complicated models.

Source: http://en.wikipedia.org/wiki/VIX

[Tesseract]

Be very careful about buying any metals right now - there may be a spike up sometime this week, but it will probably be short lived. There are a few ways to try and play this - if there is a slight rebound, going short may be the thing to do.

Did you see the VIX?



I don't quite understand your chart grip, VIX soared today as you would expect given a 2% loss on the S&P. I also own VIX June calls which greatly increased in value today after the index increased > 40%, however I have not closed my position yet. This week could have some more chaos to come.

21148

[D-Day]

I'm not worried about making money on the metals. I'm counting on buying the silver cheaper and stocking up for the time when people would much rather have the silver to pay for goods and services than the dollar.

If/when TS(really)HTF people won't be trading with silver (or gold for that matter).

The most valuable commodities in a situation like that would be food, water, shelter, tools/equipment, guns (for hunting/protection), and other hunting/gathering/food growing implements.... as well as knowledge of how to use them.

In other words, gold and silver won't be worth a pinch of piss to anyone if things really do take a turn for the worst and the existing system/s start breaking down.

The smart people out there have (or are in the process of) setting themselves up to be self sufficient/reliant.

At the end of the day, whether the system actually breaks down or not, being able to take care of yourself and your family without needing anything from anybody else will be worth more than any amount of gold/silver one might have.

I personally don't think the current sytem/s will collapse any time soon... but I'd rather be prepared for the worst while hoping for the best than be caught off guard with only a sack full of gold/silver to get me through ;)

p.s. I know you already understand all this vivek but your comment just seemed like a good sprinboard from which to make my point :)

[gripreaper]

I'm just saying, that the fear ran very high and I'd suspect most of the weak hands have been cleared out. The VIX, if you look at the weekly and view a ten year chart, rarely hits such extremes. Don't read too much into it.

Sure, it may take a few weeks to settle out and reach a support level, but I consider this a "blowoff" bottom, which would indicate a reversal in the longer term trend from down, to up. When it starts and how aggressive it will be is anybody's guess at this point.

I usually like to enter on the retest, since I don't like catching falling knives. There is no base, or any indication where that support is at this point.

But, I still think 24 on silver is a bargain, even though the next handle could be as low as 17.

[Jeffrey]

I hear ya D-Day.

All of that is of course important.

Silver and gold lubricate and facilitate trade. A person may have a certain commodity, but they are in need of something they don't have.

So, someone comes along with what that person needed. Yet, that someone doesn't want any commodity that the person is offering to trade.

Silver in this common instance is a useful tool. Silver can be traded because it can be used to purchase goods when one is lacking any particular item to barter.

Historically, it's a healthy hedge to protect against possibilities such as the one just mentioned.

[Mulder]

***duplicate post***

[Referee]

Be very careful about buying any metals right now - there may be a spike up sometime this week, but it will probably be short lived. There are a few ways to try and play this - if there is a slight rebound, going short may be the thing to do.

Really with countries demanding their gold back and the US sending Tungsten. The IMF confiscating Cypruss gold....REALLY Gold is being suppressed.

[Mike Gorman]

I'm not worried about making money on the metals. I'm counting on buying the silver cheaper and stocking up for the time when people would much rather have the silver to pay for goods and services than the dollar.
I think you have something there-Silver is a sleeping giant-the demand for it for micro electronics alone will mean it reaches unprecedented highs -i am going to stock up on Silver during this lull also-smart lad.

[Jeffrey]

Be very careful about buying any metals right now - there may be a spike up sometime this week, but it will probably be short lived. There are a few ways to try and play this - if there is a slight rebound, going short may be the thing to do.

Did you see the VIX?

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/04/20130415_EOD3_0.jpg

Is that a sign that the S&P 500 will drop in a similar fashion as the CBOE Volatility Index? It looks like it.

I'm new to this. Help me learn! Please?

----------

VIX is a trademarked ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market's expectation of stock market volatility over the next 30 day period.

[...]

Despite their sophisticated composition, critics claim the predictive power of most volatility forecasting models is similar to that of plain-vanilla measures, such as simple past volatility. However, other works have countered that these critiques failed to correctly implement the more complicated models.

Source: http://en.wikipedia.org/wiki/VIX

Alright, well I understand what the VIX is now and how it works. Namely, thanks to the above excerpt from Wikipedia and the following videos ...

8TFK2hO3pM4

XMVV4tQ6pm4

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Equity Market

The market in which shares are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies access to capital and investors a slice of ownership in a company with the potential to realize gains based on its future performance.

Source: http://www.investopedia.com/terms/e/equitymarket.asp

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Volatility

In other words, volatility refers to the amount of uncertainty or risk about the size of changes in a security's value. A higher volatility means that a security's value can potentially be spread out over a larger range of values. This means that the price of the security can change dramatically over a short time period in either direction. A lower volatility means that a security's value does not fluctuate dramatically, but changes in value at a steady pace over a period of time.

Source: http://www.investopedia.com/terms/v/volatility.asp

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Margin Call

A broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin. Margin calls occur when your account value depresses to a value calculated by the broker's particular formula.

This is sometimes called a "fed call" or "maintenance call."

Source: http://www.investopedia.com/terms/m/margincall.asp

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Maintenance Margin Requirement

The required amount of collateral or equity needed to maintain a margin account with an exchange. The minimum must be met at all times, but the particular amount required can vary. In the case of two major U.S. indices, the New York Stock Exchange and Nasdaq, the maintenance margin is 25% of the value of the stocks in the margin account. An investor will face a margin call if unable to maintain this minimum level.

Source: http://www.investorwords.com/6572/maintenance_margin_requirement.html

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For definitions of other terms and if anyone wants to understand different kinds of derivatives (in simpler terms), then head on over to this thread: http://projectavalon.net/forum4/showthread.php?58096-Understanding-Derivatives

Spend an hour on the first several posts. You will come out of it more knowledgable; the more time you spend on it, the better you'll understand it.

[Jeffrey]

Okay, so apparently there are different types of VIX indexes. If you see the VIX term tied to some asset/commodity, that just means it's a volatility index for that particular asset/commodity (gold, oil, securities). Just thinking out loud here.

Here is an article from Zero Hedge released today.

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Gold's VIX Term Structure 'Most Inverted' Since Lehman

While there are obviously sellers in the gold market, there is also a dramatic spike in demand for protecting what is still being held (remember there is a buyer for every seller). Gold's short-term VIX (implied volatility) has spiked to 18 month highs above 29% but it is the steepness of the term-structure of volatility that shows just how much protection is being sought. The difference between the one-month volatility and one-year volatility is almost 10 vols - the highest level of inversion (short-term risk higher than long-term) since Lehman. It seems the market is extremely fearful of further volatility in the short-term but less concerned longer-term. What is also worrisome is that the last two times that Gold's VIX was this much higher than the S&P's VIX was June 2006 (when the first hedge funds started to implode from Subprime) and Sept 2008 (Lehman). It appears that gold volatility is signalling counterparty risk concerns once again.

Gold's short-term VIX is its highest relative to medium-term VIX since Lehman as protection is bid...

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/04/20130415_goldvix1.jpg

and it seems the last two times that goldprotection was in such big demand relative to stocks was when counterparty risk was rising once again...

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/04/20130415_goldvix2_0.jpg

Source: http://www.zerohedge.com/news/2013-04-15/golds-vix-term-structure-most-inverted-lehman

----------

So, if I'm understanding this correctly ... when gold's short-term VIX deviates unusually high or low from the short-term S&P VIX, then that's a good indicator that a big default is on the horizon (or at least the market is concerned about counterparty risk) . Anybody care to clarify?

[Conchis]

I'm no expert in this area by any means Vivek, but I think a little clarity in what we're actually looking at will make this make a little more sense. The volatility index is tied to how far out or in the money an option is. So, wide swings in the actual price of the underlying stock (and we are talking paper gold here not physical gold) will drive the volatility index higher. We've had large swings in the price and so, by necessity the index is driven higher. Looking longer term, these short term swings don't have as much impact on the market down the road. There is a lot going on in the financial world right now, not the least of which is the whole EU situation, Japan teetering on the edge of the precipice and the US doing the herky jerky.

The price of gold traditionally has been tied to how well the stock market is doing. When the market is doing well, folks pull money out of gold and put it into the market (it's been doing well), when the market is doing poorly or there are huge inflationary risks, gold rises. A few posts back there somewhere I mentioned that high volatility is where money is made. You can make money in a falling market or a rising market if the market moves enough. It's the stable market that kills short termers. No movement, no money. I think there is a lot of manipulation going on in all of the markets.

I'd be interested in learning more about the relationship you are perceiving though. This may be predictive of Japan's default? That would be interesting.

[Selene]

Very good summary, Conchis. When the VIX goes outside of two sigma as it has here, all that generally means is "instability/stress detected in system ..."

"Something" is likely to give way, "somewhere." But an extreme VIX in itself can't tell you where that weak link actually lies.

We'll see, very possibly. Or else there's a whole lot of scurrying around and papering-over going on at the major players right now, not for the first time. It's like a smoke detector that's going off - where's the fire? Lots of candidates, unfortunately.

Cheers,

Selene

[Ron Mauer Sr]

What does the drop in price mean?

[Selene]

The Accumulation Zone is a really cute idea - but, regrettably, accumulation is nothing new nor unsupported by the historical data. The rich/smarter get richer... no matter what kind of tax system, social system, civilization, history etc you look at. The final result is always the same: 1% of the players end up with 99% of the assets. Every time. Every time. No matter how you structure the game, that's the results. The structure, of course, eventually collapses of its own weight and begins again - but that's also natural.

I've begun to think there is a kind of natural ecology involved in this. It's 'way 'way beyond probability. It's probably part and parcel of our DNA and human nature..

So here we are. The rich are getting richer... ;)

Cheers,

Selene

[donk]

I agree, and often compare it to thermodynamics, which "natural ecology" tends to obey. We run into problems when the system is manipulated counter to those fundamental "laws".

Within the context of our understand, and therefore the models "economy" is based:

Money = energy

Energy cannot be created (or destroyed)

So in theory, the amount of extant money (a store of energy ie "future work") only represents the amount of energy (future work) we are actually capable of producing.

When you mess with that, the "laws" will eventually catch up (ie conservation of energy)


These things tend toward entropy (I feel inflation tends to be indicator of this, perhaps desperate rule changing acts are another example--but in any event, if it is not tightly managed--it will fly apart).

I think your comment selene speaks to the 2nd law--or perhaps how life (and so the abstract systems we create which mimic it) tends to violate it?

[Jeffrey]

The chatter is that the COMEX and LBMA will default soon. This prediction has been touted before. There are many sounding the alarm though. There was an article on Zero Hedge, Silver Doctors, and one other one I can't recall right now. Jim Willie also just did an interview where he said the same thing.

Apparently, this manipulation/naked shorting scheme of the silver market by the Fed and J.P. Morgan may soon unravel.

http://maxkeiser.com/wp-content/uploads/2013/04/EmptyVault-300x212.jpg

Oh, and I think I remember Clif High saying last Sunday that the data indicated something "severe" in the news later this week for gold and/or silver (it could have been the fall on Monday, in which case he nailed).

[WEAREONE]

Native Americans have a different way of living with the land. The 1% of traditional Native Americans and othe Native people does not really fit into the historical model you describe. I think it is possible for a future humanity that has a more balanced approach to living, we will have less stuff. But what we do have will be in many ways priceless, clean water, clean food, working to live, not working to accumulate.. TPTB do not want that system. Luckily I think our true D.N.A/true self longs for this way of living. I think a big enough collapse of the current sysytem is likley to occour soon, We have already fallen of the cliff, just havent landed yet. The current system is not sustainable, IMO the coming correction will start a whole new system.




The Accumulation Zone is a really cute idea - but, regrettably, accumulation is nothing new nor unsupported by the historical data. The rich/smarter get richer... no matter what kind of tax system, social system, civilization, history etc you look at. The final result is always the same: 1% of the players end up with 99% of the assets. Every time. Every time. No matter how you structure the game, that's the results. The structure, of course, eventually collapses of its own weight and begins again - but that's also natural.

I've begun to think there is a kind of natural ecology involved in this. It's 'way 'way beyond probability. It's probably part and parcel of our DNA and human nature..

So here we are. The rich are getting richer... ;)

Cheers,

Selene

[Jeffrey]

----------

US Mint Sells Record 63,500 Ounces Of Gold In One Day (http://www.zerohedge.com/news/2013-04-17/us-mint-sells-record-63500-ounces-gold-one-day)

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/04/Gold%20Mint_0.jpg

[Ron Mauer Sr]

This is definitely a buying opportunity ....



If you will not need to sell for a while, and
If you have a workable plan to get drinkable water, and
If you have food stored, for yourself and some to share
If you have a debt free hobby farm


with enough supplies to last until whatever system rises from the ashes, replacing the current system of debt slavery that is yet to hit bottom and become more widely recognized.

How much will we need? How long to recover and begin to enjoy a comfortable life style? I wish I knew.

[Corncrake]

Some interesting thoughts from Barry Ritholtz's blog 'The Big Picture'

12 Rules of Goldbuggery

The reaction to Gold’s crash has produced some astonishing rationalizations. The refusal to acknowledge basic trading facts leads us to recognize that Gold bugs and traders have very specific rules that they MUST follow. These social conventions look less like a debate about asset classes and more like a religious cult.

The advocates for any sort of investing thesis have their rules, metrics, heuristics and biases. Here are the rules we teased out for the Gold Trade:


http://www.ritholtz.com/blog/2013/04/the-10-rules-of-goldbuggery/

[Referee]

Gerald Celente.....

i6PFZ50EIX4

[PathWalker]

http://blogs.marketwatch.com/thetell/2013/04/18/how-goldman-saw-the-gold-crash-coming-that-others-missed/

How Goldman saw the gold crash coming that others missed
It could turn out to be the forecast of the year.

Goldman Sachs last week cut its gold-price view two days ahead of the start of the biggest decline for the commodity in three decades. So how did the investment bank manage to foresee a rout that others, including hedge-fund billionaire John Paulson, missed?

“You had a whole group of observations that should have created a substantial rally in gold prices, but they didn’t,” Jeffrey Currie, the head of Goldman’s global commodities research team told Bloomberg in an interview a day prior. “The fact that gold did not rally on Cyprus amid the bad U.S. data that occurred in that time period created the conviction we needed.”

The week after Cyprus announced a levy on bank deposits that shocked the investment world, gold rose 0.3%. On April 10, Goldman cut its 2013 forecats to $1,545 an ounce from $1,610 and its 2014 forecasts to $1,350 from $1,490. In February, Goldman slashed its 2013 forecast to $1,550. Goldman made a further move on Tuesday, in the wake of the huge gold slump, to cut its short-term gold call to $1,400, and said it likes natural gas as a better safe haven.

On its heels, Morgan Stanley cut its 2013 view to $1,487. Bank of America Merrill Lynch dropped its 2014 target to $1,838, and sees a medium term target of $1,200, but believes jewelry demand will step up and provide support, helping gold finish at $1,670 this year. (Read: Consumers stay loyal to gold as investors flee). Credit Agricole joined the crowd on Thursday with a end-year 2013 forecast of $1,350, citing a firmer dollar as a key culprit.

Bloomberg pointed out that Currie, a 17-year Goldman veteran, made his best call in 2007, a bullish oil call that yielded 23%. He said the 2007 call was “much more of a contrarian call” than the recent gold calls.

“We were fighting the tape in the sense that you had a substantial pullback in commodity prices into the first quarter of 2007. This time, if you look at a chart, gold was trending downward consistently, so this was less of a contrarian call than ones we’ve made in the past,” said Currie.

Of course, it remains to be seen what happens with Goldman’s copper call. The analysts said back in March that the recent sell-off in raw materials related to Chinese growth has been overdone, and they expect demand will pickup in copper. Prices of copper are down about 14% this year and fell 4% a day prior, and Chinese growth worries were revived with data earlier this week. As Bloomberg pointed out, Goldman has lost about $498 a metric ton since its March copper call.


Very simple, Goldman generated the crash and manage the market.

[Jeffrey]

----------

CBC documentary is about to air ... if anyone is interested.

The Secret World of Gold (http://www.cbc.ca/doczone/episode/the-secret-world-of-gold.html)
THURSDAY, APRIL 18, 2013 AT 9:00 P.M. ON CBC-TV

Excerpt from link:


The Secret World of Gold is a documentary exploring the power and politics of gold, a precious metal with more allure and fascination than any other. Valued for its permanence, beauty and scarcity, people will lie, cheat, steal and kill in the name of gold.

To finance the Third Reich, the Nazis went after the gold of Europe. Allied countries stored their gold offshore to keep it safe. In the first months of the Second World War, the gold of England and France was secretly shipped to vaults in Montreal, Ottawa and New York.

Those ships made it safely to port, but throughout history, many were not so lucky. It is estimated that worldwide, 3 million shipwrecks loaded with treasure lie at the bottom of the ocean. Odyssey Marine, an American company listed on the NASDAQ stock exchange, spends huge amounts of money to search for that gold. But there’s always the risk they will have to hand it over to countries claiming ownership.

In recent years, economic uncertainty is giving gold a new lustre in the world of high finance. Whether it’s a few gold coins or gold bars stored in one of the many vaults around the world, many investors are taking a shine to gold. But there’s not a lot of it. It is said that, even melted down, there would not be enough to fill an Olympic swimming pool (or maybe not - see sidebar).

Some claim that much of the gold held by the Bank of Canada, the Bank of England, the Federal Reserve and Fort Knox is gone — that for every 100 ounces of gold traded, there exists only one ounce of real, physical gold. So, where is the gold — and who really owns it?

Directed by Brian McKenna for Galafilm with CBC-TV.

More here: http://silverdoctors.com/the-secret-world-of-gold-cbc-documentary-to-take-metals-manipulation-mainstream/

[gripreaper]

I'm having some misgivings about how the metals will fare in the next decade, as well as the global economies. I listened to Harry Dent, who I was fascinated by many years ago in regards to his research on how demographics effect economies, back engineered a couple hundred years, at least from the industrial revolution.

It make a lot of sense, since the massive baby boom generation is almost past their peak spending years, he is purporting that we are still in the throes of a prolonged deflation, which we will not see the end of for several years. In a deflationary economy, everything is devalued, debts default, bankruptcies increase, stocks get hammered, metals go down, people lose their jobs, homes get foreclosed on, etc. The 2008 debacle was just the opening ante for this deflation, and he expects at least another 30% haircut in housing, the Dow at about 3600 and gold at 750 before it's all over and we see inflation take off.

Yes, there is an upside. If you short stocks, invest in the pharmas, which will try and keep the boomers alive, and hoard cash, you will be fine. As dollars become scarcer and their velocity decreases, they become more valuable as they will be defended to the bitter end.

I may subscribe to his newsletter. I might be on the wrong track being a metals stacker.

[Jeffrey]

In a deflationary economy, everything is devalued, debts default, bankruptcies increase, stocks get hammered, metals go down, people lose their jobs, homes get foreclosed on, etc.

The main principles of Keynesianism = Every thing in that quote.

[gripreaper]

The main principles of Keynesianism = Every thing in that quote.

Care to elaborate? My understanding of Keynesianism is increasing debt to grow economies, which is ludicrous to me. I'm more from the Austrian school of economics.

[Jeffrey]

The main principles of Keynesianism = Every thing in that quote.

Care to elaborate? My understanding of Keynesianism is increasing debt to grow economies, which is ludicrous to me. I'm more from the Austrian school of economics.

Same with my understanding. Keynesianism leads to everything in that quote. One of the main philosophies of Keynesianism is to basically spend, spend, spend.

In debt? Let's monetize it. Nobody is spending, nobody is borrowing? Let's just print some more money.

It's like trying to dig yourself out of a hole, or it's like trying to fill a hole by using dirt from the sidewalls. Collapse is inevitable, bubbles are inevitable, the extremes of the business cycle are inevitable.

I tend to favor Austrian economic philosophies as well.

I'm also in favor of a gold standard, abolishing the Federal Reserve, bringing back Glass-Steagall, and banishing federal income tax. Just thought I'd throw that in there too.

:)

[donk]

We're in the black magic school of economics, smoke and mirrors conjured from lies.

On top of that, I believe we're currently in no-man's land, making **** up as we go along.

If anyone has/had control, they overextended themselves. Seems to me there's so much fraudulent crap out there (the "gold dump" couldn't have helped) that if we as a species manage to maintain the status quo another couple years the fundamentals will be unrecognizable before too long.

Interesting times

[Jeffrey]

Interesting times

Interesting times indeed.

[christian]

Michael Synder shared ten reasons why the recent developments have resulted in an unprecedenten run on gold and silver, quite compelling.

http://theeconomiccollapseblog.com/archives/10-signs-the-takedown-of-paper-gold-has-unleashed-an-unprecedented-global-run-on-physical-gold-and-silver

[Ron Mauer Sr]

Michael Synder shared ten reasons why the recent developments have resulted in an unprecedenten run on gold and silver, quite compelling.

http://theeconomiccollapseblog.com/archives/10-signs-the-takedown-of-paper-gold-has-unleashed-an-unprecedented-global-run-on-physical-gold-and-silver

Perhaps the government/banksters did not consult the super computers that model human behavior before they manipulated the precious metals market.

Or maybe the PTB did and it is now time to throw the government/banksters to the wolves and take down the system.

Just thinkin' out of the box.

[TargeT]

The main principles of Keynesianism = Every thing in that quote.

Care to elaborate? My understanding of Keynesianism is increasing debt to grow economies, which is ludicrous to me. I'm more from the Austrian school of economics.

Look at who Keyne studied, who shaped his philosophy and thinking in life; what were his Actual ideal society views..

I bet you will find he is a sophist (http://en.wikipedia.org/wiki/Sophism) and if you dig deeper, you might as well call him a Chaos magick (http://en.wikipedia.org/wiki/Chaos_magic)practitioner; as many society shaping idea makers seem to be. These individuals understand the power of belief (belief in an economic system, in money, in authority etc..) and use it as a tool to shape reality / society.

powerful indeed.

The trap they build is layered with detail and trapping thought patterns, don't get caught in the weeds, look at the swamp as a whole to see what it's real purpose is.

[conk]

Ask any Keynes follower this question. So, can we inflate the currency to infinity? No? So, then the system has failure built in?

Same as any Ponzi scheme, the early adopters profit, while those on the tail end suffer.

[AutumnW]

I've followed Ritholtz for a time. He's somewhat conservative, a little bit stuffy. If you believe Ritholtz you have to believe that govts will sit back, let the stock markets crater and let people starve in the streets. They are currently backstopping the mortgage market to the tune of 85 billion a month. Govts can spend their way into inflation easily regardless of generational spending patterns. Obamacare alone plus ongoing military spending will keep US in deficit for a very long time. Ritholtz is way off the mark.

Watch how the so called sequestration plays out. My bet is any govt that radically cuts services at this time will not be re elected. They won't even be able to generate campaign funds from corporations.

[ThePythonicCow]

CBC documentary is about to air ... if anyone is interested.

The Secret World of Gold (http://www.cbc.ca/doczone/episode/the-secret-world-of-gold.html)
THURSDAY, APRIL 18, 2013 AT 9:00 P.M. ON CBC-TV

Jim Willie, CB (aka "The Jackass") has this write-up on this The Secret World of Gold (http://www.cbc.ca/doczone/episode/the-secret-world-of-gold.html) show:




The Jackass heard about the important big bank exposure show back in October from Bill Murphy of GATA. So it has been over six months in arriving on the air. My guess is they removed key negative damning points in order to win approval to present it. However, it was indeed hard hitting in its content. The leading duo from Sprott Asset Mgmt was the driving forces of presenting the case of illicit market controls and price manipulation. The show's title cited the secret world of gold and its hisotry. Of the 30 minutes duration, a sufficient 20 minutes were devoted to the current corrupted gold market, but the information was dense and potent. Sprott and Embry made the case for empty insolvent big New York and London banks, the likelihood for big bank collapses, empty Fort Knox with no gold bullion in reserves, naked shorting of gold futures contracts, frequent price manipulation, and more.

The high impact show featured other notables like Andrew Maguire who focused on gold price manipulation, done on a regular basis with repeated methods. It featured Sporn, the lawyer who won a lawsuit against Morgan Stanley in 2004 for improper vault fee charges without metal in storage for account holders. It featured CFTC commissioner Bart Chilton, but his portrayal was more a buffoon with good intentions with no budget or power. It featured Frank Venoroso on the backgrounds of central bank gold history. It mentioned how Russia & China are in a major accumulation phase, as the Eastern nations are aggressive buyers while the Western nations are working to control the gold market even as they are discharging gigantic volumes of gold from their own banks. Only one factual error was cited. The show claimed that the USGovt paid gold owners in the 1930 decade a price of $35 per ounce. In fact, they were paid only $20 per ounce for their gold. The US Federal Reserve promptly pushed the gold price to $35 in order to recapitalize the US banking system. A small but critical error.

In the October conversation with Murphy, my expressed hope was for the show to be aired and released in full glory. But my suspicion was for it to be heavily diluted in its message. It apparently was not diluted much. Although JPMorgan and HSBC were each cited as chief price manipulator agents, a missing complicitous player in ScotiaBank was not mentioned, a possibly compromise. My concern expressed months ago was that threats of losing broadcast license might be involved, or even threat of having the producer's daughter killed. Plenty of precedent. Last summer, when a CNBC online executive showed a nasty segment on multi-$trillion banker loans arranged by central banks, all his children were killed with their throats cut, and the nanny was blamed and killed (naturally a suicide). See the Canadian Broadcast of the "Secret World of Gold" the DocZone video (CLICK HERE (http://www.cbc.ca/doczone/episode/the-secret-world-of-gold.html)).

[Lost Soul]

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.

BTW, the price was driven down by the sale of 16,000,000 paper ounces. That is more than is mined annually.

Buy it while you can. Many smart Americans have and most online dealers have sold out.

[ThePythonicCow]

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.

[Vitalux]

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 :laugh:

https://i.chzbgr.com/maxW500/6739195392/h1B7F681C/

[ThePythonicCow]

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 (http://www.thedailybell.com/28995/Anthony-Wile-Hugo-Salinas-Price-on-Gold-and-the-Potential-for-500-Years-of-Darkness)) 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) (http://www.thedailybell.com/29007/Antal-Fekete-Who-Said-the-Hydra-Would-Take-It-Lying-Down), 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 (http://www.kitco.com/ind/fekete/sep282007.html) 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 (http://en.wikipedia.org/wiki/List_of_countries_by_credit_rating).)

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 (http://www.professorfekete.com/articles.asp).

[ThePythonicCow]

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 (http://www.goldenjackass.com):




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]

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]

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]

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]

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 (http://projectavalon.net/forum4/showthread.php?58538-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/mcx-to-launch-innovative-1-kg-silver-futures-50542-3-50543.html
http://www.mcxindia.com/Uploads/NewsDocs/PressReleases/2012/September/English/MCXtolaunchtwocontracts-.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.indiatimes.com/2012-11-04/news/34907291_1_silver-contract-mcx-md-multi-commodity-exchange

[ponda]

Hi all,

I stumbled on these posts whilst browsing an article at zerohedge.com at this link: http://www.zerohedge.com/news/2013-04-04/cyprus-shock-turns-anger

The comments can be found here:

http://www.zerohedge.com/news/2013-04-04/cyprus-shock-turns-anger#comment-3410842

and here as well: http://www.zerohedge.com/news/2013-04-04/cyprus-shock-turns-anger#comment-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/wikipedia/commons/7/7a/Venn_diagram_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.wordpress.com/2011/09/global-reserve-currencies1.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-reports-over-239mm-in-gold-positions-buys-25mm-in-call-options-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.