# Gold Bubble goes POP?

Discussion in 'Business & Economics' started by Believe, Apr 15, 2013.

1. ### joepistoleDeacon BluesValued Senior Member

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If you want to post comments you should do so under your name, not mine. By the way, how about answering the questions Economister put to you?

Gold closed at $1203 in the US today. Dr. Doom (AKA Dr. Roubini, a famed economist), thinks that gold will be under$1000/troy ounce by 2015. At this rate, gold will be well under $1,000 before year end. http://blogs.marketwatch.com/thetel...arbarous-relic-will-trade-below-1000-by-2014/ Even the perpetual gold bug, Jim Rogers, is now a gold bear. Rogers has been hawking gold and commodities for as long as I can remember. That$600/ounce loss has made even Rogers a temporary gold bear...much to the chagrin of his devotees.

Last edited: Jun 28, 2013

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3. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member

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My bag on trip to US got lost so had to by new computer & it has windows 8 OS, which I don't know how to use well. For example can't figure out how to copy link for text posted below, so only tell it is from seeking alpha article: Precious Metals Drop: Blood In The Streets by Hebba Investments

This article states well the longer term POV about gold. I.e. in the end, when Comex has no physical gold, the paper gold shorts will not be able to deliver / buy physical gold at reasonable price / or find a buyer for their contract to avoid the need to deliver. I.e. no buyer want to be in their shoes when the contract term is up an he would then need to buy gold at high price to deliver.

"... 1. Physical Demand is Still Very Strong - Even as mining shares and paper gold prices drop, physical demand is surging. U.S. investor demand for bullion coins is on pace for its best year ever in both gold and silver. While India's central bank continues its war on gold, buyers are flocking to buy on any downturn and even today's drop (6/26/13) was met by demand that outstripped supply in India. "We are unable to give supplies though there is demand we give deliveries after 2-3 days," said Harshad Ajmera, proprietor of wholesaler JJ Gold House in Kolkata.

COMEX warehouse inventories and ETF gold holdings have been dropping as gold is removed and moves elsewhere (possibly to satisfy Asian gold demand), which means that if paper investors change sentiment and turn bullish on gold - they may not find physical gold anywhere close to current prices to fill back these inventory at these institutions.

Additionally, according to the latest U.S. census report, U.S. net exports of gold have risen dramatically and are close to 50 tonnes a month. This number is net of imports, which means that every month a net 50 tonnes of physical gold leaves U.S. shores. We will address and analyze this issue in a future article, but this is clearly institutional selling of investment gold vehicles that is being sent to meet international gold demand. If there was weak physical demand, we would not expect such a large spike in gold exports, but instead this confirms that international investors are demanding physical gold to such an extreme that it is sucking U.S. gold resources to foreign shores.

2. Spot Prices for Gold and Silver are Significantly Below Miner All-in costs - We have documented this in prior pieces, but as a reminder, gold all-in costs for 2012 were close to $1300 per ounce and were rising as of Q1FY12. Silver production costs were even higher as a percentage of current spot, with Q1FY12 all-in costs well above$20 per ounce. This situation is just not sustainable long-term - supplies of precious metals will plummet if prices stay anywhere near current levels. Even Fresnillo, the largest primary silver producer in the world, cannot produce silver profitably at current prices without significantly cutting supply.

Finally, gold production of the miners we analyzed, which incorporates 30% of annual world gold supply, actually dropped in 2012 from 2011 - even as gold prices averaged close to $1700 per ounce. With prices 25% lower than in 2012, we expect gold production to drop significantly, and since mine production satisfies more than 50% of annual world physical demand, this will be a major supply cut for buyers of physical gold. 3. Monetary Bases of Central Banks Continue to Grow - Central banks continue to print money at astonishing rates. The Federal Reserve, Bank of Japan, Bank of England, and even the European Central Bank are all increasing their monetary bases at rates that dwarf anything done in history. The Fed continues to pump$85 billion per month into the financial system - which is 50% of annual gold mine supply (around $110 billion per year at current prices) and more than 500% of annual silver mine supply (around$15 billion per year at current prices). That means that in the span of two months the Federal Reserve adds enough dollars to the monetary supply to purchase every single newly mined ounce of gold and silver.

Simply put, dollars are being created much faster than metals are being mined and eventually the laws of economics will force the price of commodities and precious metals higher. This doesn't even include the actions of the other central banks.

4. The Dollar Based System is Gradually Being Replaced - Central banks have continued to buy gold at an increasing rate even as prices fall. This is a sign that central banks feel that they want more of their reserves in gold and less in fiat currencies - which is something investors need to pay attention to because these are the ones who manage our financial systems. Why would central banks buy gold, and asset that generates no returns, unless they believed it provided a better option than currencies, bonds, and the dollar?

Not only are they buying gold, but they are also increasing U.S. Treasury sales and the latest data indicates that in April they sold the most treasuries since 2008 - not quite the display of confidence in the dollar that a recovering economy would suggest. Gold and silver would benefit greatly from any change in the structure of the financial system, especially if the dollar starts to lose its status as the world's reserve currency. ..."

BTW During 30 minutes of my travel, I talked with an Indian, who happen to be financial advisor with MBA visiting his company's product managers, one day each in several US cities. It is true that India bleeding FX is why they now have an 8% duty on gold imports. He thought that would be done with tax on oil imports instead of gold. Oil and gold imports cause large part of India's currency value fall.

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5. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member

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SUMMARY: As I foretold: Central banks, especially China's are selling dollars* and buying gold, both at the highest rates ever. Do they know something Joepistole does not?

* In China's case, also a great number of other real (Not paper promises of US Treasury) assets, like 20 to 30 years of large daily volume future oil deliveries, food producers like Smithfield (world's largest vertical producer of pork products), mineral ores, etc.

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7. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member

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As I forecast long ago, more are now getting out of Treasuries & bonds:
It seems the herd of "bond vigilantes" are starting to ride. The noise of their thundering hoofs most likely will get others to mount up and get out too.

I can not find good link. (My new windows 8 makes that hard to do.) Quote is from: "... 'Unprecedented' $80 Billion Pulled From Bond Funds ..." by CNBC, Published: Monday, 1 Jul 2013 | 2:55 AM ET By: Matt Clinch PS If you know how to make Windows 8 display the active link, please tell me how. Last edited by a moderator: Jul 1, 2013 8. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member Messages: 23,198 Asia needs more gold vaults as gold leaves the US at ever faster rates. 32.6 billion dollars worth in just one week, last week -See quoted text in pot 64. At price of$1250/oz that $32.6E9 is 2.61E7 oz. Please Register or Log in to view the hidden image! With all "gold ETFs" holding only 6.576E7 ounces (See quote below) the number of weeks like last week before there is no physical gold backing up the paper gold trades is 6.576/2.61 = 2.52 weeks !(less than a month, even if the currently accelerating rate of gold take out for sale to Asian stops increasing.) The last sentence assumes that the price of gold is the price that "paper gold" trades at. About 100 times more paper than real gold taken out trades on Comex. Thus, while there is little danger that Comex will have gold for the long paper gold trader to take, if he wants, instead of sell to another trader his contract, the paper gold can continue to set the price. When fear that Comex may not be able to actually give him the gold is long contract can demand, the price will soar. - Comex will pay what ever it must to buy gold to not default. Those who have real physical gold know they have Comex over a barrel and they will demand high price. I.e. then physical gold will set the price of gold, and that means prices Asians will pay for it. Soon we are in a new era - Asian set the price of gold, unless the US starts to sell from Fort Knox. I strongly doubt it can as US requires five years just to give Germany the gold that is legally their gold, but US does not seem to actually have it. Last edited by a moderator: Jul 3, 2013 9. ### EconomisterRegistered Member Messages: 51 The price of gold has dropped below the cost of supplying it, so it's likely that we'll see prices stabilize, based upon how quickly inventories are readjusted after this sellout. 10. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member Messages: 23,198 I.e. Comex has leveraged its physical gold about 100 fold. It takes very little to completely destroy 100 to 1 leverages, but Comex is unlikely to default. Instead they will buy gold at what ever the seller demands so they can deliver to holders of long contracts who are demanding delivery. In less than a month, Comex will probably be forced to buy physical gold, paying what every the seller demand to avoid defaulting on contracts. - See my earlier calculation of 2.59 weeks or the "six weeks" quoted below from seeking alpha. Note that calculation ignores the almost certain fact as Comex gold for contract delivery approaches zero, the holder of long contracts will try to get their gold out before there is none left in Comex's vaults to deliver. Note top part of second graph below is price of gold, not millions of ounces like bottom part. on 30 June: Please Register or Log in to view the hidden image! I. e. at end of June Comex and all other gold ETFs held 65.76 million ounces of gold, but less than a week later (see graph below) Comex held only 1.17 million ounces of gold that could be delivered as required by contracts. on 5 July: Please Register or Log in to view the hidden image! This clearly shows the difference in curves of graph below. on 14 June: Please Register or Log in to view the hidden image! Eligible metals are those that conform to the exchange's requirements of size (1000 ounce bars for silver and 100 ounce bars for gold), purity, and refined by an exchange approved refiner. Eligible metals are stored at COMEX warehouses on behalf of banks or private parties, but are NOT available for delivery for a futures contract. I.e. only the vertical gap between the two green shaded area is available for delivery. Now 8 - 6.6 = 1.4 is less than half what it was half a year ago 11.2 – 8.3 = 2.9, so another 6 months like that will leave Comex’s vault “deliverable gold” as bare as Mother Hubbard’s Cupboard! Yes and it is obvious: demand for physical gold by central banks and individuals, especially in Asia is now more than twice their historic or 2012 rates. Asians are paying premiums to get physical gold, so if you hold a large long Comex contract now maturing, you ask for delivery and same day sell in Asia to collect a certain profit of the premium. Or if like me, expect gold price to rise when Comex must buy on open market to avoid defaults, you just hold the gold for later sale. Last edited by a moderator: Jul 9, 2013 11. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member Messages: 23,198 I don't fully understand this, but it seems to be saying same thing I have been for a month now. I.e. the paper gold has very little physical gold backing it and large buying by the main dealers is the only way to avoid defaults on delivery contracts. 12. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member Messages: 23,198 Please Register or Log in to view the hidden image! Graph ends before recent collapse of gold price. At the new lower prices, production is falling and demand for physical gold in Asia has doubled! Note at end of the graph, the Shanghai exchange ALONE was delivering more than total global production. The paper gold traders will very soon cease to set the price of gold - the law of supply and demand will produce equilibrium between supply and demand, at a much higher price of course, assuming no gold leaves Fort Knox (and assuming gold said to be there is there and and not already sold to others.) Deliveries from Shanghai vault in 2013 as of five July 13 were 1098.2 tonnes This data from: http://www.goldminerpulse.com/v/shanghaiGoldExchangePhysicalDelivery.php Last edited by a moderator: Jul 10, 2013 13. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member Messages: 23,198 closely related to data & point of post 64 is this data on bond selling only: Please Register or Log in to view the hidden image! As I said in posts 64: " It seems the herd of "bond vigilantes" are starting to ride. The noise of their thundering hoofs most likely will get others to mount up and get out too." The money coming out of bonds is large part of why stocks are at all time high and gold has recovered for less than$1200/oz to close day at $1284/oz. However, the real surge up in gold prices will come when Comex's vaults are nearly empty. - At current rate of long contract holders asking for delivery, that will come in about a month. Already demand for physical gold is greater than mine production. The day of paper gold traders setting the price is over. Now the law of supply and demand rules. Prices will rise until the middle class Asians cease buying at the largest rate they ever have. Then supply and demand will be in equalibrium at new much higher price. This posted in this thread on 28 June - Less than two weeks ago! Last edited by a moderator: Jul 11, 2013 14. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member Messages: 23,198 Middle class Chinese, rapidly growing richer, are adding to India's gold jewelry demand. The rich are buying 1 Kg bars, and paying premiums to get them as supply is short. Please Register or Log in to view the hidden image! Please Register or Log in to view the hidden image! And government too - now buying gold as fast as India is! (even though China is world's largest gold producer for more than three years). - It is dumb to not ask: Why? Second graph shows Chinese Government is getting out of Treasury bonds as fasts as they can despite needing to put most of their trade dollar surpluses into Treasury bonds. * The premium in most of Asia for immediate delivery of 1 Kg bars has been more than 10% for last six months. ** Billy T, me, predicted this backing of RMB bonds with gold (for central banks only initially) more than four years ago in post. I also predicted back then that China would reduce not only the percentage of its reserves in dollar assets, but even the absolute value of its holdings - That started to happen nearly 2 years ago (in 4Q11 See above graph). When it is to China's advantage to get an EVERY YEAR reduction in the cost of its imports with US and EU in deep depression and not able to buy in completion, China will take a ONE TIME loss on its remaining dollar assets. China can crash the value of the dollar any time it wants to by dumping less than half of its Treasury bonds but needs to CONTINUE to reduce its trade with US (now less than 18% of its exports) by growing trade with others, as it is doing by 15 to 55% per year (year on year rates). Also China wants to pay for imports with printed paper, as US has for ~3 decades. When ready (the above now accelerating process is done) China will tell US: Go to Hell. We don't need to sell to you anymore. So we will no longer finance your debts.[/b] Last edited by a moderator: Jul 20, 2013 15. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member Messages: 23,198 Paper gold traders soon will have no gold backing their paper trades. Then the law of supply and demand, not the speculators trading paper gold, will set the price of gold. Much higher as the "vault empty" ETFs will need to pay dearly for the physical gold an increasing number of their Long contract holders are demanding. Either they buy at what ever price holders of physical gold demand or default on their contracts - go bankrupt. The gold ETFs are leveraged more than 100 to one! I.e. value of paper gold traded each day is more than 100 times greater than the gold in the vault. As that shrinks the leverage will be 200 to one, if not that already. 16. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member Messages: 23,198 Only "registered" gold (green curves below) can be used by Comex (et al) to meet demand for delivery by "long" contract holders. The much larger volume of gold (yellow line above) includes gold stored for specific owners. (Mostly big banks etc. and a few very wealthy individuals.) Please Register or Log in to view the hidden image! Compare top graph to same source graph below - Data only 14 days earlier: Please Register or Log in to view the hidden image! See the accelerating decline I predicted. (End of top curve falling steeper.) Gold available for delivery has fallen by 1.17 - 0.95 = 0.22 million oz in only two weeks* (0.11E6 oz/ week) and is now less than 1 million oz. See top curve right end or the 0.95E6 data. I doubt Comex will do what MFGlobal did to "solve" their physical gold shortage. I.e. they will not just take gold belonging to specific owners and use it to meet the demand for delivery, but they could as it is all in the same vaults. Legally deliverable gold will all be gone in only two months, even if the draw down stops accelerating! Then "paper gold" is just that - only paper with no real gold backing it! Note: I don't actually expect that to happen. What will happen is Comex will pay whatever price that the owners of physical gold demand to avoid default. That price probably will be >$2500/oz and climbing as the "Hold-Outs" want at least $3000/oz for their gold. They know that they have Comex over a barrel. The top management does not want to go to jail for selling what they don't have. *This numeric data is given more accurately just below horizontal black line of each graph instead of reading numeric values from the right end of graphs. In fact my reading of the bottom graph would be 1.35, not 1.17E6 oz. The steep accelerating drop probably just started on the last day (5 July13) of the bottom graph and seems to be part of the right margin line. Last edited by a moderator: Jul 23, 2013 17. ### rm simonRegistered Member Messages: 2 Yes I analysis that the gold bubble in increasing in price day by day. And If you have gold bubble then you should not sale them at this time. It will be better for you in future. 18. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member Messages: 23,198 Welcome to Sciforums and the tiny minority that thinks gold prices will soon soar. The dominate view, from the large firms, like Goldman Sucks, Morgan Stanley, to the individual like Joepistole stated in post 57 is very bearish – that gold is headed down still to 1000/oz or below. It is indeed strange how they mutually convince themselves they are correct in spite of the clear and well known facts I have presented in last dozen posts, with some of my predictions already being confirmed. Here are other facts I have only partially described earlier about India's efforts to reduce gold demand with a four fold increase in the import tax in less than one year. Like may good intentions of governments, it is producing exactly the opposite to the desired effect. I. e. Net gold import into India (Imports – exports) are soaring and now the imports are not taxed as illegal smuggling is meeting the centuries old demand for gold jewelry. Yes this is export reduction is like shutting shutting down 10% of gold mine production. Their "negative gold borrowing rates" is a strange way to say "selling gold." I have noted with scary data that gold ETF vaults are handing out their gold to long contract holders who are selling it for the immediate premium gains in Asia. Some are probably not reporting to the IRS these cash deals, so may also benefit with a tax reducing loss on their paper gold too. (Loses say on GLD offsetting gains made in stocks, etc.) Here are a few more interesting sentences from the link quoted above: "The primary reason given by the government for these restrictions is that the current account deficit [CAD] for the country is too high. India has had a CAD for quite a while now, but what is causing the alarm for the financial minister is that the Indian Rupee is weakening and dropping to all-time lows versus the U.S. dollar. They need to do something to stem the fall of the Rupee, and since they can neither raise interest rates (the economy is too fragile) nor cut oil imports; they have chosen to cut on gold imports." Note this is in complete agreement with my last paragraph of post 62 - conversation with Indian CEO during my recent travels in USA. "The first unintended consequence we are seeing is that gold imports to India through unofficial channels have been increasing. Obviously, we would not be able to quantify these amounts, but customs has been reporting a surge in illegal gold imports that have been confiscated, which means that there is probably quite a lot of imports that are not being caught.... this policy may not even solve the CAD problems experienced by the government because rupees will still be exchanged for other currencies to buy gold – it just will not be registered with government officials. One of the things investors should do is to keep an eye on the rupee-dollar exchange rate, if it continues to weaken that may be a sign that government policies are not working and large amounts of gold are still entering India through illegal imports." "The second unintended consequence is related to Indian exports of gold. In May gold exports dropped by almost 14 tonnes of gold year-over-year, while in June they dropped by 24 tonnes of gold year-over-year. This is a significant drop and is equivalent to over twice the amount of gold reserves held by the government of Cyprus – per month!" Recall how gold price fell when Cyprus's economic problems made many fear that Cyprus might be forced to dump all its gold, X tones, on the market? Well India is effectively Removing 2X tons of gold EVERY MONTH from the market! Not just a ONE TIME dump that Cyprus might have made. Gold bears are flat out irrational in their reactions: Fear of a ONE TIME dump of X tones of gold by Cyprus was a "big deal" but REMOVAL of 2x tons of gold supply EVERY MONTH or in a year 24X tons REMOVED from the market is nothing to even mention! The reduced production by higher cost mines due to lower gold prices has also made 2013's gold production about 10% less than in 2012, but they will resume production as gold prices rise. This Indian reduction of 10% is different – It will if any thing become a greater reduction in gold supply to the market as pries rise. Certainly Indian holders of physical gold will not sell it while the price is rising if they are not desperate for cash. Also note that until recently, most gold ever produced was used as "store of value" like at Fort Knox or recycled from old coins and jewelry to make new items that could later be re-cycled when fashions changed. Not true now as much as it was. Modern electronics etc. are returning gold to earthen land fills as they are scrapped. In fact most land fills are a richer gold ore "deposits" than the typical gold deposits gold mines use, but much too small to economically process. I.e. modern economies not only take gold from the ground they put it back in many small uneconomical deposits too! Man is slowly dispersion gold so it can not be economically recovered. Last edited by a moderator: Jul 23, 2013 19. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member Messages: 23,198 Sorry, but I did not see your post 56 or I would have replied sooner. I think you are looking at relatively short up side fluxuations on dollar and economy and the downside fluxuations on gold. For example gold did fall below$1200/oz but is now above $1300/ per oz. Debt is not falling, but as a percent of GDP it can and currently is (at least if one believes the ~3 trillion now in FED's asset base is actually worth 3 trillion and not just more debt that no one wants to buy at any price near "face value" the Fed claims for it). If those bonds and dead mortgages were placed on the market I doubt they could be sold for one trillion. US has lost, and is still losing, economic competitiveness, especially wrt to Asia. US economy is a patient in the intensive care ward - on extrodinary life care with 85 billion of freshly printed cash each month doing little to make it healthy enough to stop that huge infusion. Un employment falls mainly as more get so discouraged that they stop looking for a job so are no longer counted as "unemployed." Yes the dollar has its good days, even good weeks, but when you consider the year on year change there are only drops in value for many decades now. Last edited by a moderator: Jul 23, 2013 20. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member Messages: 23,198 First I note that the decrease in physical "registered" gold available for delivery to holders of long contracts is continuing, but not at the accelerating rate I forecase in post 73. What must have happened, I think, is that the gold was bought to augment the supply, before it got dangerous low. I.e. that is main reason gold held above$1300/oz for more than 10 days in July. Now to main point of this posts (bold text near end):
Yes Peter is a gold bug, but that does not refute his facts or argument. With buying of physical gold already well above production of gold (except probably Chinese production, which does not make even an ounce available to others) The law of supply and demand will soon set the price of gold - not the buyers and sellers of un-backed paper gold. As Peter said: It will be interesting (and profitable for holders of gold or long contracts) to see how high the price must climb to make supply equal demand. (This of course assumes that US does not have much gold it can dump on the market. I.e. there is either none at Fort Knox (unlikely even though last audit was in 1950, and done by their own staff) Or as seems to be the case, others, like Germany, already own the gold there - Germany wants to take delivery of its gold now, but US has told them "we will deliver it in five years." - makes you wonder if Ron Paul was not right - US does not have ownership, only physical possession, of world's largest store of gold.

* That bold text point, I have been making in this thread since telling gold was a "screaming buy" after the April fall. I.e. the registered gold, only form that can be used to avoid defaulting when long contract holders want to take gold (to quickly sell at a risk-free profit in Asia, mainly, as that is where the premiums over gold value are due to short supply of 1Kg bars) is still falling, but more slowing. Probably as stated earlier above, the ETFs and depositories, don't dare to let their supply registered gold get much below a million ounces. If it does, there will surely be a run to get the gold you own before there is none left to give you.

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21. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member

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Not only less gold from mines (see 2nd quote below) which already produce less than physical demand but:
* Yes lying is a better plan for those who are short (sold gold they don't have) especially when Comex vaults are running out of gold they can deliver to long contract holders and Comex must pay what ever price holders of physical gold demand to avoid default and jail time for the CEOs. (It is not legal to sell what you don't own and refuse to buy it from those who do own it.)

BTW for those confused about what gold miner hedging is: Miner can sell gold before it is produced, usually at less than the current price, to get funds now and deliver the gold at an agreed later date. Hedging is usually done when price is quite high to "lock in" that high price. Buyer of the hedge, thinks/hopes price is going even higher. With current price making many mines close, the mines don't want to hedge and are not. Articles telling the miners are hedging are false, and self serving lies by those who are short. As in all things, the truth will come out and the shorts will be hurting as price of gold rises to make supply (including the secondary gold) equal to the demand for physical gold. No one in public knows for sure, but many, including me, believe, Morgan Sucks etc. are up to their old tricks - selling gold they don't have, especially in mid April to cause the large rapid drop in price hoping to "cover their short position" by buying back the paper gold they sold but did not own, at the new lower price they helped to make. I'm betting they will get "caught short" as central bank and Asian demand enforces the law of supply and demand. Demand for physical gold is way up in 2013 vs. 2012.

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22. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member

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Most readers of my gold related posts know that years ago I suggested that when ready,* China would back it bonds for central banks and the IMF with gold, but here is more extreme suggestion - new gold backed currency to directly kill the dollar: http://www.youtube.com/watch?v=BSshr7toYhA Main reasons it will soon be to China's economic advantage to see the dollar die even if China must take a ONE TIME hit on the value of its holdings of Treasury paper (US bonds) is that for decades, as US has done, it can pay for imports with printed paper (Chinese bonds). A secondary, but quite important, EVERY DAY advantage is that with US & EU economies very crippled (in depression) the price of the imports China needs will be much lower than when China had to compete with the US and EU buying too.

* I have described in detail what "ready" means but briefly, China must grow its domestic market larger than its export market to keep its population employed when US and EU can not buy much and redirect it exports to nations that don't need Chinese loans to buy Chinese products. China has made great progress on both these pre-requirements mainly by increasing the purchasing power of the workers by double digits rates annually for several years now, and expanding its non-US or EU trade by 20 to 50% annually while cutting exports to US to less than 15% of the total, etc.

23. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member

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Compare this data to same type graph in post 73. After a two week pause, gold available at Comex to deliver to holders of long contracts is falling rapidly again.

Please Register or Log in to view the hidden image!

On 19July13 Comex had 0.93 million oz now on 9 august only 0.82 million ounces. I.e. in 31 days the gold backing contracts dropped 0.117 million ounces but almost all of that drop was in the lasts week: