GOLD

[Jake]

So, e.g. we're going to see $2,500 for real physical gold at the same time as a similar amount of gold 6 months out on the COMEX will fetch only $250 due to doubts about it being delivered?

I'm thinking rather that the congested rush out of paper derivitives will send money searching for the physical thus lighting its fuse. All those paper derivs are rocket fuel for a very small physical market.

I don't see (myself) paper gold at 250-maybe what you paid for it in fiat- if you are lucky. The ETF's etc may serve to crash the gold price but if there is no physical available to buy, then so what? Who cares about paper gold? Except as a vehicle to increase fiat much like a steroid boosted- savings account they would seem rather pointless if it is real gold you were after and not simple fiat returns.

It is hard to think of ETF's in any good light whatsoever except as a mechanism to inflate( and finally deflate) the price. The early quitters may get the inflated exposured gains and would be wise to convert it into physical IMO. The losers will be the late ones with fist fulls of useless cash in compensation (if they are lucky).

[d2thdr]

So, e.g. we're going to see $2,500 for real physical gold at the same time as a similar amount of gold 6 months out on the COMEX will fetch only $250 due to doubts about it being delivered?

 

I ask you why can this not happen? You use a number 2500. Why 2500? Why not 4500?

 

The price of gold in fiat is an illusion. It has been controlled by COMEX. You know that. Now if price of physical is rising exponentially, this gold will not be available for whatever price you offer, unless the seller has a reason to sell. There would still be sellers like Tom O'brien. Once these sellers dry out, and if you want to buy gold, COMEX wont have any to sell or at best they might say here accept 200$ for your paper ounce and be gone. 200$ might not buy you much.

 

[searcher9]

very surprised that no-one has post this yet as it is VERY important.

 

 

paper gold (ETF). :o

 

 

 

http://www.ft.com/cms/s/0/b9859c7e-c99b-11...html?ftcamp=rss

 

Europe’s central banks halt gold sales

 

By Jack Farchy in Berlin

 

Published: September 26 2010 22:08 | Last updated: September 26 2010 22:08

 

Europe’s central banks have all but halted sales of their gold reserves, ending a run of large disposals each year for more than a decade.

 

The central banks of the eurozone plus Sweden and Switzerland are bound by the Central Bank Gold Agreement, which caps their collective sales.

 

The lack of heavy selling is important for gold prices both because a significant source of supply has been withdrawn from the market, and because it has given psychological support to the gold price. On Friday, bullion hit a record of $1,300 an ounce.

 

“Clearly now it’s a different world; the mentality is completely different,” said Jonathan Spall, director of precious metals sales at Barclays Capital.

 

European central banks are unlikely to sell much more gold in the new CBGA year, according to a survey by the Financial Times.

 

 

 

so you won't be able to buy physical in large amounts anywhere soon imo.

You cash in your paper gold, it sits in sterling/dollars/euros.....but you can't buy any physical......uh oh...

[searcher9]

Central Banks' Gold Disposals Drop 40% in Accord, World Gold Council Says.

 

http://www.bloomberg.com/news/2010-09-27/e...il-reports.html

 

 

Central banks and the International Monetary Fund sold about 94.5 metric tons of gold in the year that ended yesterday, the lowest amount under an agreement that began in 1999, according to data from the World Gold Council.

 

Eurozone banks disposed of 6.2 tons, led by Germany, Greece and Malta, while the International Monetary Fund sold 88.3 tons. The figure for the eurozone banks was 96 percent below last year’s 142 tons. The data run through Sept. 14 and the first year of the third five-year agreement ended yesterday.

 

Gold is heading for a 10th consecutive annual advance, the longest winning streak since at least 1920, spurring central banks globally to add the metal to reserves. Combined central bank holdings rose in every quarter since the second quarter of last year, data from the council show.

 

The Central Bank Gold Agreement was announced more than a decade ago because of concern that uncoordinated selling was destabilizing the gold market and driving down prices. Gold fell from a then-record $850 an ounce in 1980 to $253.83 in February 2001. It reached a record $1,300.07 on Sept. 24.

[HPCsoYESTERDAY]

very surprised that no-one has post this yet as it is VERY important.

 

 

paper gold (ETF). :o

 

 

 

http://www.ft.com/cms/s/0/b9859c7e-c99b-11...html?ftcamp=rss

 

Europe’s central banks halt gold sales

 

By Jack Farchy in Berlin

 

Published: September 26 2010 22:08 | Last updated: September 26 2010 22:08

 

Europe’s central banks have all but halted sales of their gold reserves, ending a run of large disposals each year for more than a decade.

 

The central banks of the eurozone plus Sweden and Switzerland are bound by the Central Bank Gold Agreement, which caps their collective sales.

 

The lack of heavy selling is important for gold prices both because a significant source of supply has been withdrawn from the market, and because it has given psychological support to the gold price. On Friday, bullion hit a record of $1,300 an ounce.

 

“Clearly now it’s a different world; the mentality is completely different,” said Jonathan Spall, director of precious metals sales at Barclays Capital.

 

European central banks are unlikely to sell much more gold in the new CBGA year, according to a survey by the Financial Times.

 

 

 

so you won't be able to buy physical in large amounts anywhere soon imo.

You cash in your paper gold, it sits in sterling/dollars/euros.....but you can't buy any physical......uh oh...

 

Hmm, i wonder if the etf purchasers will get grumpy about this or just shrug it off

[romans holiday]

so you won't be able to buy physical in large amounts anywhere soon imo.

You cash in your paper gold, it sits in sterling/dollars/euros.....but you can't buy any physical......uh oh...

Or, you'd just have to buy it again at higher prices... but this only begs the question....why would you sell in the first place.

 

[romans holiday]

http://www.bloomberg.com/news/2010-09-27/e...il-reports.html

 

Central banks and the International Monetary Fund sold about 94.5 metric tons of gold in the year that ended yesterday, the lowest amount under an agreement that began in 1999, according to data from the World Gold Council.

 

Consider also that most of the gold the IMF is selling isn't going onto the open market, but has been sold "in-house"... to other central banks. This only serves to bolster the market price of gold. Another article from the beginning of the month:

 

http://www.bloomberg.com/news/2010-09-10/i...w-222-tons.html

The International Monetary Fund, which set out a year ago to sell about 13 percent of its gold holdings, sold 10 metric tons to Bangladesh for $403 million.

 

The transaction brings total central bank purchases from the fund to 222 tons, according to fund data. India has bought 200 tons, Sri Lanka 10 tons and Mauritius 2 tons. A further 88.3 tons has been sold under the agency’s “on-market” sales program, it said in a statement yesterday.

 

The lender’s executive board approved the sale of 403.3 tons of bullion on Sept. 18 last year as part of a plan to shore up its finances and lend at reduced rates to low-income countries. After selling only to central banks, it expanded sales to the open market in February.

[searcher9]

Or, you'd just have to buy it again at higher prices... but this only begs the question....why would you sell in the first place.

 

 

what if this was a sign:

 

https://www.kitcomm.com/showthread.php?t=66321

GoldSep 10 (GCU10.CMX) traded at $3,401.50 today did you miss it?

 

 

obviously the chart has disappeared now, but I saw it for myself on that very day.

 

afaik, this has never happened before & was being talked about all around the web. iirc one of your very well informed posters put a link up.

 

We all know the disconnect has already happened between paper gold and physical gold, now it's just a matter of time. I think time is very,very short. Days/weeks ??

[searcher9]

Consider also that most of this gold hasn't really gone onto the open market, but has been sold "in-house"... to other central banks. This only serves to bolster the market price of gold. Another article from the beginning of the month:

 

I think you missed a word out Roman Holiday. 'physical'

 

 

"This only serves to bolster the market price of physical gold."

[romans holiday]

Hmm, i wonder if the etf purchasers will get grumpy about this or just shrug it off

Grumpy?

 

Tell me it's not true....

[searcher9]

Hmm, i wonder if the etf purchasers will get grumpy about this or just shrug it off

 

hey man, it's an old article & I can see them getting grumpy about it....yes.

[searcher9]

another link on that 'glitch'

 

http://www.infowars.com/investors-spooked-...s-gold-to-3400/

 

 

any of you 'day traders' ever seen a glitch like this before?

[romans holiday]

Smallest Commodity Moves in 14 Years Mean Precious Metals Best Alternative

 

http://www.bloomberg.com/news/2010-09-26/s...lternative.html

While wheat as much as doubled this year and cotton surged, the benchmark index for commodities is signaling neither inflation nor deflation, spurring investors to bet the best returns next quarter will be in precious metals.

 

The Standard & Poor’s GSCI Index of 24 raw materials, tracked by as much as $80 billion of investments, advanced 1.6 percent since December, the smallest change since 1996. Record gold prices and a jump in copper were wiped out by slumping natural gas and oil prices as slowing growth in the U.S. and China, the biggest fuel consumers, sapped demand.

 

The rally in agricultural commodities has been more about a weaker dollar and the Russian drought than demand for raw materials, said Michael Pento, a senior economist at Euro Pacific Capital in New York, who correctly predicted the collapse in commodity prices in 2008. Investors accumulated record amounts of gold and silver this year to protect their wealth amid concern the world’s economy would falter.

 

“Global growth is not on a tear, primarily with the drag from developed countries on oil,” said Walter “Bucky” Hellwig, a Birmingham, Alabama-based senior vice president at BB&T Wealth Management, which oversees $17 billion. “If there’s a price increase there from higher demand, that’d be indicative of a rebound in the economy.”

 

U.S. consumer prices rose 1.1 percent in the 12 months ended in August, the Labor Department said Sept. 17, below the average 2.6 percent during the previous decade. The Federal Reserve indicated Sept. 21 that it’s now focused on inflation below the preferred long-term range. European Union inflation slowed to 1.6 percent in August, from 1.7 percent in July, the statistics office said Sept. 15.

 

‘Margin Compression’

 

Gains in agricultural commodities are raising consumer costs. Kraft Foods Inc., based in Northfield, Illinois, boosted U.S. prices twice since May on some types of coffee, and Bridgestone Corp. and Goodyear Tire & Rubber Co. announced higher charges for tires. Next Plc, the U.K.’s second-largest clothing retailer, said Sept. 15 that selling prices will rise by 5 percent to 8 percent in 2011 because of cotton.

 

Coffee traded in New York rose to its highest price since 1997 on Sept. 8, rubber touched a 21-month high in April in Tokyo and cotton reached a 15-year high in New York on Sept. 22.

 

Food companies may absorb commodity gains instead of passing them on to consumers, said Evan Smith, who helps manage $2 billion at U.S. Global Investors Inc. San Antonio, Texas.

 

“Higher corn and wheat prices mean the buyers of those things, consumer goods and food manufacturers, will face some pricing-margin compression” because of the “tough economic environment,” he said.

 

......

 

The International Monetary Fund forecast in July that global growth will slow to 4.3 percent in 2011 from 4.6 percent this year. The euro zone may slow to 1.4 percent next year from 1.6 percent in 2010, China’s expansion may be 8.9 percent, down from 10 percent, and the U.S. will be at 2.5 percent, slipping from this year’s 2.7 percent, according to the median of as many as 62 economists’ estimates compiled by Bloomberg.

 

“As far as the idea of booming global growth, I just don’t see it,” Euro Pacific’s Pento said.

 

Oil traded at $76.49 a barrel on Sept. 24, almost half the record of $147.27 reached in July 2008. U.S. gasoline demand slid to the lowest level since October 2008 in the week ended Sept. 10, according to data from MasterCard Inc.

 

Haven Assets

 

Slowing growth sapped a gain of as much as 6.5 percent in the MSCI World Index of equities this year, leaving the gauge little changed and driving investors to precious metals and other assets favored in times of financial stress. Treasuries returned 8.5 percent this year, according to an index from Bank of America Merrill Lynch, while holdings in exchange-traded products backed by gold and silver reached a record, data compiled by Bloomberg show.

 

Gold may rise to $1,315 an ounce by year-end, advancing 1.3 percent from $1,298.10 on Sept. 24, heading for a ninth straight quarter of gains and the longest rally since at least 1975, according to the median of 24 analyst estimates in a Bloomberg survey. Silver may climb 2.8 percent in the quarter to $22 an ounce, an eighth consecutive increase, the longest stretch in at least 35 years, the survey showed. Silver hit a 30-year high of $21.49 on Sept. 24.

 

The survey projected that copper, cocoa, coffee, sugar and soybeans will fall by Dec. 31, while cotton will rise. Corn, wheat and nickel may be little changed.

 

 

[HPCsoYESTERDAY]

another link on that 'glitch'

 

http://www.infowars.com/investors-spooked-...s-gold-to-3400/

 

 

any of you 'day traders' ever seen a glitch like this before?

 

reminds me of the day in 2008 when silver 'glitched' down to $6 on the comex - though i have to say this never materialized (yet )

[HPCsoYESTERDAY]

here we go:

 

 

(credit pix for capturing this at the time)

[kkeegan123]

 

 

Well, just popped over to CID and placed my Sept order... , so prepare for a good correction in the next 24 hours.

 

I went for Elizabeth Sovs @ £205.69 this time.

 

With sterling at almost 6 month highs against the $, I am wary that we could see a weakening of the £ after the early October spending review announcement. On the other hand, if sterling rallies from here, I will benefit when it is time to place my Oct order.

 

JL

 

 

[romans holiday]

Gold is the final refuge against universal currency debasement

 

By Ambrose Evans-Pritchard

 

http://www.telegraph.co.uk/finance/comment...debasement.html

States accounting for two-thirds of the global economy are either holding down their exchange rates by direct intervention or steering currencies lower in an attempt to shift problems on to somebody else, each with their own plausible justification. Nothing like this has been seen since the 1930s.

 

“We live in an amazing world. Everybody has big budget deficits and big easy money but somehow the world as a whole cannot fully employ itself,” said former Fed chair Paul Volcker in Chris Whalen’s new book Inflated: How Money and Debt Built the American Dream.

 

“It is a serious question. We are no longer talking about a single country having a big depression but the entire world.”

 

The US and Britain are debasing coinage to alleviate the pain of debt-busts, and to revive their export industries: China is debasing to off-load its manufacturing overcapacity on to the rest of the world, though it has a trade surplus with the US of $20bn (£12.6bn) a month.

 

Premier Wen Jiabao confesses that China’s ability to maintain social order depends on a suppressed currency. A 20pc revaluation would be unbearable. “I can’t imagine how many Chinese factories will go bankrupt, how many Chinese workers will lose their jobs,” he said.

 

Plead he might, but tempers in Washington are rising. Congress will vote next week on the Currency Reform for Fair Trade Act, intended to make it much harder for the Commerce Department to avoid imposing “remedial tariffs” on Chinese goods deemed to be receiving “benefit” from an unduly weak currency.

 

Japan has intervened to stop the strong yen tipping the country into a deflation death spiral, though it too has a trade surplus. There is suspicion in Tokyo that Beijing’s record purchase of Japanese debt in June, July, and August was not entirely friendly, intended to secure yuan-yen advantage and perhaps to damage Japan’s industry at a time of escalating strategic tensions in the Pacific region.

 

Brazil dived into the markets on Friday to weaken the real. The Swiss have been doing it for months, accumulating reserves equal to 40pc of GDP in a forlorn attempt to stem capital flight from Euroland. Like the Chinese and Japanese, they too are battling to stop the rest of the world taking away their structural surplus.

 

The exception is Germany, which protects its surplus ($179bn, or 5.2pc of GDP) by means of an undervalued exchange rate within EMU. The global game of pass the unemployment parcel has to end somewhere. It ends in Greece, Portugal, Spain, Ireland, parts of Eastern Europe, and will end in France and Italy too, at least until their democracies object.

 

It is no mystery why so many states around the world are trying to steal a march on others by debasement, or to stop debasers stealing a march on them. The three pillars of global demand at the height of the credit bubble in 2007 were – by deficits – the US ($793bn), Spain ($126bn), UK ($87bn). These have shrunk to $431bn, $75bn, and $33bn respectively as we sinners tighten our belts in the aftermath of debt bubbles.. The Brazils and Indias of the world are replacing some of this half trillion lost juice, but not all.

 

East Asia’s surplus states seem structurally incapable of compensating for austerity in the West, whether because of the Confucian saving ethic, or the habits of mercantilist practice, or in China’s case by the lack of a welfare net. Their export models rely on the willingness of Anglo-PIGS to bankrupt themselves.

 

So we have an early 1930s world where surplus states are hoarding money, instead of recycling it. A solution of sorts in the Great Depression was for each deficit country to devalue, breaking out of the trap (then enforced by the Gold Standard). This turned the deflation tables on the surplus powers – France and the US from 1929-1931 – forcing them to reflate as well (the US in 1933) or collapse (France in 1936). Contrary to myth, beggar-thy-neighbour policy was the global cure.

 

A variant of this may now occur. If China continues to hold down its currency, the country will import excess US liquidity, overheat, and lose wage competitiveness. This is the default cure if all else fails, and I believe it is well under way.

 

The latest Fed minutes are remarkable. They add a new doctrine, that a fresh monetary blitz – or QE2 – will be used to stop inflation falling much below 1.5pc. Surely the Fed has not become so reckless that it really aims to use emergency measures to create inflation, rather preventing deflation? This must be a cover-story. Ben Bernanke’s real purpose – as he aired in his November 2002 speech on deflation – is to weaken the dollar.

 

If so, he has succeeded. The Swiss franc smashed through parity last week as investors digested the message. But the swissie is an over-rated refuge. The franc cannot go much further without destabilizing Switzerland itself.

 

Gold has no such limits. It hit $1300 an ounce last week, still well shy of the $2,200-2,400 range reached in the late Medieval era of the 14th and 15th Centuries.

 

This is not to say that gold has any particular "intrinsic value"’. It is subject to supply and demand like everything else. It crashed after the gold discoveries of Spain’s Conquistadores in the New World, and slid further after finds in Australia and South Africa. It ultimately lost 90pc of its value – hitting rock-bottom a decade ago when central banks succumbed to fiat hubris and began to sell their bullion. Gold hit a millennium-low on the day that Gordon Brown auctioned the first tranche of Britain’s gold. It has risen five-fold since then.

 

We have a new world order where China and India are buying gold on every dip, where the West faces an ageing crisis, and where the sovereign states of the US, Japan, and most of Western Europe have public debt trajectories near or beyond the point of no return.

 

The managers of all four reserve currencies are playing fast and loose: the Fed is clipping the dollar; the Bank of England is clipping sterling; the European Central Bank is buying the bonds of EMU debtors to stave off insolvency, something it vowed never to do just months ago; and the Bank of Japan has just carried out two trillion yen of “unsterilized” intervention.

 

Of course, gold can go higher.

 

I see Robert Murdell [the architect of the Euro] stated on Bloomberg that there has never been such currency instability in the past few thousand years.

 

[d2thdr]

I looked back but cannot see Jake having answered this question.

 

I admire the writings of FOFOA - especially his use of language to explain difficult concepts and have learned a great deal. However, this last part about a paper price of 200 USD or any other price for that matter when no physical is available is something I just cannot understand. When no physical is available for fiat currencies, how can any price be generated as there will be no value at all in paper claims and their price will be zero.

 

 

Ok Schaublin,

 

Here is the answer you are looking for explained by the best economic writer on the internet FOFOA

 

 

A fiat system cannot exist without a functioning counterweight, and today's mountain of derivatives is failing at this task.

 

So where does gold fit into all of this?

 

Well, the gold market is part of this massive derivative complex that is currently counterbalancing and supporting the dollar.

 

Today, countless gold analysts around the world acknowledge that gold is a manipulated item. While being on the right track, they are still using the wrong perception to grasp the dynamics of these markets. This lack of perception is what keeps them from positioning themselves and other gold people correctly: positioned to gain wealth when a stake is finally driven through the heart of this paper beast.

 

The efforts of most goldbugs are focused in one direction; to once again make our paper gold markets reflect the true rarity and actual fundamental value of physical gold bullion. I borrow a line from Mr. Moldbug to describe this position: "They are aware that this system does not work at all, but this does not lead them to question the entire tradition. Indeed, since their mind exists inside that tradition, they interpret it as mere reality." In other words, the chances of "gold to the moon" on the COMEX are the same as the US government returning to a gold standard: exactly zero!

 

FOA: Lost in all the confusion is the distinction between investing in the price of gold and investing in gold itself. Perhaps 90% of all the investing in today's worldwide, dollar settled, gold market is done in this first way mentioned. Yes, the market is structured contractually, to settle in gold. However, in practice, in norm, and in past legal precedent, it is accepted that paper gold trading is meant to only capture the price movements in gold while ceding, what could be, controlling physical trades and their price setting function to other market areas.

 

Obviously, this is the way it all started years ago, with the physical trading and its fundamentals dominating the lesser paper trading. But the market evolved with the paper contractual trading becoming 100 or more times the size of the physical side. But everyone already knows all this, right?

 

What doesn't seem to be obvious is the "why for" the paper market grew so large. It grew to dominate because world wide dollar expansion reached its "non hedged" peak. In other words, the dollar's timeline was ending as its ability to produce non price inflationary economic gains came into sight.

 

In order to push dollar holdings further, international players needed and purchased "paper financial hedges" to balance their risk. Within their total mix of derivative hedges were found "paper gold price hedges"; modern gold derivatives. The important thing to remember is that these positions are not and never will be used to demand physical gold. They are held to buffer financial and currency risk associated with holding any form of dollar based asset. To work, these items don't need to really perform "dollar price movements" in the holders favor as much as they need to be present in the portfolio to act as insurance stickers. In that truth, these paper gold positions act like FDIC insurance at our banks.

 

While so many of our gold bulls salivate at the prospects of some player calling for delivery and driving the gold derivatives market to the moon; it ain't gonna happen! Our world of dollar based gold derivatives has grown so large and become so integrated into supporting (hedging) international dollar assets, the central banks will band together to crush any delivery drive.

 

This is in the ECBs interest as I will explain in a moment.

 

If some big player said he was going to take 100 million ozs out of the paper gold market, the Central Bank systems would just order him to trade out for liquidation only and go to the cash market to buy his gold. Don't think I'm confusing Comex positions and their rules as being different from the rest of the world gold market. What works on comex works everywhere when the system is at risk. The controlling governments, who's domain Bullion Banks reside in, would, could and will force those holders of bank busting positions to simply cash out for the good of their system.

 

How many postulated, even just a few years ago, that with the fed expanding the money supply by a year to date "one trillion"; that paper gold could not reflect this inflation? This only further confirms that this form of market "hedge" is failing to function for its owners.

 

Paper gold derivatives became a major force in allowing this last, end time demand for dollars and subsequent surge in its value. This is why Another said it would run way up, even while being inflated, before the end would come.

 

The leverage today will be in a physical gold position, not any other form of gold ownership. By accumulating physical gold today, we are truly walking in the footsteps of giants; advancing with them as they work thru this singular, long term political move.

 

 

You know, modern financial engineering incorporates all the physical factors of "just in time delivery" management, and labels it "just in time dispersion of risk". In other words: they try to take all the perfect workings of a mechanical operation and replicate it into financial dealings. But, financial instruments, while understood by us as being paper bonds, stocks and bank accounts, are actually completely organic! They are, like money, really just concepts of value we hold in our head; not oil filters or fuel pumps we hold in our hands. The "worth" of things is a "value" we mentally create thru countless interactions with each other as we go thru the day: interactions we call "the markets".

 

It's no accident of nature that our world monetary structure embraced derivative expansion as it has over the last ten or twelve years. I think we can say that this modern creation of risk management began around 1988 or so. (It's funny, but I remember living in San Diego and reading a paper about a gold company called Barrick that just started only a few years earlier?)

 

The record of derivative evolution meshes seamlessly with the recent need for supportive dollar currency measures; a strategy of maintaining a failing system that was ending earlier than expected. Truly, in 1990 no one was going to carry the dollar any further, waiting on the endless delays of Euro creation, without some way to hedge risk. We had hit the end of the dollar's timeline too early; we had missed the mark.

 

The US could not physically save the dollar then, neither with gold backing nor the production and sale of real goods. The only answer was to let the dollar kill itself while you create an illusion of risk dispersion in the form of derivative protection; a form of backing if you will. With this "illusion of risk dispersion" in hand, called a derivative hedge, the world currency system and its denominated assets, continued on. This "just in time risk management" was and is adopted into every present day currency that carried the dollar as reserve backing.

 

It's no wonder that Alan Greenspan has commented so often on the need to control derivatives yet has no workable plan to counter their function. Truly this dynamic was created to counter his function and few can understand this! In effect, the dollar was placed on a one way street that required it to be inflated into infinity. All as a means of protecting dollar originators; the US banking system. Dollar leverage, that is actually US liabilities, is now built up endlessly. This all points to a nonstop, end time need for an uncontrollable inflationary expansion by our fed.

 

In our first real test of "just in time risk management" our Fed is and will provide buying power to gobble up any and all risk, "just in time" and without end. It seems that when our "free market" created assets are threatened to be exposed as an illusion of value, Americans embrace any and every form of government socialistic bailout known to man. Perhaps, our much exampled form of a "free market driven economy" was little more than "free as long as derivative risk is covered with social money"... "just in time".

 

Now, we will follow this trend in an accelerated fashion, until all derivative process is exposed as nonfunctional outside a massive hyperinflationary policy. Our wealth is and was nothing but an illusion of safety and created in our own minds. Within this mix is contained all the various gold derivatives we have come to love so well. The future failure of a gold contract does not mean that the long holder gets his price or his underlying good; it means his derivative fails to shelter his exposure by matching his other loses. In terms closer to a gold bug's heart; paper gold in any form will not match up anywhere near the price of free traded physical gold.

 

We are on the road to high priced gold and under priced derivatives. The same thrust will be apparent in all financial derivatives. Further, we are on the road to a fully "cash settled" contract market for gold; here in the US and abroad. In the time ahead, just before serious real price inflation rears its head, look for most all dollar based contract commodities markets to be restructured into pure "undeliverable" cash settlement markets. Markets that, also, many gold producers will be forced to use. The day of big premiums on gold coins and bullion is coming and coming fast.

 

Implore your minds to hearken back to what is real and alive in our world. While standing here among the mountains and trees, our financial perceptions begin a change; recasting our thoughts of accounts and credits into hazy feelings of virtual wealth we never really knew. Suddenly, bonds, stocks and paper investments descend to lower levels of importance.

 

It was as true yesterday as it is today, and will again be so tomorrow; that the touchable things in life are what make us whole as much as they make us wealthy. Our bodies are real, so too is the earth and all upon it: is it such an unreason that our wealth should not be real also?

 

For myself and many others that hear our message, the answer is no. No, it is not unreasonable to clearly own and touch what our efforts in life have brought us. I suspect that during this era, within this moment in time, events will eventually define such logic more clearly and prove it to be sound beyond any doubt.

 

Times change, my friends, history moves on and so too will mankind's perception of wealth. Our perceptions will evolve, not in a forward matter, but rather in an ages old oscillation that returns us back to saving wealth itself; instead of a paper promise of wealth. With a regularity of seasons, as sure as the phases of moons, a changing of "political will" is once again about to redefine what our virtual written worth really is. In response to these changes, often made with little more than the stroke of a pen, mankind will seek a secure position. A position that will more so value an ancient wealth: a golden savings that no politicians could ever write the value of.

 

What "IS" firmly grasped by every major player in this market is: -- If at any time a majority in the market were to attempt to use these paper markets to extract a gross amount of physical product, the rules would not be changed! Rather, the rules would be enforced and the players would be cashed out and sent into the real physical markets to do their deals. Only then would fundamental supply and demand, based on gross dollar liquidity, create a "non virtual" real price for the product.

 

We wanted a free market and a free market is what we got: -- but it doesn't move the virtual price toward the gold bull's favor. Now they are mad because their bets are countered while physical gold advocates scoop up an almost free metal: -- using the liquidity that dollar inflation is producing. Truly, if ever there was a way to profit from gold mining, today, it's by buying this almost free physical gold the mines are producing; while mine players and paper gamblers pound their wealth into the dirt. This is what PGAs call benefiting from the leverage in mining (smile).

 

In a convoluted stretch of reason, "virtual" gold bulls wanted these markets to be regulated so the supply side of these paper creations would pay off on their bets. The bulls wanted to be able to create all the buying leverage they wanted while the bears would be locked into delivering a metal who's total world amounts are fixed. The bulls wanted free leverage without the using full amounts of real cash but wanted the bears to mark to the market with real gold buying power for every wager they made. If there is manipulation in our paper gold arena, it's in this area of investor understanding. What these markets "truly represent" is the misconception about gold in our time.

 

Western paper gold bulls fueled the creation of these markets by supplying the demand for such gold vehicles and governments helped their currencies by using these same as FDIC-like "insurance stickers" on their reserve positions. They all wanted a place where they could bet on gold, using maximum leverage, and not have to fully fund the physical delivery of bullion if it came to that.

 

Somehow in the process, everyone was thinking they were doing an end run around the slow thinking, stupid gold advocates the world over. Hoping that coin and bullion buyers, who were creating the physical demand, would one day feed the leveraged paper profits of paper players. Hoping that the rules would be changed just enough so gold could be kept in a nice tight range.

 

We are seeing the results today of this fraud of a paper game as it comes to an end. It's not nice to watch. Busting not only the dollar factions that played this sector for their best interest, but also denying any profits to the whole gold industry that chose to ignore the long term best interest of gold's market value. The same industry that decided to cater to the singular greed of a small group by sacrificing high gold prices so that leveraged plays would work. In the process they played a political game to limit gold prices from getting too high and will now suffer on the altar of a "gold price without a range".

 

They can call the outcome anything they want: "bullion at a premium to comex" or "comex at a discount to bullion". Either way the whole system is destined to split and leave the paper players holding an incredible bag as bullion runs away with the help of fundamental gold factions in Europe.

 

Many of you are just now having that "a-ha" moment, when the light bulb goes off and you finally realize just how the dollar is doomed and gold will be set free. But then many of you "newly enlightened" ones say "ahh, but this could take decades to unfold." What you don't understand is that it isn't beginning now simply because your understanding is. No, it began 40 years ago and more, and we are right now knee-deep in the final end game.

 

But right now, for perhaps the first time in history, individuals can join central bankers and the true Giants of the world by participating in the ultimate hedge fund. One that, like modern hedge funds, focuses on the hedge itself as the key investment with the most leverage, with the expectation of life-changing returns. And the main differences between this and traditional hedge funds are 1) much less risk, and 2) it is open to ALL individuals, including you!

 

Bear in mind that the gold price is not a simple one-to-one inverse relationship with the dollar. There is a great leverage lurking in there, but it has been largely masked by the artificial abundance of paper gold which weighs down upon the equilibrium price. And even so, since 2002 the dollar value has decline by just 20% on a trade-weighted basis, whereas the gold price has responded with a 300% gain. And the moreso that the public and private parties of the world rightly gravitate toward physical gold instead of the illusion of paper derivative gold as the solid foundation of their savings and diversifications, the moreso you will see this price leverage grow in favor of larger multiples of gold price gains against modest dollar losses....

 

 

 

[drbubb]

BUYING SOME GDXJ PUTS here ... update : daily

- as a partial hedge for CDNX, and my Junior miners

 

[enrieb]

Here is a short radio podcast about the worlds first global money - silver pieces of eight.

 

http://www.bbc.co.uk/iplayer/episode/b00tt...ieces_of_eight/

 

After the introduction of the Guldengroschen in Austria in 1486, the concept of a large silver coin with high purity (sometimes known as "specie" coinage) eventually spread throughout the rest of Europe. Monetary reform in Spain brought about the introduction of an 8-reales coin in 1497.

 

In the following centuries, and into the 19th century, the coin was minted with several different designs at various mints in Spain and in the new world, having gained wide acceptance beyond Spain's borders. The main new world mints for Spanish dollars were at Potosí, Lima, and Mexico City

[Steve Netwriter]

Yay, it's an audio and I can get it here in NZ

Thanks, going to record it for my personal listening pleasure

 

[Wanderer]

OK, if no-one else can be bothered....

 

1304 and counting

[nixy]

OK, if no-one else can be bothered....

 

1304 and counting

 

1296 to 1306 in 20 minutes..

[warpig]

beautiful....

[The Mad Hatter]

That was a pretty convincing bounce through. Like it had been summoning up strength.

 

I bet them shorts are sweatin'...