Is the Price of Gold Being Supressed? 6 comments
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24-Hour Gold has put together a nice page that tracks gold prices around the world and compares the spot price to the actual price being paid in the non-rigged free market - Ebay.
As of Nov 21st, here are some of the most recent average completed auction prices for various gold forms: (Keep in mind that gold closed at $801 on Friday).
- 1 Ounce American Eagle - $954 (19% Premium)
- 1 Ounce Buffalo - $968 (21% Premium)
- 1 Ounce Gold Bar Bullion - $942 (18% Premium)
- 1 Ounce Canadian Maple Leaf - $918 (14% Premium)
- 1 Ounce Krugerrand - $935 (17% Premium)
There is plenty of evidence to support claims that the gold price is being suppressed. They naturally do not want gold, being a barometer of inflation and poor market conditions, to go ballistic. They might be able to control various markets, prices, interest rates, but they can’t control the true price of precious metals in the free market. Ahh, if they could only print gold and silver out of thin air like they do with paper money. But the fact that dealers are running out of the physical metal and prices at auctions are so far above the quoted Comex spot price should give even those that doubt this “conspiracy theory” a moment of pause.
Even Fox News recently published an article covering this discrepancy titled “Why Gold Is Down, But You Can’t Get Your Hands on Any.” It isn’t easy to prove or explain what exactly is causing the premium and I don’t claim to understand all of the dynamics. But I am fairly certain that precious metals are extremely undervalued and that Comex prices will begin to catch up to the free market prices.
There is evidence that the upside squeeze in the dollar is now ending. If this is the case, then we should see a bear market rally across all equities start to take hold. The dollar collapse will send commodity prices much higher and push gold back above $1,000 as we move into the new year.
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This article has 6 comments:
Its plain to see the economic quagmire the world has gotten itself into as of late. There are many problems, issue, reasons and fingers being pointed all over the world. I do not wish to expound on all the economic maneuvers the central banks around the world have under taken lets just say the have done everything in their power to pump as much liquidity into the market place as possible. This is the economic dogma of our era, its on page one of all the G20 nations central bank play book. Its a simple theory it states in times of market unrest or panic simply increase the money supply as quickly as possible and get money moving again. Movement is velocity and the velocity of money is how many times it changes hands from one business transaction to another. If velocity is low then you have a slow or stagnant economy if velocity is to high you have a inflationary environment. This is the real job of all the central banks, they are just keeping an eye on the velocity of the economy. Think of them as driving a car and watching speedometer and increase or decrease that speed by stepping on or off the gas peddle which in this case is interest rates. So the central banks around the world in our present crisis stepped on the gas and nothing happened so they stepped harder and still nothing happened finally they pushed it to the floor using all the monetary tools in their bag of tricks but still the economy slowed. The engine had seized.
The problem the central banks are facing is that no matter how much money they physically put in the system or make easily available to borrow from them directly the same thing keeps happening, "flight to quality". Banks, money managers, investors everyone is moving to safety and the perceived safest investment in the world is US Treasury paper. So on one hand the Fed is pushing as much money as possible out the front door and investors around the world are selling off their assets converting their value to cash and then buying US treasury paper which is essentially taking all the money in the back door of the Treasury. The Feds easy money policy is actually making the situation worse because the liquidity is allowing a easy sell off of any financial instruments therefore compounding the fight to quality. The problem with Gold To central banks of the world gold is kryptonite, its the last thing you want around when your trying to run a world economy on a fiat monetary system. It has no fungablity meaning its completely impracticable in financial world run by computers and trying to manage the financial lives of billions of people around the world. Try buying a loaf of bread with a 1 oz gold coin thats worth a $1000.00 So when Nixon took us off the gold standard its been the job of the US Treasury department to keep gold under control and mostly importantly down play its value as a viable investment in our modern world. Gold competes with paper currency as perceived storage place of value and for the fiat currency a constant reminder to the public that paper currency is just that paper and has no intrinsic value other then the perception of value given to it by the government that issued it.
The US treasury in one of the worst kept secrets in recent financial history has been controlling the price of gold for decades. Now I know thats a pretty broad statement and I have little proof other than the research work of the gold bugs but just google “gold price manipulation” and you’ll be well on your way down conspiracy lane. The long and the short of the gold price manipulation is that wall street banks and primarily JP Morgan Chase collectively known as commercial interest on the Comex suppressed the price of gold with the blessing or at the bequest of the US Treasury. These banks where allowed to sell short contracts in unlimited and I am talking millions of contracts in order to keep the price of gold down especially in times of crisis over the last twenty years. Having done this over such a long time and shorting heavily in recent times JP Morgan had established a hugh short position on the NY Comex (as of Q3 2008 it had 95 million open gold contracts). I would have to imagine this was getting quite problematic for JP Morgan as the the real or physical world of gold coins bars etc. was valuing gold at over a $1000.00 oz in contrast to the paper world of gold on the comex where the price was under $800.00. But then JP Morgan was given a gift from the Feds in the form of Bear Stearns, it turns out that Bear was not a participant in the gold price suppression scheme and actually had a huge net long position. This allowed Morgan to wash its short positions against Bears long position and dramatical reduce its over all short position. (www.marketoracle.co.uk...)
New direction
When Lehmans Brothers was allowed to collapse and the commodities bubble burst in the 3 quarter of this year hedge funds where forced into a vicious cycle of forced selling of assets, any liquid assets no matter how prized were thrown up for sale to raise cash and gold was no exception. Now here is where the first clues start turning up that there is a new direction at the Comex. Instead of standing by and watching the gold market sink to incredible lows like what was happening across the street in the stock market and by the way allowing it to cover its short position at prices not seen in years, JP Morgan and the other commercial interest bank on the Comex began to cover their short positions becoming net buyers and holding up the price of gold as the hedge funds unwound their position. This can be seen in the last two weeks Comex gold price action where trading was locked in a very specific band between $700.00 and $750.00 oz as the commercial interest covered their short position. A little web research will quickly confirm that the commercial bank present short interest stands at the lowest point in recent history. The next clue happen yesterday Friday 21st which happens to be the day after the November gold option contract closed. The price of gold shot straight up $50.00 at the open on no apparent news. I submit to that this was not a short covering squeeze but the total lack of opposition from the commercial banks who are suppose to be in front of the price of gold selling short and keeping gold down. The commercial interest may have very well jump to the long side of gold now that they have completely covered their short position. But this would put them in conflict with the treasury. Unless the treasury has changed policy and now wants gold to rise or the Chinese have decided to enter the game with their own markets that aren’t going to manipulated by the Comex boys.news.xinhuanet.com/eng...
Given the 18 to 20% premium above spot prices that physical gold is selling for, and the increasing difficulty of finding physical gold to buy, and the increasing demand for physical gold from countries in the Middle East, and central banks in the EU suspending their scheduled gold sales, somebody is inevitably going to make a tidy profit from taking delivery of COMEX gold, and then selling it to the highest bidder. Who will it be?
The only trouble would be figuring out how to hold onto the profits. Do you hold dollars, or yuan, or a basket of currencies? Do you hold gold or silver or corn? Decisions, decisions, decisions.....
Gold is currently at $816oz... we will see where it goes from here. Eventually, the dollar will devalue and you will have to choose your currency or metal...
As for Jason Hommel, yes, he's been buying 1000oz bars, melting them, making 1oz rounds, and in the process is making a killing! All it takes is $$$ to make $$$.
Economic engineering once again to be proven smoke and mirrors.
Cant print your way to wealth:
www.rapidtrends.com/bl.../