nononameo

Law of Supply & Demand Is Dead for Gold & Silver

There's always a premium of coinage above bullion, but the premium is increasing, as the price is falling.

The thing that a lot of people don't understand is that the physical dealing in gold is a small fraction of the notional value of the derivative trading. Therefore, it's almost trivial from a monetary standpoint for the FED to have a few of their banks short the futures to cap the price.

They were all saying a few months ago that the big problem was "inflation indicators" and that something needed to be done. They just took the direct approach. They shorted the market down to whatever price they chose.

What would blow their scheme out of the water? If a large player wanted physical delivery on the contract, then you can't deliver what you don't have and it would cause the mother of all short squeezes.

So when the Chinese of a few of the Saudis decide they want a lot of the real thing, if they just stood for delivery in the futures markets they would basically wipe out the western banking system because the price of gold would soar, indicating a complete loss of confidence in fiat money and the currencies would be defacto collapsing against intrinsic value.