Over the past several weeks or so there have been some significant developments happening in the gold market that are just too substantial to ignore. Just about any one of these developments could ignite the fuse for a huge gold price explosion. Could a gold price explosion be just around the corner? You decide.
Phyiscal Gold Scandal Brewing
There seems to be trouble brewing around the world on fake gold-plated tungsten bars which have made their way into circulation. I had first heard some rumblings from here and this article by Jim Willie, which some believed to be just rumors. Apparently some proof of gold-plated tungsten bars have shown up at W.C.Heraeus foundry, which is the world's largest privately owned precious metals refiner and fabricator, in Hanau, Germany.
In October, the Hong Kong bankers discovered some gold bars shipped from the United States were actually tungsten with gold plating -Jim Willie Golden Jackass.
The implications of this issue can be far-reaching, since this could trigger deep inspections to verify gold bullion bars stored in vaults around the world as owners become alarmed they may be holding fake gold bullion bars. This could easily lead to new scandals in the Gold/Silver ETFs and places like Fort Knox. You can view the video footage from the German foundry here.
If the gold-plated tungsten bars are not enough to do it, then how about some major scandalous action going on over at the London Bullion Market Association (LBMA), the world’s largest market for trading gold bullion. Just unbelievable.
I estimate that as much as 50,000 tonnes of gold have been sold that do not exist. That is equivalent of all the gold reserves in the world that are yet to be mined -- or, put another way, 25 years of gold production......The fractional reserve operation of the LBMA is likely to be the next Madoff scandal, except multiplied by 100 -- a $5 trillion fraud as opposed to a $50 billion fraud.
Like all financial scandals before it, this one will be exposed just as surely as night follows day. -Adrian Douglas GATA.org
Wow, lots of people who think they own gold will wake up one day and learn they actually don't! You probably don't need anyone to connect the dots for you to see the gold price rocketing into the next galaxy once this scandal is exposed. A very long and detail report with supporting information that should be considered for your bathroom reading list, can be found here.
Possible Comex Physical Gold Shortage in 8 Months ( Sept. 2010 )
Okay now, let's look at some gold action and more significantly non-action going on over at the Comex. The non-action being the Comex's inability to replenish gold and silver bullion leaving their warehouse. This not an issue of just keeping up with demand, but looks to be a bigger issue of possible physical gold and silver shortages in the making. The report shows that the Comex will be out of gold bullion around Sept. 2010 if they are unable to replenish their gold bullion stock.
Having examined six months of delivery and inventory data from the gold and silver divisions of the New York Commodity Exchange.........discovered that bullion dealer inventory appears to be reducing dramatically and is not being replaced. Douglas...... concludes that this likely indicates a worsening shortage of gold and silver bullion. Douglas has published a report on his findings at the Market Force Analysis Internet site under the headline "Comex Inventory Data Reveal an Alarming Trend" ...
To throw some more fuel on the fire, Indian and Chinese (the world's two largest gold consumers) gold demand is off to a strong start so far in 2010. The Business Insider is also predicting a gold shortage in their article, "Brace Yourself for a Big Gold Shortage."
Comex Silver/Gold Futures May Enforce Position Limits
If you have been following the work of silver analyst and expert Ted Butler or the nice folks over at GATA.org, then you can really appreciate the significance position limits for gold and silver could have on the prices of gold and silver.
The U.S. Commodity Futures Trading Commission said on Tuesday it will hold a public meeting on March 25 to examine whether position limits are needed for gold, silver, and copper futures markets.The CFTC, the top regulator for futures markets, has long enforced position limits for grains trading, and is now mulling similar restrictions on the number of contracts speculators can hold for other markets.
The March 25 meeting will look at "the application of speculative position limits to address the burdens of excessive speculation in the precious and base metals markets; how such limits should be structured; how such limits should be set; the aggregation of positions across different markets; and the types of exemptions, if any, that should be permitted," the CFTC said in its official notice. src -Reuters via GATA.org
After many years of petitioning the CFTC and complaining about fraudulent commercial short positions suppressing the price of gold and silver, finally the CFTC may be taking steps toward cleaning up the fraud. If enacted, it is expected that the silver/gold prices will rise substantially and very quickly. The CFTC has scheduled a meeting this month March 25th, 2010 to discuss the feasibility of imposing position limits on the US metals market.
Disclosure: No positions