It's Going To Implode: Buy Physical Gold - NOW

It's Going To Implode: Buy Physical Gold - NOW
Gordon Gekko
March 11, 2010

http://gordongekkosblog.blogspot.com/2010/03/its-going-to-implode-buy-physical-gold.html

Any unbiased observer who knows how to put two and two together will be able to tell that something very fishy is going on. The urgency with which trillions in debt is being shoved down the market's throat at the worst possible time for the US Economy has the distinct smell of the government trying to extract every last bit of money from those stupid enough to buy the bonds before it all blows up. Rest assured, a huge chunk of this money is being funneled to the insiders who are most likely covertly using it up to buy real assets for themselves while keeping the crowds distracted with the stock market circus.

The bond market is the backbone of the US Ponzi Finance system. When it goes – and the day is not far in my opinion - the whole enchilada will come crashing down. Any type of financial asset that has a counterparty – which is pretty much all the paper assets in the world – bonds, futures, any and all derivatives and yes, even the paper currency – will crash. What will they crash against? Yes, that’s right - Gold. All the world’s capital – trillions, perhaps quadrillions of it - will come rushing into the very tiny physical (NOT paper) Gold market. Remember, the world’s real physical capital – real assets such as land, oil-refineries, mines, infrastructure, etc. will not vanish, only it will be re-priced in terms of Gold and its ownership transferred to those who hold it. Since everything stays on this planet, it is a zero-sum game and the winner will be Gold. In other words, an ounce of physical Gold will command a lot more in real purchasing power than it does today. Just like a national currency is a claim on goods and assets within that country, Gold will be a claim on global goods and assets worldwide.

Paper Gold Will FAIL

Today what you think of the price of Gold is nothing but the price of paper Gold. "What is the difference between the two? We are still getting the metal at the price we see on the COMEX, are we not?", you may ask. Sure, but the key word is still. Even today you have to pay "premium" to the futures price to get physical ranging from about $50 for some coins to about $10 for bars. When it all blows, these “premiums” will skyrocket and the price of physical WILL decouple from the official paper price (this is what the guys at EverBank are scared s--tless about), as we already witnessed in 2008 – and this is the good scenario. Indeed, we may have a situation where there is no physical available at any paper price.

1. The GLD ETF

The problems with the GLD ETF are too numerous to enlist here but why bother when they have already mentioned 'em all in their prospectus! It is simply another Wall Street scam designed to rip off the retail investor and rest assured, when the SHTF, you will be the last in line since the insiders need somebody to hold the bag in order for them to get bailed out. YOU will be the one left holding the bag. Unless you have a direct line to Ben Bernanke, I suggest you get the hell out of any paper ETF’s such as GLD, SLV, etc. Remember AIG? It’s all good until it isn’t.

2. The Gold Futures Market

The futures market is nothing but a tool for the dollar managers (US Government/Fed/Bullion banks) to manage/control the price of Gold. Any rational observer with an iota of brain who has watched the gold market for any reasonable length of time can tell that the price is intentionally driven down during the Comex trading hours. If you don’t believe this, either you’re in denial or worse – collusion - and IT WILL end up costing you big time. Given the massive, concentrated and long-term (the entire past decade - they haven't been net-long - not once - during that time period) nature of their short positions, it really isn’t that hard to deduce that the banks do not nearly have enough metal to cover their shorts and that the sole intention of the massive short position is to control the price. Whenever the price rises (or threatens to rise) the big bullion banks ala JP Morgan create massive naked shorts introducing fake supply of Gold in the market, thus driving the price down. “But the price has been rising for the past decade, hasn’t it? So how can you say they are driving it down?”, many people ask. Well, the constraint on the bullion banks has been the availability of the physical metal. If the metal is not available, the fraud of the paper market is exposed and they lose their price managing ability. So they allow the price rise to a level at which there are some weak hands willing to sell and then they hold it there till all the sellers have been exhausted (I am assuming the Fed has already sold all the US Gold during the past decade). So strong are Gold’s fundamentals that despite the massive rigging, all they have been able to do is slow its rise. The weak hands who sell the physical metal at every price rise have helped them in this endeavor. But soon, as the bond market implodes, they will run out of sellers. Treat the availability of real metal at today's paper price a gift and buy as much as you can.

To those who think that the Comex shorts will be crushed one day and the price of paper Gold will do a moonshot, to them I will say that you are dreaming. The Comex shorts will be crushed, but not in their own casino! If and when a majority of paper Gold longs demand delivery a force majure (who do you think the US Government will side with?) will be declared with cash settlements and/or offers of equally worthless GLD shares (don’t tell me you didn’t know about this). By some accounts, this is already happening. What will happen to the paper price then? That’s right – it will utterly collapse even as the physical’s price is rocketing. Paper gold holders will dump it all to buy the physical – which, unfortunately – will most likely not be available at all. Yes, yours truly has been trading the paper [Gold] markets himself, but only with the objective of converting the paper profits onto the metal. Having said that, in light of the sum total of the recent developments mentioned in this update I think it is too risky to be trading right now and one should just sit 100% in physical Gold and some currency for day-to-day needs.

Additionally, there is increasing evidence that the Europeans have withdrawn support from Wall Street’s paper Gold market (COMEX and the LBMA, which also operates on a fractional reserve basis as documented here) and are in favor of setting up a physical only Gold market (this is quite a long story - for details, I suggest you go through FOFOA’s blog). Jim Willie had this to say in a recent piece (he’s been accurate on many things so far, so I at least pay attention when he has something to say):

Fast approaching is the event of GAME OVER for London, a condition that has already reached critical level, according to a key reliable source of information with London connections and direct experience with its market events. How long can a major metals exchange sell contracts but have miniscule supply of gold in their vaulted possession? The paper gold market and the physical gold bullion market have finally separated in a practical manner, meaning actual gold has almost no role anymore in London paper contract settlement. The absence of gold in London requires extraordinary tactics to settle contracts and to obtain gold bullion. Red tape procedures delay delivery for individuals, and bribes accompany gold delivery demands as standard practice. The London Bullion Market Assn has almost zero gold, its supply having been drained in high volumes since early December, a process currently in acceleration. The opportunity to convert fiat money into precious metal at prices considered reasonable is also vanishing. The London gold banker said,


"There is going on a lot more than meets the eye. The physical system is actually consolidating bigtime and is organizing itself with lightning speed, totally hidden from pretty much anyone, even the so-called insiders. The paper precious metal market and the physical precious metal market have defacto disconnected. The paper and physical gold markets currently operate in parallel universes. The outflow of physical metal from bank vaults is happening at a mind bending pace."

Wall Street and the US Dollar are being increasingly marginalized at the global level with China having instructed its companies to renege on Wall Street’s derivative contracts last year; Russia, Middle-East and China setting up their regional currency blocs; Germany calling for an end to the CDS casino and the recent exclusion of Wall Street banks from European Government bond market. For obvious reasons, none of this is getting much play in the lapdog US media.

Physical Gold in your personal possession is the only thing that will survive the coming financial Armageddon. What we are witnessing right now is nothing but the calm before the storm. Keen observers are hearing rumblings beneath the ground signaling an imminent volcanic eruption. Once it blows it will be too late to take action. Trading paper markets for paper gains is like picking up pennies in front of the steamroller. It’s time to stop trading and just buy the physical metal. The window of opportunity to convert your casino chips (fiat money) into real money, i.e. Gold, is getting smaller by the hour. He who panics first, panics best.

GET. GOLD. NOW.

Why Gold Might Soar Over the Next Four Weeks

Why Gold Might Soar Over the Next Four Weeks
Patrick A. Heller
Oct 28, 2008

http://www.numismaster.com/ta/numis/
Article.jsp?ad=article&ArticleId=5514

Whether or not you acknowledge past efforts by the U.S. government with other governments, central banks and private trading partners to suppress the gold spot price, events coming to pass in the next four weeks could create overwhelming pressure causing much higher gold prices.

Last Friday, the Taiwan government announced that it had completely liquidated its holdings of Fannie Mae, Freddie Mac and Ginnie Mae bonds. If a long-time ally of the United States is willing to admit that it is bailing out of dollar-denominated debt, will other nations continue to show restraint?

Last Friday and Saturday, leaders from 43 Asian and European nations met in Beijing to discuss the global financial crisis. The United States was specifically excluded from this meeting.

These events are just appetizers on what is coming up in the next few weeks:

- Oct. 28: Comex November gold and silver options expire.

- Oct. 28-29: The Federal Open Market Committee meets to discuss, among other subjects, the possible 0.5 percent reduction in benchmark interest rates.

- Oct. 29: Last trading day for COMEX and Chicago Board of Trade gold and silver futures contracts.

- Nov. 4: The U.S. elections will be held and end the need for politicians seeking re-election to try to look good for the voters.

- Nov. 6: European Central Bank meeting at which one of the subjects will be cutting benchmark interest rates.

- By Nov. 10: Adrian Douglas's Market Force Analysis" indicates that the temporary bear market rally in the value of the U.S. dollar will come to an end.

- Nov. 15: The G-8 summit meeting in New York City will discuss plans to reform the international financial and monetary system. There is a strong likelihood that one of the major topics will be the replacement of the U.S. dollar as the major international currency.

- Nov. 20: December gold options expire. Currently, there are about 70 percent more outstanding call options (which gives the owner the right to buy gold at the contract price) than there are put options (which give the seller the right to sell gold at the contract price). If the price of gold starts to rise to any degree, owners of call options might be able to demand physical gold for their contracts at below-market prices. Thus, any modest rise in gold prices could lead to an extreme supply squeeze and rocketing prices.

Other continuing pressures for higher precious metals prices include:

- The TOCOM, the Tokyo Commodities Exchange, provides daily reports of trading positions for major traders. Goldman Sachs and six other firms had huge short gold positions in early 2006. Goldman Sachs and these others have been continuously reducing their short positions. Late last week, Goldman Sachs TOCOM gold position turned into a net long of 370 contracts. The other large short sellers as a group are in their lowest short position in the past 30 months. These companies now have less incentive to want to hold down gold prices.

- There is a significant effort underway by would-be gold and silver buyers, dismayed by the current high premiums for physical gold and silver to purchase December COMEX contracts and ask for physical delivery of the 100-ounce gold and 1,000-ounce silver ingots. Since the COMEX only has a tiny coverage of physical metal for its outstanding contracts, there is a growing risk that the COMEX gold and silver contracts may default. If this occurs, the COMEX allows contracts to be settled for cash rather than gold or silver. If defaults occur, the spot prices for physical gold and silver will soar instantly.

- AIG, America's largest insurance company and beneficiary of over $100 billion in government liquidity over the past six weeks, is still at great risk of financial collapse. From a high of $63.68 per share within the past year, the stock settled at $1.35 on Oct. 27. AIG is widely regarded as holding the largest number of gold and silver derivatives (especially silver) of any company in the world. If it fails, the counterparties on these derivatives contracts could be forced to quickly acquire large quantities of gold and silver to minimize their financial losses.

It would only take one or a few of these events to get out of control for the prices of gold and silver to explode.

The U.S. government and its partners are pulling as many strings as it can to try to hold down prices. A large number of 400-ounce gold bars have been appearing on the market with markings that indicate that they may either be coming from the U.S. Treasury or International Monetary Fund reserves. The IMF is not yet authorized to sell any gold, but apparently can lease gold without restriction. If it becomes public knowledge that the U.S. or the IMF is sneaking gold onto the market to help hold down prices, the news will actually have the opposite effect because it would represent an admission that the U.S. dollar deserves to be worth much less than it is today.

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