For the past few weeks, spot gold prices seem stuck around $1600/oz. But wait! If I go online or to local bullion dealer, I can barely get an ounce of gold for less than $1800! Why is the bullion dealer selling it for so much more? Of course, this is wrong question! The right question is why is the listed spot price of gold so unnaturally low on the COMEX?
If you try to take physical delivery of an ounce of gold today, you will be lucky to find any……even at $1800. There is NO supply! At the same time, the coronavirus has many believing we are on the verge of Great Depression 2.0 (and I think we are!). To protect themselves, citizens worldwide have been ordering physical gold like never before! Basic economics of high demand and low supply would therefore dictate higher prices. The physical market reflects reality, whereas the COMEX does not!
When gold is traded on the COMEX (where “spot” prices are determined), the commodities exchange cannot distinguish between actual real gold being sold, or “promises for gold” being sold. Futures contracts are one form of “promise”.
It is important to note that gold is the enemy of “fiat” currencies such as the dollar. Central bankers, and their primary dealers, are the masters of fiat, wanting civilization to utilize their “fake money” instead of gold, or “real money”. The bankers work day and night to ensure gold is “less attractive” than their “fake money” by depressing the spot gold price.
One of the methods bankers use to manipulate the price of spot gold on the COMEX is to dump large quantities of futures contracts on the exchange, instead of real gold. This provides the appearance of a large amount real gold being sold, and lowers the price. When other traders and hedge funds see the price dropping, they will often sell too, depressing the price further instead of getting caught at the bottom of the down trend. This additional selling puts real physical gold on the market. Once the gold prices are lowered, the bankers will buy the physical gold cheaply, and make good on their futures contracts. They sold high, and bought low, profiting the difference. This “rowing” of the gold price has gone on for years!
ALONG COMES THE CORONAVIRUS
The coronavirus sparked panic in the worlds financial markets. The panic instigated an historic rush to own physical gold, so much so that supplies disappeared altogether. The price of physical gold rose dramatically. The higher prices would in turn would hurt a bank having to buy gold on the open market to satisfy a “promise for gold” sold earlier. Selling high, and buying higher causes a loss such banks.
So on February 24th, and again on March 10th, the bankers began viciously attacking gold dumping massive quantities of futures (promises for gold) on the market to pull the prices back down. This worked temporarily, but did not release any phsyical gold to the marketplace. If anything, the low prices caused more buyers to enter the physical market (including myself).
The bankers now have a problem. They can either default on their futures contracts to deliver gold (it is unavailable for them to buy at $1600/oz), or they can take HUGE losses paying the fair market price ($1800+/oz) which is substantially higher than the prices they got selling the futures contracts.
The bankers did neither! Instead, they are in the process of creating a new fake paper gold supply, based on 400oz bars of gold, instead of the standard 100oz quantity traded on the COMEX. This new paper instrument represents a 1/4 fraction of a 400oz bar of gold, and 400oz bars are typically vaulted in London.
A recent article on zerohedge noted a fraud that the COMEX was committing by creating these fractional paper instruments against 400oz bars of gold that don’t exist!!
Needless to say, the gold manipulators have been caught red-handed! The paper contracts and spot price of gold is NOT representative of the real value. Gold buyers are better off if they purchase the REAL physical metal on the open market, while the bankers continue playing with their fake monopoly money! Their fraud and manipulations are now fully in the open for all to see!
With all the trillions of new currency being printed and placed into circulation, watch for the physical price of gold to skyrocket, especially as the gold manipulators scramble to get their hands of the real thing!