The legal claims on physical gold far exceed the amount of physical gold that the banks actually have by a very, very wide margin. And right now the bankers are scared out of their wits because their warehouses are being drained of physical gold at a frightening rate. So what happens when their physical gold is gone but they still have lots and lots of people with legal claims to gold? When that moment arrives, it will represent the end of the paper gold scam. Many believe that the recent takedown of the price of paper gold was a desperate attempt by the bankers to put off that day of reckoning, but it appears to have greatly backfired on them. Instead of cooling off demand for precious metals, it has unleashed a massive “gold rush” all over the globe. Meanwhile, word has been spreading among wealthy families in both North America and Europe that they had better grab their physical gold out of the banks while they still can. This is creating havoc in the financial community, and at least one major international bank has already declared that it will only be settling those accounts in cash from now on. The paper gold scam is starting to unravel, and by the time this is all over it is going to be a complete and total nightmare for global financial markets. [Read more...]
In this article I will argue that the recent slide in the gold price has generated substantial demand for bullion that will likely bring forward a financial and systemic disaster for both central and bullion banks that has been brewing for a long time.
To understand why, we must examine their role and motivations in precious metals markets and assess current ownership of physical gold, while putting investor emotion into its proper context. [Read more...]
Rick Santelli today gave an EPIC RANT on the difference between physical gold and paper liabilities commonly traded on commodities exchanges.
I don’t even look at gold as gold anymore since they securitized it. If things went badly in the world that I used to observe as a gold bug; the gold would end up in the hands of the gold bugs. If things go badly now, they’re going to end up with checks from ETFs!
Sorry, it’s not the same! The reign of paper gold as the Ayn Rand endgame, to me, that’s over. Game, Set, Match! [Read more...]
Outflows from the world’s biggest gold exchange traded fund, the SPDR Gold Trust (ticker: GLD), continued yesterday for the eleventh day running, taking the total volume of gold held to back GLD shares to its lowest level since November 2011.
“It is really a tug of war between ETF selling and physical buying right now,” says Yuichi Ikemizu, head of commodity trading, Japan, at Standard Bank. “We have seen quite good physical demand from China and Southeast Asia, but the ETF selling has put a lid on gold prices.” [Read more...]
Guest Post, by Guillermo Barba
Today we have an exclusive note on this blog: the Mexican Superior Audit of the Federation (“ASF” in Spanish), in its “Report of Supreme Audit Results of the 2011 Public Account” delivered last week to the Chamber of Deputies, gave a stern “recommendation” to the Bank of Mexico (Banxico) to audit the Bank of Mexico’s gold reserves held in London at the Bank of England.