Note: Goldman is still propping. It just made a great headline so suck it.

There's trouble brewing with gold yet again -- what, did you think we forgot about the bond market implosion earlier this month? Oh please. Perhaps Timmy has forgotten but you know the Chinese haven't, they're the elephants of American dollars and they aren't going to let a single one slip out of the printer. Hate to break it to you, Zimbabwe Ben, but they've sort of got our number.

Fox News, however, is a tad behind the curve. $1000 gold? Please. I've been saying $1500 by the end of the year if only it can break $1000. Who or what is intent on keeping it down? And what in the hell is going on with the Comex? Well, duh, again.

Via FN:

Gold could go well above $1,000 an ounce in the next couple of years, according to some people bullish on the metal, who say China could boost the yellow metal's price significantly if it takes the policy actions one of its research officials is advocating.

A Chinese academic with ties to the Chinese Communist Party says the People's Republic should buy more gold and diversify its nearly $2 trillion in foreign exchange reserves away from U.S. Treasurys.

Li Lianhzong, director of the economic bureau at the party's China Central Policy Research Office, made the comments at a forum in Beijing that also covered the broader topic of China’s currency on the world financial stage.

Li was cited by Dow Jones Newswires as saying China needs to increase the value of its foreign exchange reserves -- the source “from which we create our fortune.”

GATA Chair Bill Murphy blames Citi alum Robert Rubin for these shenanigans, and I guess "setting the tone" can have its own consequences:

Bill Murphy: It's what we call "The Gold Cartel". The United States government is the main culprit, with "hit men" like Goldman Sachs and J.P. Morgan Chase, and other central banks, like the Bank of England. It's been going on for some time now.

Basically, it all started with [former US Treasury Secretary under the Clinton Administration] Robert Rubin, back when he was the head of Goldman Sachs in London. He would borrow gold from the central banks at a 1% interest rate, and then sell it. He took this idea and made it the essence of his "Strong Dollar Policy" [while at the US Treasury].

Then there was Lawrence Summers, who followed him as Treasury Secretary. He once articulated the relationship between gold and interest rates in his paper, "Gibson's Paradox and the Gold Standard". Keep the Gold Price down, he said, and you keep interest rates down.

Now, the US is very concerned about stock market interest rates, the Dollar and so on. The main way to control all that is to keep the Gold Price down. So they'd borrow central bank gold and surreptitiously put it in the marketplace, via various leasing and swap operations. It's this gold that has kept the price from being $2,000 an ounce – or well over it.

Oh wait! Are we talking about the same Larry Summers who might take over as Chairman of the Federal Reserve if OMGObama decides to give our buddy Zimbabwe Ben the boot? Go figure!

Analysts already write in the manipulation as it's been a reality for as long as there have been hands to stick in the cookie jar. How pathetic is that?

The Fox News article continues (taking a long hard piss on gold is the media's favorite activity right after rubbing Ben Bernanke's balls, apparently):

Some are not as bullish on gold's prospects.

John Nadler, senior analyst of precious metals company Kitco says over the next several months gold's range will likely "remain between $680 and the $980 area.

He says it's been a "struggle" for the gold bulls at the four digit level and that the "onous is on them to prove if we're in the midst of a hypercyle for gold"

"Despite the Armageddonish headlines, the sky ended up not falling and the dollar retains its reserve currency status."

Nadler believes the talk of a the need for a new world reserve currency is merely "jawboning by the Chinese."

Longer term, Nadler says the jury is still out on whether gold can go deep into four-digit territory. For gold to move to $3,000 to $4,000 an ounce, Nadler says “Kim Jong il would have to go nuts” with his nuclear weapons.

Well who said gold is going to $4000 an ounce at this point? That's just ridiculous, even for the doom-and-gloomers (present company included and excuse me, we call it being realistic thank you very much).

For those of you who are still in denial, I warn you now that the big boys are ramping up for a doozy. You thought June was a bit silly? Hold tight and try not to lose your breakfast in the process.

Market Force Analysis says December 2009 gold is working out to look even more astonishing than June futures (with a chart so go check it out):

The bets by bulls outnumber those by the bears by a 2.3 to 1 ratio which is even more bullish than for JUN 2009. The Total Call option interest is 113,663 contracts which is very similar to JUN 09. Furthermore if gold is trading at around $1600 by DEC then 100,000 contracts will be in the money!

I consider option players highly sophisticated speculators. Such large bets are likely being made by some large money interests who are buying out of the money options BEFORE going into the futures market. Buying long futures in large volumes will rapidly drive up the gold price but the massive open interest in the Call Options then allow access to much more futures contracts at the same price by exercising the options and then perhaps taking delivery of the gold. This is bolstered by sources revealing that JPM and GS are buying in quantity. So on the part of JPM this is likely a ploy to try to cover a chunk of their massive short position.

Duh. Duh duh duh.

Goldman and JPM loading up on gold? Uh huh. That's interesting. Hold tight, kids, it's about to get a bit crazy around here...