Seriously WTF is Going on with Gold... Part 3? Is Anyone Else Seeing This?

Wednesday, November 25, 2009 , , , , , 1 Comments

It didn't come from me. Maybe it did. Whatever. We could all be wrong and this could all be wild gold bug speculation. Zimbabwe Ben and I will get one year older and the gold market will stay relatively stable come December. I'm not talking sane, I'm talking we get another month or two until it goes crazy.

I'm fixated on this at the moment. Sorry but I'm sick of watching Ben Bernanke act like a bitch so this will have to keep my attention for the time being.

Anyway. Further wild speculation: could the US Mint's announcement that it would resume delivery of Gold Eagles to dealers in mid-December have a single thing to do with this lingering rumor about some disaster in gold ETFs at the same point in time?

This whole tungsten thing can't be good for the larger picture, which naturally means further insanity. Zero Hedge gives us some actual numbers that appear reasonable (given the circumstances) but there's still time left in Q4 and if any of this is legit, this is when you're slipping off to the bunker with your stash.

I don't care what you think about rumors about salted bars and the Bank of England bailing out London OTC markets, some things are obvious and it's obviously getting weird over there.

The Golden Truth:

The situation in December gold on the Comex could get quite interesting. As of today's trade date, there are 94,544 open December gold futures contracts. Anyone holding one of those contracts who does not or can not take delivery (1 contract = 100 ozs, or roughly $118,000) of Comex gold needs to have that postion sold by the end of trading Friday. Tomorrow the Comex is closed and Friday will be a low volumn day. The reason for this is that Monday is what is known as "first notice day," which means that anyone long a gold contact (or silver) can be tagged with a delivery notice.

Now, the amount of gold being reported by the Comex as "registered" (not that we trust that number) - which is the amount that is available for delivery - is a little over 2.1 million ozs. If o/i (open interest) on Monday is any where over 21,000 contracts (2.1 million ounces), December could be a very interesting month for gold. In other words, if the open interest at the close of trading Friday is greater than 21,000 contracts, the Comex has a delivery problem. The price will go parabolic.

With the open interest at 94,000+ right now, and with Friday being a very low volumn day, we can expect that the number of contracts that potentially stand for delivery will far exceed the amount of gold available for delivery. Now, contracts can be tendered for cash instead of gold, and someone holding a contract can sell it after 1st notice day. But, anyone holding after Friday must have an account fully funded to accept delivery because, in theory, every single long position on Monday could be tagged with a delivery notice (this never happens but theoretically it is possible). We'll have to wait until Friday afternoon to know for sure, but I suspect the relentless move up in gold prices this week are sniffing out the possibility of a delivery issue as described above.

Like I said, maybe we're all out of our minds. Perhaps if the entire machinery of the gold market were more tangible and less made out of paper (by law, mind you), it wouldn't be 90% wild speculation and 10% actual physical metal.

Again, JP Morgan, Goldman Sachs, and I guess Deutsche Bank, this goes out to you sad, sad motherfuckers. I would say I wish you the best of luck but actually I hope we're all right and the fucking floor drops out of the Comex because of you pricks. Maybe it'll open that 8th portal to Hell we've been waiting for and you can all fuck off at last.

I dedicated that to you before but it was less critical then, it's almost funnier now.

This fraud could be a papercut or it could be a massive gaping wound:

In 1933, President Roosevelt made it illegal for U.S. citizens to own gold bullion. Most nations have made similar laws.

Basically, the only private gold ownership allowed to people is ownership in jewelry or coins like the English sovereign or South African Krugerrand.

The problem is that most "gold purchases" by private individuals are really paper purchases. If 'paper gold' is based/backed upon the tungsten 'fool's gold' that central banks and governments are trying to keep secret, how deep does this go? And if so, where did the real gold go and/or did it ever exist? Is this another gigantic fraud going on here, like the other ponzi and shadow/dark pool money scams of wal-street?

Many investors and commodity brokers are aware of the fraud in selling paper gold bullion (How much imaginary gold has been sold?).

Christ. Yeah, I'd say this is pee yourself worthy if you allow yourself to get worked up over this kind of stuff.

I guess that depends on if you actually have any.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


beebsblog said...

Gold is going to the moon. The dollar is going to zero.

When, I don't know, but I am positioned heavily in mining and gold mining shares.

I'm so scared I am trying to get my wife to sell ALL of her bonds and move it to gold.

I could be wrong.