For the majority of the last 20 years, the western Central Banks, under the direction of the BIS, have been able to use the precious metals derivatives markets to “manage” the price of gold. As long as counterparties who are “synthetically” long gold and silver are willing to settle the derivatives trade in cash or ETF shares, gold derivatives can be created in infinite quantities and used to keep a lid on the price of gold.
But since late spring, it seems that the attempts to use the paper gold and silver markets on the Comex and LBMA to drive the price lower have been met with aggressive buying. For now the only explanation is that a large buyer (or maybe several) may be accumulating physical gold/silver, which is preventing the price managers from indiscriminately printing and flooding the market with paper derivative contracts to drive the price down. The tail may no longer be wagging the dog.
My friend and colleague, Paul Craig Roberts wrote this commentary about the possibility that the physical gold market is taking away:
After years of being kept in the doldrums by orchestrated short selling described on this website by Roberts and Kranzler, gold has lately moved up sharply reaching $1,510 this morning. The gold price has continued to rise despite the continuing practice of dumping large volumes of naked contracts in the futures market. The gold price is driven down but quickly recovers and moves on up. I haven’t an explanation at this time for the new force that is more powerful than the short-selling that has been used to control the price of gold.
You can read the rest of PCR’s analysis here: Is The Fed Losing Control Of Gold