If you don’t want everyone to run out of the coal mine, hide the canary from everyone’s sight before it dies. – Quote from a good friend and colleague
The story is getting old, but it needs to be shoved in front of us to keep the truth alive. By now most of you have seen the incredible 325:1 paper gold to deliverable gold ratio on the Comex. Let’s say the CME were to hypothecate ALL of the gold reported to be held in Comex vaults and used it to “back” the paper gold open interest. It would require importing 6 times more gold, or 956 tons – more than 1/3 the total amount of gold mined globally in a year. Just not possible.
It’s very important to keep in mind that the numbers that are reported representing the amount of gold held in Comex vaults are numbers that originate from the bullion banks, who generate the reports and send them to the publishing apparatus at the CME. They are not audited. Using those numbers as “the numbers” requires a leap of faith that could easily be betrayed. This is a point fact – not opinion – based on the history of bank numbers reporting that gets lost on most people and market analysts. Let’s put it this way: If the Comex numbers are being reported accurately and honestly, it would be the only area of bank financial reporting that is not laced with fraud. Are you willing to make that wager?
For the record, here’s what happened today:
After trading sideways around the $1065 level in the overnight Asian trading session – the actual physical gold trading market – paper gold engaged in the now familiar “cliff dive” formation just after 8:00 a.m. EST. There were no news or events reported that would have triggered any type of market response from the price of gold. And the trading “needle” didn’t move in any other related commodities market or in the stock market futures.
Just pure, unadulterated blatant manipulation of the price of gold using fraudulent electronically generated paper contracts.
John Embry emailed me this a.m. and asked me – rhetorically, of course – how come the U.S. Government is so insistent on the idea of raising rates and coming up with truly insulting economic numbers to allegedly justify it? What is really going on behind the curtain?
The answer, of course, is that the Fed will not be raising rates. Especially now that the U.S. Treasury debt outstanding is a short chip shot away from $19 trillion and every privately compiled economic activity measurement index is now showing that the U.S. economy is in collapse.
But it’s the same game they are playing with the price of gold. If you are worried about everyone leaving the coal mine because people see a dead canary, take away the canary the before it dies and replace it with a happy fairytale.