Published on Friday, 16 August 2013 10:55
Written by Michael Snyder
The demand for physical gold is exploding all over the world, and bullion banks are now experiencing a supply crunch that is absolutely unprecedented. As physical demand continues to rise, the massive Ponzi scheme that the bullion banks have been engaged in is going to become increasingly obvious, and at some point the lack of physical gold is going to break the back of the paper gold market and we are going to see the price of gold go to levels that we have never seen before.
You see, the truth is that the central banks of the world and the bullion banks have made “paper promises” that vastly exceed the amount of actual physical gold in existence. This kind of scheme works fine if everyone does not come asking for their gold at the same time. Unfortunately for the ones running this scheme, people are now starting to ask for their gold back and it is causing huge problems.
It started earlier this year when Germany asked for 300 metric tons of their gold which was supposedly being held at the New York Fed. If the New York Fed really did have as much physical gold as they claim that they do, that request should have been no problem. Instead, the Germans were told that it would take seven years to fulfill the request.
At that point, alarm bells started to go off in financial circles all over the planet. People all over the globe began asking for their gold back, and now this is causing serious stress for the bullion banks. The following is what Hong Kong hedge fund manager William Kaye told King World News the other day…
There are serious strains in the (gold) system. I’ve never witnessed such a serious strain in my lifetime in terms of the backwardation of gold, and in terms of the lease rates being negative for such an extended period of time. This suggests that there are two forces at work: One is that there are serious strains in the system — that the bullion banks are struggling to come up with the physical gold for spot delivery that the market demands.
Right now the bullion banks are experiencing unprecedented difficulties coming up with the physical gold and physical silver that they are supposed to have. Evidence of this supply squeeze is starting to pop up all over the place. Some of this evidence was summarized in a recent article by Jim Willie…
It’s so ugly that in the silver market, JPMorgan has not yet satisfied and delivered on the June silver futures contracts! It’s so ugly that using hidden entities that Andrew Maguire has detected in London, JPM is using hidden entities to hog 90% of the July silver deliveries! It appears that JPM doesn’t have the silver to meet June delivery, and is trying to replenish their own vaults by taking delivery in London, secretly, to replenish their inventory! Where are they getting it from? Maybe the SLV!
The JPM clients have removed between December and June- close to 40,000 kg of gold- thats 40 metric tons. While JPM’s house account has removed over 40 tons in the same period! What’s the lesson there? It appears JPM’s best friends and clients don’t trust them anymore!
My best source (originally a trader with Scotia Mocatta) tells me that the allocated gold account raids have resulted in 40-60,000 tons of gold! (The US likely doesn’t have any of its reported 8,500 tons left at all!). Rubin and Clinton might have made $2-$3 trillion leasing and selling the US gold. Someday the US may have to replenish its gold.
We’ve had other things like ABN Amro’s default, and another small Dutch bank just made the same statement that they’re not going to redeem on gold accounts. Morgan Stanley is stalling on every single metals transfer request. When it is finally transferred the serial numbers and weights are different than what was documented. Clearly the broker dealers are going into the market to find the gold, to find supply just in order to meet their daily requirements.
The Brinks’ accounts are going bare and are almost down to zero – these are all problems on the supply side!
At some point the lack of physical gold and the lack of physical silver are going to become glaringly apparent to the general public, and at that point we could see a fundamental shift in the marketplace. Keith Barron speculated on what the “trigger” for this shift might be during a recent interview with King World News…
All I know is that this ‘trigger’ which is going to ignite this move is coming, and it will involve substantial repricing of both gold and silver. One possible trigger may turn out to be a failure of the COMEX. We do know that there is a shortage of physical gold for delivery, and that’s because so much gold is going to Asia right now.
You can see by the price action in the U.S. dollar right now that the Asians are dumping their dollars. But, interestingly, they are also paying a premium to get physical gold right now with no delay in shipment. So there is a loss of faith in the paper gold and silver markets by major participants. It’s almost as if they expect a failure.
Barron is fully convinced that we will eventually see a “breaking” of the COMEX which will shock the world…
I firmly believe there will be a point in the future when this sort of event triggers a run on the COMEX, and more and more entities are going to ask for physical delivery. This will have the effect of breaking the COMEX and creating a failure. When that takes place you will see an explosion in the prices of gold and silver that will literally shock market participants around the world.
And the truth is that this has been a long time in coming. The bullion banks should never have made so many empty paper promises.