Friday 16th August 2008, 11.01 pm: Proof of manipulation?
Some advocates of gold and silver investment have made much of the alleged lack of silver supply. Some bullion dealers ran out of finished product (1oz coins and small bars) but John Nadler of Kitco repeatedly stated that you could trip over piles of 1000-ounce bars in the vaults around the world.
Now tonight, this notice appeared on http://www.kitco.com/ - in red 'ink':
"IMPORTANT NEW NOTICE: Due to market volatility and higher demand in the entire industry, we are anticipating delays in supply of all bullion products. Please note that you can continue to place orders and prices will be guaranteed; however, cancellation fees will still be applicable regardless of the length of the delay. Consequently once inventory is received there may also be delays in processing and shipping by our vaults."
This clearly states that there are shortages of ALL BULLION PRODUCTS with respect to real demand. (Or does it?) So why is the price of gold down 8% for the week at $786 and silver down a great big chunk at $12.70 at the end of this week?
Only one answer is possible: The price is set by the paper markets only. Nadler may have been correct when he previously stated that the 'clearing price' for real physical gold was $740 or not too far from there. Maybe the clearing price for physical gold is where we are now, at about $780: when reached, the vaults clear. Maybe they have? Or maybe not? Who knows in this world of fraud and illusion?
It also implies that the run up from $730 to $1020 was all paper speculation and 'froth' - including the buying of ETFs, futures, options, swaptions and all that nonsense. Perhaps the ETFs have little or nothing to do with the physical market after all? I'm sure that futures and options have little or nothing to do with the physical market. Does anyone ever take delivery? Can anyone ever take delivery?
Well, maybe today people have started to take delivery of these 'contracts' or maybe someone has just placed a real order for real metal.
The paper markets seem to be just a means for governments and finance houses to 'earn' commissions and/or short the market using someone else's property.
Imagine if you were short gold at $920 a couple of months ago and then saw it jump to $980 in a matter of days. Maybe you bailed out with a huge bankrupting loss, thinking that the price is going to $1200, only then to see the 'market plummet to $786 and your original (now closed) position hugely profitable. What irony. What a joke! Jim Sinclair of http://www.jsmineset.com/ has often said that using margin in gold is dangerous.
The question is, at $786, should I sell any real gold that I bought at $300, before it might go back to $300?
Answers on a postcard please.