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Gold Falling into the Twilight Zone

Commodities / Gold and Silver 2013 Apr 24, 2013 - 07:08 AM GMT

By: DeviantInvestor

Commodities

A Quick Recap

  • Cyprus: Warn the wealthy insiders, politicians, and Russians, and then steal from the remaining depositors. This will hurt confidence in banks, the EU, and the IMF.
  • Bail-in Plans: Announce that the bail-in plan (steal from depositors) is THE template to fund bank failures in the EU, Canada, USA, and New Zealand. This further reduces confidence in banks and politicians. Read A Tipping Point In The Financial System – Part 2.

  • Gold bars leaving the Comex vault: According to David Chapman, gold in Comex vaults is down about 25% since 2010. Read the whole article for some interesting insights.
  • Japanese money printing announcement on April 4, 2013. Yes, printing money (“monetary heroin”) has not worked in the past thousand years, but printing more aggressively might be successful (like treating heroin addiction with more heroin) this time. And, yes, it will end badly.
  • Kennecott copper mine landslide, although anticipated, occurred on April 10. This mine (per Bill Holter) annually produces 400,000 ounces of gold and 3,000,000 ounces of silver and is the largest copper mine on earth. It has been shut down, and that supply is temporarily not available. Gold, silver, and copper subsequently declined.
  • White House and banker meeting: Over a dozen important bankers met with President Obama (according to the Wall Street Journal) on Thursday April 11. Strangely, gold, silver, crude, and copper crashed thereafter.
  • Gold: The paper gold market was crushed by a 400 ton paper gold sell order – naked shorts – and driven down into a five standard deviation price move. Such a move should be very rare. Assuming statistically normal price distributions (which I doubt for manipulated markets), this move should occur only once in several thousand years. Read Score: Banksters Two, Gold & Silver Zero.
  • Silver: Same crash as in gold! While the paper markets went into the tank, the physical markets experienced heavy demand. Premiums on silver eagles and other silver products jumped much higher. Paper silver is down since April 11 by about $5, but the premiums on physical silver have risen by $3 – $5.

 

Possible Comex Default

From Bill Holter:

“Last week Barrick Resources announced the postponement of their giant Pascua Lama mine. This was to be one of the world’s largest mines and is now tied up in litigation over true ownership as it appears to show that Barrick does not have clear title. The probable reserves were nearly 18 million ounces of gold and almost 700 million ounces of silver. Work on this mine was completely ceased last Wednesday.

‘Last Wednesday’ was also an important day for the Kennecott copper mine in Utah, the ground started to shift more rapidly prior to this weekend’s landslide. They knew this was coming as they closed the visitor center on April 1 and had all equipment and personnel out of harms’ way. This mine produces some 400,000 ounces of gold and over 3 million ounces of silver as a by-product of copper; this is the largest copper mine on the planet. Have you heard even a peep out of the mainstream media on this? I didn’t think so.

Is it not strange that these two events came to a head last Wednesday? The same day that out of nowhere gold reversed from being up and give up $40? And then of course there was Friday with $85 and another $75 this morning. Gold is now down $200 per ounce in just over 3 trading days. Between these two projects, one not coming online and the other going off line, a VERY significant amount of production is not going to happen. Does this make sense? Did you not learn in school that ‘less’ supply meant higher prices? In the real world? We don’t live in ‘the real world,’ we live in a world where everything financial is manipulated.

Here is what I see happening. They knew that this mine was going to collapse and the production would stop. Then the ruling on the Pascua Lama mine was sent down. Last Thursday President Obama met with 15 heads of the biggest banks and brokers in the country, THIS was discussed as sure as the Sun came up this morning: we have hit the bottom of the barrel! Reserves that could be fed into the market are and have dried up at the same time that production has dropped and future production delayed. The paper game is blowing up …RIGHT NOW and the topic of discussion at the White House was about “how it would play out”.

The COMEX will default in the next week or several weeks and people will be ‘settled’ with Dollars, no more metal will be delivered! So, knowing that ‘game over’ has arrived, they are dumping a massive volume of paper contracts with impunity to push the metals prices as low as possible before the ‘default’.”

More on the Comex Force Majeure

Larry Gold published his related thoughts:

“As for the timing of the prediction, I have a problem with ‘next week or within a few weeks’ time frame. Somehow I don’t see the game ending that quickly. I would expect the COMEX to deliver but it might take 6 months for your contract to get filled with the real physical bullion. Then at the same time they continue to crash the market with intent of making those Goldbugs pay dearly. With that said, I’m not too obtuse to deny the possible charade of forcing metal settlements to be as inconvenient as possible. ‘You don’t really want this old nasty metal in 5-6 months. No, you want nice crisp dollars deposited into your account TODAY!’

If the COMEX does fold, I think they will let silver go first (before gold), and here’s why. Historically, it’s been the habit of TPTB to blow up a small island first and see what happens. Think the Bikini Atoll with the H-bomb. And now more recently think of Cyprus. A ‘Force Majeure’ in silver would be a huge event, but light years away from what a ‘Force Majeure’ in gold would mean. They could invent a silver shortage story to explain it away, i.e. mine collapse, cyber attack, fat finger from a rogue commodity trader, and on and on.”

Deeper into the Golden Twilight Zone

Martin Armstrong announced that we should expect gold to drop further to $1,158 or $907.

Jim Sinclair has long maintained that gold would trade higher than $3,500, but now he has stated that, with a derivative meltdown and the failure of the fractional reserve gold system, the dollar could collapse and gold could trade to some incredible price like $50,000.

Gold and Silver demand for physical metal: There are numerous stories regarding massive sales of gold and silver to individuals, supply shortages, and delivery delays. Read this article from Liberty Gold & Silver! The US Mint reported record gold sales, and we have heard similar stories from China, India, Dubai, Australia, Canada, and the United States. From David Baker:

“Back in 1980, just as the gold price blasted upwards past $800/oz, buyers reportedly lined up in droves at various bullion dealers to participate in the rally. … That flurry of buying ended up representing a classic top. As gold failed to move higher, the speculative frenzy soon reversed into a despondency that dragged gold into a twenty year bear cycle. For those investors who bought at the top, it was a hard lesson learned.

Fast forward to today, and in the days that have followed this past Friday’s (and Monday’s) incredible gold price smash, the strangest thing has happened: physical buyers have come out in droves, but this time they’re buying immediately following an unprecedented $200 price decline.

Consider the following:

The US Mint reported selling 63,500 ounces (2 tonnes) of gold on April 17th alone, which brought total April month-to-date sales up to 147,000 ounces – more than the previous two months of gold sales combined. The US Mint’s year-to-date sales are now up 79% from the same period in 2012.”

Summary

There appears to be increasing stress and risk in the financial system. Apparently “they” are planning for an “event” that will require confiscating some customer deposits to RECAPITALIZE the “too big to fail” banks, gold bars are being removed from the Comex vault, the President met with important bankers and gold and silver crashed the next day, and people around the world responded to the lowered prices by purchasing much more physical gold and silver, instead of dumping them in a panic. Apparently those buyers saw value, not paper prices, and were not scared away by the naked shorts crushing the paper markets. For them it was an opportunity, not a disaster.

We have fallen into the golden twilight zone.

GE Christenson
aka Deviant Investor

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© 2013 Copyright Deviant Investor - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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