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Comex Gold Continues to Slump Despite Soaring Demand for Physical Gold

Commodities / Gold & Silver Oct 21, 2008 - 10:21 AM GMT

By: Mark_OByrne

Commodities Comex gold continues to surprise to the downside despite the incredibly strong fundamentals of gold bullion itself with increasing shortages, delayed deliveries and premiums soaring for physical bullion in Asia, Europe, the US and internationally. Premiums have soared on smaller bullion products (from 1 ozt to 5 kilo gold bars) and look set to soon rise on the larger 100 and 400 ozt London Good Delivery gold bars.


Large investors and bullion dealers are now looking to take delivery of the December gold contract and there is likely to be a significant number of longs who stand for delivery leading to COMEX warehouses being depleted and the increasingly ridiculous COMEX price then surging in value.  

The possible default of COMEX is even being considered by some astute observers. It is estimated that COMEX only have enough gold to deliver on some 10% of the outstanding contracts. October is not a delivery month so the December contract is being targeting. Some large money interests also realize the potential for sizeable profits from taking delivery of large gold and silver bars and melting them down into smaller bullion products for sale at far higher premiums. The COMEX December Gold option expiry is November 20 and there may be fireworks in the gold market soon after the election on November 4 th in anticipation of far higher prices due to the incredibly strong supply and demand fundamentals.

Bernanke's proposed stimulus package shows that his helicopters are well and truly dumping dollars on America like confetti at a ticker tape parade. While this may be bullish for stock markets in the short and medium term it is likely to have serious ramifications for the dollar and the global monetary system in the coming months.

The public finances of the US are in a mess and deteriorating fast and now the United States is formally committed to "unlimited" creation of dollars and the U.S. national debt is rising at an annual rate of 75 percent. This will result in far higher gold prices in all fiat currencies in the coming months.

While cash has been king in recent weeks, with government money printing and digital money creation out of control, cash may well become trash in the coming months as the inflationary consequences of the U.S. Federal Reserve and Treasury's huge gamble with the global monetary system is realized.

The humongous bailouts of hundreds of banks internationally will likely ultimately result in massive government deficits and bankruptcies for some western national governments.

And all this in conjunction with the global derivatives market worth more than $516 trillion, (£303 trillion), roughly 10 times the value of every single person, company and country economic  output which has rightly been called a "ticking time-bomb" and “financial weapons of mass destruction” by the bizarrely bullish Buffet.

By Mark O'Byrne, Executive Director

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
Ph +353 1 6325010
Fax  +353 1 6619664
Email info@gold.ie
Web www.gold.ie
Gold and Silver Investments Limited
No. 1 Cornhill
London,
EC3V 3ND
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708
Email info@www.goldassets.co.uk
Web www.goldassets.co.uk

Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

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Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

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Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Mark O'Byrne Archive

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