We are used to the gold market being controlled by vested interests but their ability to manipulate is now being seriously strained as Central Banks are lining up to buy the lows. In the case of the latest pullback from the $1800 level, the London Trader has pointed out that “We were within a hair of a major price explosion, and disorder in the gold market.” Checkout some of the comments from a series of 3 interviews given on King World News.

Physical demand is huge.

“In the past we have seen waterfall type declines when small speculators are heavily leveraged.  But the market has changed.  When the physical market was not as strong as it is now, these corrections would go $200 to $300 in gold.  As an example, we went from a previous peak of about $1,900 down to around $1,500, or roughly $400 in that case.”

“We are not going to see that this time.  It’s not going to happen that way this time.  Back then, the central bank buyers and these sovereign buyers were quite happy to sit and wait for a lower price.  Now they are not.  These buyers want out of their dollars and euros and they want physical gold and silver.

In the past, central banks have had the luxury of sitting back and waiting for the price to come to them.  Right now you have different central banks and different sovereigns competing with each other to buy gold, and in some cases silver as well.

There are simply too many buyers right now, and the competition to buy physical is extremely fierce right now….

“We are continuing to see the bids get raised in these markets.  This has become a competition for the central banks and sovereign buyers to get rid of their dollars and euros as fast as they can, and swap it for something of real value.

How will the physical orders be filled?

Meanwhile, the bullion banks run the COMEX and they are not stupid.  They are going to ring the register on this managed money.  The commercials have been doing extremely heavy short covering into the weak-handed longs which have been selling, but they are also covering into fresh shorts from speculators and managed money.

 The question now is, where is the inventory going to come from to fill all of these physical orders?  The physical market is already tight as a drum.  I would be surprised if there is much more downside in this environment.  Yes there is this game of the commercials covering into weak-handed longs, and fresh shorts, but there is reality here, and reality is the physical market, and these buyers have moved their orders higher, and will continue to do so.

In the past India was the largest buyer of physical gold and when they didnt like the price they would sit back and wait for the price to pull back. Now plenty of buyers are lining up including China and Central Banks.

India would just say, ‘We’re the biggest gold buyers in the world, so we will just step back and wait for our price.  We will wait for our price because we already have plenty of gold here.’  But now you’ve got too many competing entities all trying to acquire physical gold. 

Suddenly China has overtaken India.  So India doesn’t have the luxury of sitting back.  India is back in the market now.  India is back buying in the mid-$1,700s.  India was back yesterday.  India is back today.  They need to buy gold and they are stepping ahead of other entities and becoming a large buyer.

The Indians are not stupid.  They know the commercials harvest the weak hands on the COMEX.  Once they see open interest get to a certain level, they fully expect a reaction in the price.  But your readers have to understand that there isn’t going to be a ‘correction’ this time, there will only be a ‘pull back.’  There is a big difference between a pull back and a correction.

The reasons for this is there are just layers of central bank and sovereign physical buy orders in here right now.  Some of it has already been filled.  There has been tonnage filled at higher levels than we are currently trading.  As soon as we went through $1,760, we started to see central bank buying.

Bullion Banks had to stop the latest price rise

“Why do you think the bullion banks threw everything they had at the gold market at the $1,800 level?”  The answer, “We were within a hair of a major price explosion, and disorder in the gold market.”

“As gold was heading up to the $1,800 level recently, we were very close to a situation where we were going to see a commercial capitulation.  Some of the weaker commercials were already starting to bail out of their shorts.” 

“You have to understand that some of these bullion banks are more than happy to turn on these less powerful commercial shorts.  They view them as weaker hands.  Yes they are all commercials, but some of them are a lot weaker than the bullion banks. 

But there does come a point where the bullion banks say, ‘We’ve got to protect those stops.’  We had already gotten to the point where some stops were being tripped from those weaker commercial shorts….

“It got to the point where the vast majority of stops were located near the $1,810 level.  If gold would have pierced $1,810, that would have tripped the vast majority of all of those weaker, underwater commercial short positions out of the market.  This would have created enough of a short squeeze that we would have seen new highs in gold very rapidly.

 This would have been a literal failure by these commercials (commercial signal failure).  The gold market got to within $10 of their stops.  Why do you think the bullion banks threw everything they had at the gold market at the $1,800 level?  We were within a hair of a major price explosion, and disorder in the gold market.

 They (bullion banks) wanted to protect those stops, even though they weren’t their own stops.  They needed to do this in order to stop those weaker commercials from capitulating.  Now everyone is getting bearish, and when the physical market is closed, we are seeing some shenanigans such as after hours price drops in access market.

 So we are seeing more weak hands entering the short side of the gold market, and the commercials have been covering not only into the small speculators liquidating, but also into these fresh shorts.  The commercials are doing this in a very, very calculated way.

 hat readers need to take away from this, is we were dangerously close to a commercial signal failure and a major price spike in gold.  Even though the commercials have alleviated that concern for the time being, the possibility still exists that we could see a major price spike when the $1,810 area is pierced on the upside in gold.”

LBMA is a massive Ponzi scheme.

On July 20th, the ‘London Trader’ told King World News, “The LBMA’s price fixing scheme is coming to an end.”  Gold quickly rose $200 after that interview.  Today the source now tells KWN the LBMA has, “… incredibly large quantities of paper silver and gold being traded each day, but the real problem here is there is virtually nothing to back this up.”  The source also said, “This is all part of the LBMA Ponzi scheme.”

 

“The physical silver market is extraordinarily tight.  It’s insanely tight right now.  In other words, there isn’t any for sale.  We are seeing large premiums in places like Shanghai.  If a buyer wants size in physical silver, you are going to have to wait a long time.”

“When the commercials see a large order enter the market, they just turn the market around.  They don’t have that quantity of silver in inventory.  Every day the London Bullion Market Association (LBMA) clears 5,000 tons of silver, and between 600 and 700 tons of gold through paper trading.  When you think about it, that is a ridiculous amount.

This is all part of the LBMA Ponzi scheme.  You have these incredibly large quantities of paper silver and gold being traded each day, but the real problem here is there is virtually nothing to back this up….

So if I turn up to the LBMA and I say, ‘Out of your 5,000 tons of silver that you clear every day, I just want 300 tons.’  It shouldn’t be a problem.  It shouldn’t even cause a ripple.  But when you think about it, and that physical silver is leveraged 100 to 1, that’s more than the annual mine production of silver for the entire year when you do the math, including the leverage implications.

Of course they can’t deliver the 300 tons.  They don’t have it.  So when you actually go and send a Brinks truck to go and pick this silver up at the back door of Scotia Mocatta, you aren’t going to get it.  An order like that takes at least two months to get filled.

Too many large physical orders waiting to be filled.

 The problem right now is that there is such a large overhang of orders in both of these markets, and specifically silver.  Every day there are people turning up at the fix to buy physical, regardless of price.  As the markets are taken down, it exponentially increases the amount of physical silver that needs to be filled.

I would also add that the local traders are heavily short now.  So we are seeing a large short position building in silver on this price decline.  And don’t forget, the COT reports are groomed.  I don’t trust them. 

So when they see a large physical order enter the market, that’s the point where the commercials start covering.  Remember, the gold and silver markets on the COMEX are all about chasing out leveraged longs.  That’s all that market is about right now.

But we will see a day when silver can no longer be capped through paper trading and various games being played at the LBMA and COMEX, and in the end, it will be the physical market which will be the deciding factor.  At that point you will see the real price of silver for the first time, and it will leave people in disbelief.”

 

Sources:

  1. London Trader – Competition To Buy Physical Gold Is Fierce,
  2. London Trader – Bullion Banks Had To Halt Gold’s Advance
  3. London Trader – The LBMA Is A Massive Ponzi Scheme
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