KWN: London Trader Explains Latest Moves In Gold and Silver Market – Including Recent Takedown

Comments Off on KWN: London Trader Explains Latest Moves In Gold and Silver Market – Including Recent Takedown

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

Swiss Refiners Say Demand For Gold Is Massive

Comments Off on Swiss Refiners Say Demand For Gold Is Massive

Egon von Greyerz is founder and managing partner at Matterhorn Asset Management, gave an interview on KingWorldNews of gold refiners in Switzerland reporting massive demand for gold.

Von Greyerz also said the financial world is headed into trouble that will be much worse than 2008.  But first, here is what Greyerz had to say about Swiss refiners:  “The gold market may appear quiet right now, but underneath the quiet there is a great deal of action in the physical market.  Swiss refiners are telling me they are working ‘round the clock’ because demand for gold is so massive.”

“At the same time, we are reading that a number of central banks are buying gold.  So the nonsense coming from the mainstream media that people are not interested in gold is completely false.  We are seeing massive accumulation of physical gold.  This decline today is clearly only in the paper market.

Once people wake up to the fact that the paper market is not even a real market, meaning it’s a false market that can never deliver the real goods, once investors realize this, that is when people will really panic….

“The paper market will then be either non-existent or we will see a massive premium between physical and paper.  I think those days are not far away.

I don’t think people are focusing enough on the long-term consequences.  The masses are just living day-to-day and hoping the current problems will go away, but they won’t.  The same people who did not see the problem in 2007/2008 are now saying, ‘It’s over.’  Nothing is over.

Situation much worse than 2008. Hyperinflation to follow.

We are actually going to go into a situation that is much worse than in 2008.  Once again, people are in total denial, and that includes governments and central bankers.  The first consequence of the enormous deficits and massive credit bubbles is going to be hyperinflation.

The hyperinflation will come as a result of governments printing unlimited amounts of money.  During this hyperinflationary depression, people will see currencies falling in value against real money, gold.  In a hyperfinflation, nobody benefits from the money creation except the ones standing nearest to the printing press

So governments will help themselves and banks will get some benefit, but by the time the money gets to the people it will be worthless.  Pensions will be wiped out as well.  When Germany went through the Weimar hyperinflation, at that time people were more self-sufficient.  Today, many people are dependent on governments.

This is why we will have more social unrest and anarchy.  I don’t think governments will be able to control it because people will be poor, hungry, and homeless in many cases.  The consequences of all of this reckless behavior is going to be very serious for all of us.

This is the first time in history that we will see hyperinflation occurring simultaneously in many countries.  Previously, this type of event has been isolated to one country at any one time.  Gold will be an extremely important means of survival and payment during this hyperinflationary period.”

 

 

Back Of Envelope Calculation Of Gold Sales

Comments Off on Back Of Envelope Calculation Of Gold Sales

Calculations taken from an Eric Sprott presentation.

And perhaps I can explain it best just by comparing ‘10 to ‘11.In ’10 we had the IMF theoretically selling 400 tons of gold.This year we have central banks buying 400 tons of gold.That’s an 800 ton change in one year in a 4,000 ton market.We’re getting data outta China which suggests that their purchases might be up 3 or 400 tons this year.

So with those two items I can come up with one 1,100 tons of change year over year in a stagnant market that provides 4,000 tons available.Where could the gold possibly have come from?And I have no other conclusion to come to other than to believe that central banks are surreptitiously continuing to lease out their gold.And then when they lease it out they essentially lease it to a bullion dealer who sells it to the real buyer and the bullion dealer owes it back to the central bank who still says they own it but of course getting it back won’t be easy because of the shortage.

And what about China, as figures show demand is clearly rising

this shows the gold imports that mainland China receives from Hong Kong.And this date is up to November of this year.And you can see the stunning change in demand whereas most months was below 20 tons, we’ve had a series of month where it goes 20, 40, 50, 60, 80 and the latest month which was November was 102 tons.As I mentioned, the annual production of mines is around 2,700 tons, 350 that’s produced in China; none of it leaves the country.The world has 2,350 tons left to buy which is less than 200 a month and China bought 102 tons of that last month.

Pension funds have been massively short of gold in their portfolios as a hedge in recent years and are now due to beef up their holdings.

the World Gold Council that basically said studies were done showing that even a pension plan that had minimal amount of risk should have two or three percent of their investment in gold, medium risk would be four to nine, max risk or high risk would be at ten percent.And just to put that all in reference, the amount of gold in gold stocks that is available in the world’s investment pool today is .75 percent of all assets.So even just to get to two would imply a huge influx of buying in both bullion and equities from that sector.But the work stands up to analysis and I think ultimately the pension fund advisors will have to go there.

Then there’s gold’s relationship to silver in its price.

A company called Gold Money that many of you might know that’s on the Internet, their sales of gold and silver are just about equal and I’m unofficially I think the Royal Canadian Mint’s about 1.5 to 1.And all I can suggest to you is if people keep buying gold and silver at a 1 to 1 ratio, there’s no way in this earth that the price could be 55 to 1.In other words you’re buying 55 times more silver and even just the relationship of silver to gold, there’s 80 million ounces of gold available per year.There’s 900 million ounces of silver.That would imply something like 11 to 1 ratio but half the silver’s used in industry.So it really is something like 5.5 to 1 is the ratio of what’s available and yet the prices are trading at a 55 to 1 ratio.

 

%d bloggers like this: