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Gone In 60 Seconds: 11 Tonnes Of Comex Paper Gold At 9:54 am EST, 11.1 tonnes of paper gold which hitthe Comex trading floor and electronic trading system in a 60 second window. It represents approximately 30% of the total amount of gold the Comex vault operators are reporting to be available for delivery under Comex contracts – dumped in paper form in 1 minute…
Gold has been in a steady uptrend since December 18th, bottoming at $1131 after a four and half month price correction. Firmly back over the 50 dma, the price momentum appears to be a threat to the “bullion” banks who suppress the price of gold in the paper derivatives market on behalf of the western Central Banks and, ultimately, the BIS. The banks must feel threatened by the recent activity in both physical and paper gold trading. This morning the price of gold was attacked in the Comex paper market after St. Louis Fed-head, James Bullard, delivered remarks about interest rate policy that should have propelled the price of gold higher: “We think the low-safe-real-rate regime is unlikely to change in the near term. This means the policy rate can also remain relatively low over the forecast horizon” (link). Instead, the Comex was bombed with paper: At 9:54 a.m. EST, 3,927 April gold futures contract (paper gold) was dropped on the Comex. Prior to this, the the average number of contracts per minute since the Comex had opened was under 500 contracts. This is 11.1 tonnes of paper gold which hit the Comex trading floor and electronic trading system in a 60 second window. It represents approximately 30% of the total amount of gold the Comex vault operators are reporting to be available for delivery under Comex contracts – dumped in paper form in 1 minute. This reeks of fear. The western Central Banks have grossly underestimated the eastern hemisphere’s appetite for physically deliverable gold. Despite an attempt by the BIS to mute India’s demand by restricting the availability of cash in India’s banking system, India’s current demand is robust and will likely increase as Indian’s now have cause to fear the Indian Government’s war on cash. In addition, China’s demand for gold seems to be accelerating. Based on Swiss export numbers, 158 tonnes of gold was shipped to China in December. Far higher than the numbers presented by “official” organizations tracking gold flows. Current premiums to the global market price of gold on the Shanghai Gold Exchange are running in the low teens. So far this week well over 100 tonnes of gold have been delivered onto the SGE. Except for the PBoC, all gold distributed inside China must first pass through the SGE. The western Central Banks will have a problem if the price of gold begins to take-off, as they will lose control of their ability to control the price using derivatives. Perhaps in addition to the standard price containment operation on the Comex this morning, the attack on the price of gold in the paper market was in response to Eric Sprott’s comments on King World News yesterday:
James G. Rickards is the editor of Strategic Intelligence, the latest newsletter from Agora Financial. He is an American lawyer, economist, and investment banker with 35 years of experience working in capital markets on Wall Street. He was the principal negotiator of the rescue of Long-Term Capital Management L.P. (LTCM) by the U.S Federal Reserve in 1998. His clients include institutional investors and government directorates. His work is regularly featured in the Financial Times, Evening Standard, New York Times, The Telegraph, and Washington Post, and he is frequently a guest on BBC, RTE Irish National Radio, CNN, NPR, CSPAN, CNBC, Bloomberg, Fox, and The Wall Street Journal. He has contributed as an advisor on capital markets to the U.S. intelligence community, and at the Office of the Secretary of Defense in the Pentagon. Rickards is the author of The New Case for Gold (April 2016), and three New York Times best sellers, The Death of Money (2014), Currency Wars (2011), The Road to Ruin (2016) from Penguin Random House.
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