Commodity Trade Mantra

Desperate to Exit Short Positions, Banks Chose a Chinese Holiday to Slam Gold Prices

Desperate to Exit Short Positions, Banks Chose a Chinese Holiday to Slam Gold Prices

Desperate to Exit Short Positions, Banks Chose a Chinese Holiday to Slam Gold Prices

The long-side speculators who trade paper based claims to gold, silver and other precious metals (futures contracts) are, generally speaking, get-rich-quick schemers. They are the managers of independent hedge funds. They vie for control over the futures markets with institutions that include some of the largest banks in the world and the hedge funds that are owned or operated by current or former executives of those banks. Both long side and short side speculators at futures exchanges, like COMEX in New York, operate at extraordinarily high levels of leverage. The long side speculators are pure gamblers, as they have no influence over central bank policy. In contrast, their opponents take no gambles at all. They are the big international banks that control the world’s major central banks and finance ministries.

On October 4, 2016, for no apparent economic reason, the paper gold market was suddenly flooded with fictitious yellow metal. This was likely done by the bullion bank divisions and controlled hedge funds connected to those same international banking firms I mentioned earlier. As noted, the “gold” used for this take down is a work of fiction, as it is with all such take downs. It doesn’t exist in the real world. It is purely in the form of paper futures contracts which promise potential delivery of the yellow metal. Exactly how much short selling was required to dislodge long speculators from their positions may never be known, but according to Andrew McGuire, the short sellers managed to “rinse” 1,000 tons of worth of paper gold long positions out of the market.

Those who issue such contracts and the governments that back them know that no more than about ½% of the speculators who purchase gold for “future delivery” will ever actually collect the physical gold. The rest are just heavily leveraged get-rich-quick schemers. Gold dropped like a stone… down $42.80 an ounce, or -3.26%. Similarly, silver was down even more in percentage terms, by $1.01 per ounce, or -5.38%, while platinum dropped by $21 or 2.09%.

They could set gold prices at $200 per ounce if they wanted to. Or, even less. But, it would last for only a fleeting moment in history. Perhaps, a day or so. Not more. The problem is that setting such a price would trigger an avalanche of physical gold buying from purchasers all over the world. The end result: the US Treasury would be on the hook to supply thousands of tons of gold within a few weeks. It would exhaust all its reserves within a few months. The result would be that the system bankers have concocted to manage the price of gold would be proven to be a fraud. Massive failures to deliver would multiply though the marketplace. The credibility of the gold prices set at futures markets would be destroyed forever.

The reason gold prices dropped so dramatically, therefore, is probably as fleeting and capricious as the people behind it. There are two possibilities:

To continue to read further, please click here for the original article.

Courtesy: Avery B. Goodman

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