Gold War Heats Up As Bears Become Increasingly Desperate

Once you start down a road and get yourself in too deep, you have to keep pushing on.  Going back is no longer an option.  So we’ve seen this desperation with the way the gold market has been handled over the last few years.  We’ve seen these egregious price smashes in the paper gold market on big volume…

This takes place even when the gold isn’t available in the physical markets.  But these raids have been done consistently.  We saw one (raid) yesterday, when a 4,000 contract sale took place in just a few seconds and smashed the gold price $30 lower.  But the paper price just rebounded.

So it really starts to feel like these massive bear raids we’ve seen are having less and less effect.  The big problem these guys (central planners and bullion banks) have is when this thing turns around, you can sell all of the paper gold you want, but what you can’t do is conjure up physical gold out of thin air.  And when the price spikes are going up instead of down, various players and large entities are going to want their physical metal, and that’s when this whole thing is going to start to unravel because we all know the physical metal isn’t really there.

There is very little gold available vs all of the paper claims.  This massive trend of Asian buying of physical gold, wherever they can get their hands on it, is going to take over the gold market.  I’ve had entities approach me looking to buy gold, ‘in whatever quantities they can find.’  At some point this is going to matter.

So for all of the efforts to keep the gold price under control, and we all know the quotes from guys like Eddie George, Alan Greenspan, and Paul Volcker, which state that the gold market has been ‘managed,’ you can only do that for so long.  They do this with derivatives, but ultimately someone is going to say, ‘This derivative that entitles me to gold, I want that physical gold.’  When that happens, and ‘When the tide goes out,’ as Warren Buffett says, ‘we will see who is swimming naked.’

I think we are now at the point where these bear raids in the Comex market are becoming very, very instructional.  In April of last year, the price of gold was smashed and was then digested as gold traded sideways.  But now the recoveries from these smashes have gotten shorter and shorter.

This has been the case all the way through the end of last year, to the point where we saw this $30 fall on the Comex yesterday, and the chart was a straight ‘V’ –  gold bounced straight back up again.  And I think what we are seeing is the market saying, ‘We’re happy to buy gold at $1,235.  If you’re going to sell it below $1,235, hell, we’ll buy it there because it’s even cheaper, and then we are going to go right back to paying $1,235 for it again.’

This insatiable demand for physical gold is what pushes the price straight back into the face of the gold bears.  So I’m watching very carefully these bear raids and the reaction to them.  The fact that the physical buyers are absorbing all of this paper gold selling and taking the market right back up is telling me that there is enormous demand for physical gold at these levels.  The bottom line is the shorts need to be very, very careful here.”