Maguire: “Outside of the virtual world of the Comex casino, sovereign and central bank buying is evident, as are the bullion banks, who are fully aware of this bullion drain, and they are taking the long side of these naked short sellers who blindly ignore the fundamentals....
“Now, Eric, in the real world wholesalers were the busiest in months yesterday, and they are run off their feet again today. Looking at the charts, that’s really counterintuitive to what’s happening. There is enormous demand sub-$1,200, and these divergences cannot last much longer.
This enormous leverage employed by these paper market sellers is a distortion of what’s really happening. We’re stretched so far that the unwind and the rebound higher are going to be disorderly as sovereign and central bank buyers continue to milk Comex-based leverage selling.
They are busy converting this resulting spot price into physical (gold) at the painted fixes (in London). This physical latency will catch up in a very disorderly way the moment the downside momentum wavers. And we’re reaching the point where we can see that change in behavior is beginning to become evident.”
Eric King: “Andrew, can you give us an idea of how much tonnage is being taken out of the market as they put the (recent) smash on gold?”
Maguire: “Eric, the amount of synthetic supply that’s coming into the market is in the tens of tons, in (increments of) several tons at a time. It’s resulting in literally hundreds of tons in a week being supplied into the marketplace.
Because of the latency I discussed, it’s not being noticed but the central banks, bullion banks, and the sovereigns are taking the long side of that (trade). They are taking delivery on an unleveraged basis, and it will show up, but it’s in the hundreds of tons, especially as we moved sub-$1,200 (on gold). That’s why sub-$1,200 is unsustainable, despite what the likes of Goldman Sachs and all of these shill bullion banks are saying.”
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