Andrew Maguire - Hedge Funds Gold Shorts To Get Massacred

"Today whistleblower Andrew Maguire stunned King World News when he said that hedge funds which are heavily short gold will get massacred and may in fact go under.  Maguire, who recently appeared in the CBC production “The Secret World of Gold,” also spoke about extraordinary events taking place at the LBMA, where bullion banks are in serious trouble once again.  Below is part two of a series of extraordinary written interviews which covers only a small portion of what Maguire had to say in his tremendous KWN blockbuster audio interview.

 

Maguire:  “The LBMA bullion stocks are thin.  For example, the LBMA delivery conditions were extended from 2 days to 5 days.  Why do you think this little known decision to extend delivery times was made at the request of the bullion banks?  The fact is that the gold market has been in tight supply for some time now. 

 

There is just very little physical (gold) for sale in size at these current levels.  In the past I reported leased gold regularly appeared at the (London) fixes, where the Bank of England would step in at the clearing hour, after the fix, to lend metal to meet these delivery shortfalls....

“Much less of this is now happening.  Many of these accrued positions, they already can’t be paid back within the originating terms.  So on a short-term basis they have to be rehypothecated, further rolled out, and they match even further out forwards and futures (contracts).

 

These guys are digging an even deeper hole.  Talk about an act of desperation.  When viewed from a wholesale market perspective, it’s absolutely clear this is an act of desperation.  There is only one other alternative -- you buy back these leases.

 

The first stage we just discussed is what we’ve already seen.  The second is now happening and it’s about to accelerate, which is going to ignite very large hedge fund short fuel above the market.  Eric, these funds are the bullion banks’ reserve fuel.  It will be the next source of bullion bank short covering, and it’s going to place the funds in serious trouble.  (They will be) left holding the bag.

We could easily see some of these short funds go down.  People say, ‘But they’ve got lots of profits.’  But bear in mind that with their short profits, instead of crystalizing them, they’ve continued to add to these shorts to unprecedented levels and at much lower price levels.

So it doesn’t take much of a gap higher to place some of these funds (seriously) under water.  And I expect a very narrow exit window when this happens.  Some of these funds are going to be unable to exit.  I would absolutely advise your listeners (and readers) to be really careful who you have your investments with. 

This (upside) resolution is going to be disorderly.  I believe the only way the Fed can stem this outflow of bullion is to actually allow the price (of gold) to go back above $1,300.  Western central banks are no longer in a position of strength, and these paper market games are just desperate acts (at this point).”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/7/19_Andrew_Maguire_-_Hedge_Funds_Short_Gold_To_Get_Massacred.html