Gold Market To See Largest Short Squeeze In Modern History

"Today one of the savviest and well connected hedge fund managers in the world told King World News that the gold market is getting very close to seeing a massive and unprecedented short squeeze that will eclipse anything in seen in modern financial history.  Outspoken Hong Kong hedge fund manager William Kaye also spoke about what is happening behind the scenes in the ongoing war in the gold market.  Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, had this to say in his fascinating and powerful interview.

 

Kaye:  “The short interest in GLD right now is incredibly high.  It’s roughly 30 million shares, and the key point here is that this is taking place while the shareholder count keeps contracting.  The shareholder count is down to just over 300 million shares, so the short interest is roughly 10%.

 

The shareholder count keeps contracting because the physical gold keeps getting redeemed....

“The reason this is important is because shareholders who aren’t selling their gold are nevertheless having their shares borrowed.  So the bullion banks are now net short almost 10% of GLD.  That’s several billion dollars worth of gold.  This also leads me to believe that, despite the prospectus, each share of GLD is not backed by the physical gold.

 

This is pretty important because what it means is that because of the massive short position you now have 338 million net shares long of GLD.  This is a problem because it is 30 million more shares than what they are reflecting in their accounts.  So somebody is going to have to eventually come up with that gold.  This is another reason why the gold market is setting up for an enormous short squeeze at some point.

 

But, Eric, there are a lot of things happening now at a rapid pace, which is usually indicative of an end game.  There have been rumblings about more problems inside the LBMA delivery system.  All of this leads me to believe we are very near a major turning point.

 

It is now apparent that part of the feed stock (1,300 tons) for the takedown in the price of gold came from the Bank of England, as reported by Alasdair Macleod.  The problem with that is the Bank of England only owns about 300 tons.  So this is not their gold that is being sold.  Instead, this is gold being sold by the Bank of England which is owned by nations that have entrusted the Bank of England to store their gold. 

 

Well, guess what?  If those countries go to the Bank of England and ask for their gold back what they will get is the same type of answer that the Germans got when they asked the Federal Reserve to send Germany’s gold back to them, which is essentially, ‘You can’t have it, but we will give you a very tiny portion of the gold you are supposed to have stored with us, and it will take 7 years for you to get it.’  We don’t know whose gold was sold, but we do know that it didn’t belong to the Bank of England because as I said they don’t own that much gold..."

 

at  http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/7/30_Gold_Market_To_See_Largest_Short_Squeeze_In_Modern_History.html