Kaye: “The Spyder Gold Trust, GLD, continues to get looted. Yesterday GLD lost more gold on one day since the smash in April -- about 11 tons. That’s a lot of gold for one day, and now GLD has lost over 35% of the gold they started with at the beginning of the year....
“Critical to the prosecution of what, up to now, has been a very significant raid, has been the ability to get physical gold out of the GLD vault in London. So on the recent dip we have seen that pattern continue.
Eric, as I told you last week, we are in the last three innings of this end game and I don’t think this will go into extra innings. Central planners are now ramping up most of the tactics they know how to use. It would appear they have already used a fair amount of the 1,300 tons of gold that mysteriously left the Bank of England.
So, it doesn’t appear that they have a lot of other places they can go to loot physical gold, other than GLD. I need for KWN readers to understand the scale of what’s really happening here: GLD lost 1.2% of its entire inventory overnight, just in the last 24 hours. That is absolutely staggering.
As I said earlier, that’s the biggest decline in inventory since the April smash. This was the same tactic they used in April, and they have been getting equally aggressive again, even though we haven’t seen the same effect in terms of a decline in the price of gold. I attribute this to the fact that outside of GLD they don’t have many sources where they can turn for physical supply. Meaning, the West is literally running out of physical gold.
But I also attribute the limited decline in price to the insatiable demand for physical gold in this area of the world (Asia). Demand in China has been very, very strong, as has demand from the Reserve Bank of India, Russia, and so forth. So it’s getting more difficult for these guys to press the price lower and keep it there below $1,300. Andrew Maguire had predicted this, and certainly the price action has confirmed his view.
So I think the real risk from the standpoint of investors who want to stay on the sidelines until the technical action in gold looks better, is the fact that we are now in a situation where one day in the not-too-distant future, people could wake up and gold is trading several hundred dollars higher.
There is no rule that says when a price suppression scheme can’t be orchestrated any longer, and we are now getting to that point, that a major slingshot in the price of gold cannot come into play. People could wake up to force majeure getting declared by the Comex, and essentially JP Morgan and the other bullion banks settling all of their contractual obligations outstanding for gold delivery in cash.
These bullion banks are allowed to do that, and this is certainly what’s going to happen, but then there is going to be a total panic. There are roughly 90 - 1 claims for every ounce of physical gold in existence, and most of those claims are paper. That cannot be reconciled. It’s not possible.
So, when various entities wake up one day and realize they have been forced out of what they thought was exposure to gold by the Comex and the bullion banks, and they are settled in cash, there is going to be a mad scramble for physical gold around the globe -- the likes of which the world has never seen in all of human history. But this scramble for gold won’t be happening at anything close to existing prices. This is where we will see gold soar to $2,000, $3,000, $5,000 an ounce and more.”
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