"Make no mistake about it, at some point in the future, the physical demand for gold and silver are going to completely blow up the Comex.
Anyone looking to preserve some portion of their financial health with gold and silver should buy as much as they can, as soon as they can. When this situation on the Comex unwinds, it will catapult the price of gold and silver to unimaginable levels"
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These are tough times for Americans. My favorite item to buy and hold is gold, but problem -- gold pays you nothing, which is why so many fund managers won't touch it.
But gold is OK with me because over the last year gold is up 55.4% and over the last 30 days gold is up 14.65%. I'm not greedy and I hope I'm not stupid, so I'll forego the dividends in favor of a bull market and rising prices.
But for the average Joe, paying near 1400 bucks for a one-ounce gold coin is a no-no. Therefore, only those who can afford it are buying gold. So how do the Chinese do it? They buy small quantities and keep accumulating their gold. The Chinese tend to be patient while Americans' attitude is 'I want it, and I want it now.'
I've seen a lot of big bull markets, but this gold bull market contains probably the most persistent and relentless advance I've ever seen.
And I ask myself, what's going on, and what does this mean? Here's what I think. Gold topped out in January 1980 at a price of 850 per ounce. After that, gold sunk into a long bear market that took gold down to 295 in 1999. At the bottom, gold was not only forgotten, it was despised. In 1999 gold and gold shares were selling at 'dirt cheap' prices. Gold shares were selling in the $3 to $4 range, so cheap that I recommended buying them as if they were eternal warrants. From it's 1999 low, gold headed higher. Year after year, largely unnoticed, gold plowed higher.
In January 2008 gold did something that excited gold-followers. January 2008 gold finally surged above its 1980 peak of 850. That reminded me of 1954 when the Dow did 'the impossible.' On November 23, 1954 (I remember it well) the 'miracle,' the Dow closed above its old 1929 high of 381. From there the Dow headed higher, and 381 was never seen again.
I consider that from 1980 to 1999, 19 long years, gold was bottled up and held back by a vicious bear market. Just imagine the strength it required in gold to march back from its 1999 low of 255 to its 1980 high of 850. But having bettered its 1980 high, the full power of the primary bull trend was released. We're seeing that extraordinary power now as gold pushes higher day after day.
Recently, gold has closed higher in 21 of the last 25 sessions or 87% of the time.
Of course, by ordinary standards gold is now severely overbought. But in super-powerful moves, an item can remain overbought for weeks or even months. Gold is now like a 'wrecking ball,' smashing through everything in its way.
On the Comex there's a huge short interest in the Commercials, in large investors (usually the funds) and in the small investors. Gold is pushing the shorts to the wall as I write. Now we hear stories of Barrack gold closing its hedge book by buying billions of dollars of gold. We hear of nations standing in line to buy the rest of the IMF gold that's for sale. We hear news of various central banks reversing their anti-gold stand and now buying gold instead of selling it.
So far, the only populations that are buying gold are the Chinese and Indians and probably other Asians. As gold flows to China and the developing nations, it's a sign that the East is growing stronger and the West is growing weaker. The only policy the US government has regarding gold is stupidly to deny its power and validity.
*Dow Theory Letters, by Richard Russell, December 3, 2009:
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The following letter is from a London-based silver trader to CFTC Commissioner Bart Chilton. I wanted to post this letter, which appeared in Friday's Midas report.
Anyone who follows the gold and silver markets knows about the severe imbalance which has occurred for several years between the size of the short interest in gold and silver futures vs. the amount of physical gold and silver sitting in Comex warehouses. As an example, JP Morgan and HSBC combined (and it's mostly JPM's short) have a short position which represents 199 million ounces. This is nearly 4 times the amount of silver currently listed as "registered," or available for delivery.
In any other instance,with any other commodity, the CFTC (Commodity Futures Trading Commission), which is the Governmental body which regulates commodities trading, has always enforced "market concentration" regulations and restricted the size of the long or short position which can be held by any firm in that specific commodity. There is usually a standard applied which measures the amount of short/long interest in a given commodity vs. its available supply on the exchange. As Ted Butler has been pointing out for years, never in the history of commodity futures trading has the short interest in silver (and gold) come even remotely close to degree of concentration and nominal amount vs. available supply as it is in the silver market.
The issue here concerns the CFTC's refusal to impose the same standards to the silver market which have been applied and enforced in every other commodity market. Why does the CFTC refuse to address this issue in the silver (and gold) market? Bart Chilton represented to Bill Murphy last December that he would address the problem in the silver market. Since that time, a new chairman - Gary Gensler - was installed by Obama. Gensler is a former partner at Goldman Sachs (surprise surprise). He was also part of Robert Rubin's Treasury Department in the late 1990's. The egregious and blatant manipulation in the Comex gold and silver markets is largely attributed to policies implemented by Robert Rubin.
I wanted to post the following letter to demonstrate how blatantly the CFTC is enabling the massive manipulation in the silver market to continue. In my view, there is a very distinct connection between the appointment of yet another Wall Street crook to the CFTC post and the lack of enforcement in gold and silver trading.
Further to my letter of the 11Nov. 2009
Dear Mr. Chilton,
I was a little disappointed that you had not acknowledged my letter to you on 11th Nov.I realise you are busy but it would be nice to at least know you were taking my information into consideration and looking into the questions I raised.
You must be aware of the concentrated positions evidenced in your own published data. This information has most certainly been in your hands for a year now. Since that time the concentration has increased to record levels. I realize that you inherited this criminal situation BUT THIS IS NOW HAPPENING UNDER YOUR WATCH.
As you know I am a metals trader based in London and am fully aware how JP Morgan et al is able to move the silver market at will. Indeed I am able to profit from such activity as we are given clear signals by them when they intend to instigate a sell off. If you cared to contact me I would be able to give you information on just how these signals work. You may wonder why I would want to expose such a profitable activity? It is because I want to trade in a fair market and think of my profession as honourable. I believe all human beings should act with integrity and when I look around in church on a Sunday realise that I am deceiving and robbing ordinary hard working god fearing human beings.
It makes me very uncomfortable to stay silent as I witness traders I know profiting from insider information. It is bad enough that a so called respectable bank is allowed to act in a criminal manner but I suggest you check into and audit the personal positions traders acting for a ‘certain bank’ take around the orchestrated sell offs.
I have been asked questions on how traders can justify such large bonuses this year. I think the press will have a field day now that these questions come into focus. Especially when we make them aware that it is not just through legal trading, and that the CFTC is fully aware this is going on.
You and I know that JPMorgan is acting as an agent for the Federal Reserve. It is common knowledge to all professional traders. I can only deduce that your lack of action in tackling this blatantly obvious manipulation because your hands being tied due to pressure from above. The CFTC’s lack of action is threatening to blow up the precious metals market.
This brings me to my main concern. Do you realise that the massive short paper positions are HANGING BY A THREAD? There is simply not enough physical metal available for delivery for the December delivery contract.
Over this Thanksgiving we saw another supposedly marked to market Derivative position blow up causing ripples through the market. Yet this default is just a fraction of what is threatened within 4 weeks in the physical market. I have been just one more voice trying to warn you this is going to end badly no matter how much you are reassured by JPMorgan the positions are hedged. All they can do is now take a MASSIVE risk in adding to the short positions in order to instigate a selloff. Unfortunately Gold will not oblige in assisting this telegraphed action. Are you willing to allow this king of risk to escalate?
Please acknowledge my letter.
Respectfully yours
Andrew T. Maguire
When Bill Murphy met with Chilton last December, he demonstrated with hard data and facts that eventually, left unchecked, that the huge, illegal and unregulated short positions in gold and silver would eventually get blown away by increasing demand for physical gold and silver. The author of the letter alludes to this in the last paragraph. Chilton has obviously decided to ignore Murphy's warnings, as the net short position in both gold and silver become more extreme every week.
Make no mistake about it, at some point in the future, and possibly starting this month with the December deliveries of gold and silver, it will become apparent to all involved that the physical demand for gold and silver are going to completely blow up the Comex. Anyone looking to preserve some portion of their financial health with gold and silver should buy as much as they can, as soon as they can. When this situation on the Comex unwinds, it will catapult the price of gold and silver to unimaginable levels.
-SUNDAY, NOVEMBER 29, 2009
A London Silver Trader Challenges The CFTC
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