Saturday, July 31, 2010

Gold Shot Heard Round The World

"When 45 ounces of gold are sold but only 1 ounce is sourced, the result is a massive suppression of the gold price. But the converse is also true: When 45 ounces of gold are demanded for every 1 ounce that is in the vault, the price explosion is beyond imagination."
-Adrian Douglas

Adrian Douglas: What's unravelling is gold price suppression

We interrupt my trip back in time to relay to you this VERY IMPORTANT update on the BIS Gold Swap. The run on the bullion banks has begun in earnest. Follow the link above as this is a MUST READ story.

Harvey Organ of "Truth In Gold" comments on Adrians story above:

First of all, the FT has now confirmed that 10 commercial banks were involved in the swap with central banks not one bank.

They also confirmed that the BIS has been credited with unallocated gold and this unallocated gold came from customer deposits at European banks.

Thus, the commercial banks used as collateral depositors gold and not their own and then swapped this unallocated gold with the BIS. The BIS will thus be a creditor

to the commercial banks if the swap cannot be unwound. The central bank and/or the commercial bullion bank would have complete use of physical gold that they are now dishoarding to meet the massive demand on gold that they are facing!!

In other words, they used their double accounting trick. The BIS gets unallocated gold which is basically a paper claim on gold. The central banks mobilized

gold as demand from Europeans for physical gold caused tremendous grief for our bankers.

Adrian is correct..the bullion banks are "awash" in gold liabilities for the record number of oz that they are suppose to hold. Investors are now mistrusting

the bankers and are asking for their metal back. The unallocated ledger at the bullion banks is turning over as fast as possible to allocated gold.

Those who get physical first wins, those who delay have nothing but a paper obligation.

Now wonder, the BIS was silent on the matter.

I hope to be back monitoring the Precious Metals by the middle of next right and sit tight.

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