from TF Metals Report:
Since writing this report on June 25, The Banks have surged total Comex gold open interest by another 22,000 contracts or 3.5%, all in a desperate attempt to contain the “price” of gold below the post-Brexit highs.
The purpose of this update is to once again highlight the tenuous and desperate situation of The Bullion Banks. These Banks are trapped short in Comex paper gold derivatives and they are clearly attempting to contain/restrain price below $1350 and the post-Brexit highs near $1360. How do we know this? Check the chart below:
The usual Shills and Apologists will claim that the benevolent, altruistic Banks are merely “acting in their role as market-makers” and “providing risk management services for their mining company clients”. To that end, you and I are supposed to believe that the 71,309 new Comex gold contracts created since June 23 were done so in order to “maintain an orderly market” and “allow producers to forward sell or hedge” 7,130,900 ounces of gold (about 222 metric tonnes or 7% of global production).
GIVE. ME. A. BREAK.
Instead, this Friday’s CFTC-generated Bank Participation Report will likely show a NET short position for the 24 largest, global Banks to be in excess of 250,000 contracts. This means two things:
- On Comex alone and for their own, proprietary accounts, these 24 Banks are NET short 25,000,000 ounces of paper gold. That’s about 778 metric tonnes of “gold” or just a shade over 25% of annual, global mine supply.
- On every $10 move UP in gold going forward, these Banks incur paper losses of $250,000,000. Thus, a move from $1350 to $1390 will “cost” these Banks about $1B in paper losses.
And this is why The Banks are so desperate to contain the paper price here. BUT THEY WILL LOSE! Brexit, NIRP, Eurozone bank collapse, global QE and all the rest WILL all combine to drive physical demand for gold past the point where the Bullion Banks will be able to deliver it. Once delivery failures begin, the collapse of the Paper Derivative Pricing Scheme will quickly follow. From there, where will prices head? We can’t know for sure but we can say with certainty that prices will NOT be $1350 an ounce for gold and $20 an ounce for silver.
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