by Dave Kranzler, Investment Research Dynamics:
It’s beginning to look like the Indian Government’s latest attempt to suppress the amount of physical gold demanded by the Indian population is going to backfire – badly. Narenda Modi’s stunning withdrawal of 500 and 1,000 rupee banknotes has caused an even greater rush to gold. According to the All India Gems and Jewelry Trade Federation, Indian gold imports jumped up to 100 tonnes in November, the highest since December 2015.
It’s becoming more apparent that Modi’s initiative is being fueled by western bankers. It is widely acknowledged that the Bank for International Settlements (BIS) is directing the western paper gold manipulation scheme. Ragurham Rajan, the former head of India’s Central Bank, the Royal Bank of India, was recently appointed Vice Chairman of the BIS. In other word’s, Modi’s move has BIS “fingerprints” all over it.
Make no mistake, the manipulated decline in the price of gold was engineered exclusively in the paper gold markets of London and New York (LBMA and Comex). China’s demand has spiked up to unprecedented levels – 131 tonnes was delivered onto the Shanghai Gold Exchange on Wednesday. In other words, between India and China alone, the demand for physically delivered gold has increased considerably.
As John Brimelow of John Brimelow’s Gold Jottings remarks, “if the Government had not sprung this stunt, stronger Indian buying [with the recent decline in the spot price of gold] would probably have stopped the [price] slide $100 higher and maybe discouraged some of the western [paper] liquidation.
One of the most glaring indicators that the price take-down has been driven by the western paper gold market is the divergence between the open interest in Comex gold futures and ETF physical gold holdings. While the open interest in gold futures is now down about 35% from its peak in early June this year, the gold holdings as reported collectively by physical gold ETFs is down only 5% from its peak. As Brimelow points out, “it was the surge in ETF [gold] outstandings in January which gave the alert that the move [in the price of gold] was serious.”
In other words, based on trading divergence between the western paper gold market and the behavior of the eastern physical bullion markets and physical ETFs, the price of gold is being controlled – for now – in the paper market.
Now is a great time to add to your physical gold and silver holdings. This price take-down is a gift from the elitists. The “shock and awe” price-hits when the Comex opens almost everyday are designed to discourage bullion buyers. In truth it reflects an increasing degree of desperation over what seems to be increasing “stress” being put on the ability of the west to supply gold into eastern demand. Trying to quash India’s demand is the easiest route because the Indian Government is a lapdog for the west.
As this effort fails, the rebound in the price of gold and silver will likely create its own “shock and awe.” In today’s episode of the Shadow of Truth, we discuss the Totalitarian movement toward a “cashless” monetary system and why accumulating gold is the best way to fight back.
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