By Rob Kirby
Financial Sense University
Friday, October 9, 2009
http://financialsense.com/fsu/editorials/kirby/2009/1009.html
Impeccably reliable sources have informed me that as recently as Sept. 30, 2009 – the last possible day of trade in the Sept. 09 gold futures – a number of well-heeled market participants “bought” substantial tonnage worth of gold futures on the London Bullion Market [LBMA] and immediately told their counterparties they wanted to take instantaneous delivery of the underlying physical bullion.
The unexpected immediate demand for substantial tonnage of gold bullion created utter panic in at least two banks who were counterparties to this trade – J.P. Morgan Chase and Deutsche Bank – because they simply did not posses the gold bullion which they had sold short [an illegal act which in trading parlance is referred to as a “naked short”].
To summarize: Banks like J.P. Morgan Chase and Deutsche Bk. - who sold endless amounts of gold futures at prices of 950 – 1025 and then tried to make “side deals” with the folks they sold the futures to – offering them spot + 25 % [let’s say 1,275 per ounce] to settle in fiat – only after their counter parties demanded substantial tonnage of physical gold bullion.
Stunningly, if accurate [and there is absolutely no doubt in my mind that this is not], this means that gold is already in SEVERE backwardation and this fact is being hidden from the public.
Then, to protect the “integrity” of the futures market as a ‘price discovery mechanism’ – Central Banks – aiding and abetting - plunder the sovereign assets of their respective countries to bail out their agents / friends in an attempt to ‘sweep the whole bloody mess under the carpet’.
To think that anyone wonders why our financial system and fiat money will soon to be TOAST?
Rob Kirby is proprietor of Kirbyanalytics.com and sales agent for Bullion Custodial Services. He is also a GATA consultant.
For further reading:
"Floating Derivatives in Uncertain Waters Increases Risk of Drowning", Bob Chapman, September 9, 2009
"Where's the Gold?", Nathan Lewis, June 26, 2009
"Will Increased Delivery Demand Break the Gold Warehouses?", Jim Sinclair, June 12, 2009
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