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Purpose2012
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The Gold Market Seen Through a Glass Darkly - Darryl Robert Schoon - Survive the Crisis

Mr Schoon -

I'd just like to say how much I enjoy your articles, over the last few years you have had quite on effect on my opinions !

However I do think it's incorrect to give too much credence to the story about the BoE selling gold to bail out a bank with a heavy short position: I commented previously about this, on Bill Murphy's article "It Won’t Be Long Before The Gold/Silver Manipulation Scandal Goes Mainstream" - the original source claimed :

"One globally significant US bank in particular is understood to have been heavily short on two tonnes of gold, enough to call into question its solvency if redemption occurred at the prevailing price... Faced with the prospect of a global collapse in the banking system, the Chancellor took the decision to bail out the banks by dumping Britain's gold."

I can't claim to understand leverage, so maybe there is something I'm missing, but 2 tonnes = just 64,300 oz ; so at the early-1999 price of ~$300, surely that's a total value of only $19.3 million ? How could a loss of that amount really have caused the collapse of a single bank, let alone "a global collapse in the banking system" ? I have little doubt that there is a price-suppression occurring, but I don't see how that particular allegation makes sense.

Also, do you not think that the price spike in August 2011 (and the subsequent return to the 'trend line') has a lot to do with the previous 'fiscal cliff', where the US came within hours of either defaulting, or not being able to pay its federal employees ? (It will be interesting to see if history now repeats, or at least, rhymes...)

Of course, even if there's no price-suppression occurring, the price of gold (and the other PMs) will undoubtedly rocket at some point: I always bear in mind that only about 1.3 ounces of gold is mined annually for each *100* people on the planet - so even if just "The One-Per-Cent" (as opposed to "The 99%") finally follow their accountants' advice and start shifting just 10% of their portfolios into gold, they (currently) only need to spend $2500 each to exhaust the entire world's annual production of the yellow metal...

Wishing you (and everyone !) peace & prosperity over the coming times,

Jim

Commented 4149 days ago

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Beginning of the headline : Gold is a leading indicator of monetary distress No matter what confidence game is being run, confidence is the necessary pre-requisite.This is why confidence indicators are so closely monitored by central bankers.If consumers and businesses lack confidence, they will not partake of the central banker’s credit; a necessary step in the indebting of otherwise willing victims... Read More

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