Thursday, November 14, 2013

Conspiracy for Sale $831M

COMEX gold inventory on November 8th was 19.9 tonnes which amounts to $830M at $1,300 per ounce.  So if someone purchased $831M of gold futures and stood for delivery of all 19.9+ tonnes the COMEX would be forced to settle some of those futures in cash.  When the COMEX paper gold market is shown to have no physical gold backing it the price of physical will jump and reveal the gold price suppression conspiracy.  Cash settlement will likely be at 'before' prices.  But the buyer will realize a nice gain on the physical gold that they were able to receive and get their money back on the ounces that are cash settled.  

Surprisingly no ambitious hedge fund has tried this yet.  Since most hedge funds have about 4:1 leverage it would take them only $170M of equity.  Didn't Steve Cohen of SAC Capital just sell some artwork for a couple hundred million?  What is keeping George Soros, Kyle Bass, John Paulson, Carlos Slim or some other 21st Century version of the Hunt Brothers from giving it a go?  They've thought of it - or I charge only a small finders fee, just enough to wet my beak!*

Financiers looking at cornering the COMEX gold market must think that 1) the COMEX can get more bullion quickly and/or 2) cash settlement of COMEX futures would not send the physical price skyward and/or 3) selling their recently purchase 19.9 tonnes would tank gold prices when they try to cash out.  Could cash settlement already be built in to the price?  I doubt it.  And, if it is purchasing the last of COMEX's bullion at paper prices would be a fantastic investment.  Where could the COMEX get more bullion?  GLD?  the US Treasury?  The GLD ETF self-reportedly has 866 tonnes of gold.  And GLD's gold is conveniently stored at the same bullion banks who warehouse the COMEX's registered and eligible gold.  Selling 19.9 tonnes of gold without depressing prices should be easy since China is purchasing over 100 tonnes per month these days.  

What am I missing?  Perhaps anyone and everyone who can come up with $831M is not greedy enough to upset the apple cart.  LOL!!!!!


*The Beakwetter.  JP Morgan should hire whoever produced this video to manage their Twitter presence;-)


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