The paper market for gold & silver continues to unravel as individuals around the world are buying up the physical metal at the lower prices. However premiums have risen, especially for silver. I spoke to one dealer who has a $7 premium over the silver spot price which makes your cost right at $30 for an ounce of silver versus $23 on the paper market.
There have been widespread reports of people attempting to get their “allocated” gold but have been unable to acquire it. Allocated gold is held in a vault specifically with your name on it. The contract indicates that there is no accessibility to it by anyone else. It appears that this is not the case. The gold depository may have hypothecated the gold (pledge without delivery or title of possession) and generated revenue for its own account. Once gold gets pledged, it can be hypothecated 100 times over, almost like fractional banking. To unravel all of this mess, participants may have to go into the market and buy back gold at a higher price. Others will settle for cash. Either way, owners of the gold will not be happy campers. Litigation will result. This will expose the lies and deception behind the paper market. To rectify the situation, I ultimately expect the price of gold and silver to climb rather dramatically. If and when it happens, we will look back at this period and marvel at the attempts of the central planners to extract wealth from the masses.
500 tons and 53,000 contracts were sold into the gold market to force the price down in record time. This orchestrated attack on the price of gold (and silver) appears to be the focused attempt to remove the canary in the coal mine. Once again, it appears that they have failed just like everyone else who has made similar attempts over the last 5,000 years.
Will they try a second time? I expect so. Should we expect a double witness? A triple witness? Who has the greatest determination? The Kings of the East are known for their patience. Could we see $1260 gold and $19 silver? Only with a notable premium if you take possession. In the end, the true value will prevail and the fiat currency will suffer. Volatility will continue until the new equilibrium is attained. If you own gold or silver, your emotions will be tested, possibly to the extreme until the new equilibrium is established.