Central Banking: A Blight On Humanity

[Peter Presland]

If the hypothesis outlined in your post above is correct, and the Chinese have demanded physical delivery of gold which J.P. Morgan Chase and Deutsche Bank have been unable to deliver, how do you suspect this will play out in goldbug, financial market and Central Bank land?

Jan

To be honest, I really don't know. That's the short answer.

I still dabble in day-traded gold futures but, in line with unprecedented COT levels and the changing behaviour of the commercials category outlined in those articles, my system is simply not what it was and I will likely stop day-trading altogether. The dynamics have been altering subtly over a good few months now such that old algorithms have broken down and no amount of tweeking seems to make intra-day price action predictable enough to turn a reliable profit any more. Probably no bad thing I guess since it is a bloody useless occupation anyway - but like I've said before, I don't make the rules.

On the broader question of Gold Bug fever and the alleged 'caught-short' positions of the bullion banks: To the extent that they can still rely on the CB's to exert a measure of real control (ie suppression) of the gold price there will probably not be a default comparable to Lehmans or Bear Stearns. In spite of what seems to have been a surprise warning shot across the bows, I believe the CB's ARE still determined to exert that control despite obvious increasing Chinese involvement. In my view it is the likely existence of David Guyatt's 'black gold' in vast quantities largely controlled by the Western CB's cartel that is the real wild card. Arguably, bringing increasing amounts of it into play with the sort of devious cunning native to them, could seriously shaft anyone foolish enough to bet the farm on a real price explosion. In fact I don't think the Chinese want to precipitate a price explosion either. They are probably well aware of the 'black gold' and who controls it since a large proportion of it belonged to them before being stolen by the Japs. They are probably just intent on getting it back as an asset likely to retain value rather better than the vast hord of US paper promises they currently hold.

Anyway, all I know for sure is that the financial markets generally (Equities, Bonds, FOREX) and the PM's markets in particular have a very strange fractious feel to them right now. We are in seriously uncharted territory and anyone who believes 'the recession' is over is living in cloud-cuckoo land IMHO. All that together with the global military and domestic security stuff fills me with foreboding. But other than being determined NOT to be surprised by anything (having a few weeks stash of food, cash, fuel, a bit of bullion - that sort of thing) I'm buggered if I know what I can do about any of it except be ready to enjoy the fireworks.