First post by way of a personal Introduction

[Peter Presland]

David

I think your assessment of the London fix has merit. It will also take account of the Comex trading session (and latterly Tokyo and the Exchange Traded Funds) which in turn are no doubt similarly affected and used for purposes other than is apparent to the casual innocent 'investor'. Comex short positions over a certain size have to be 'covered' by physical bullion deposited in Comex nominated wharehouses. Even a minow like me can trade with leverage of over 20:1 (which, as a matter of prudent risk management I don't BTW). Those with serious inside knowledge of impending bullion movements (by definition those also capable of exercising a serious measure of control by virtue of the size of the positions they are able to take) can use leverage of up to 100:1 ! Unlike OTC derivatives, exchange traded futures do have the merit of being marked to market at the end of every trading session, so small players can get some idea of what is going on from daily traded volumes and open-interest values plus the more comprehensive weekly and monthly OI reports. From GATA sources you will know something of the interplay between positions defined under exchange rules as 'speculative' and those defined as commercial. The commercials have for many years remained net short (understandable in the case of miners simply selling production forward or 'hedging' future production (though that has been a major looser these past few years) - but the size of net short positioning and the way it concentrates in the hands of just a few gigantic players makes it clear as a bell that they are just too damned cocky for words. In my humble judgement, they CLEARLY have knowledge of 'production' outside bona-fide mining and recycling, and use it to screw the longs on a basis that has been like clockwork over the past 10 years or so - in spite of the net price rise.

If your estimate of the amount of Black gold in existence is anywhere near correct, they can clearly go on doing so for as long as the Longs (and the poor bloody miners) are prepared to let their pockets be picked too. And that in spite of the present relatively elevated price. Frankly, although I do hold a bit of bullion, I am far less sanguine than I was about prospects for a price explosion now. Seems to me that TPTB are on the case. They've got it well covered and will decide, in their own good time, the price gold will be allowed to rise too - no matter what the investment demand may be. In the meantime they KNOW who is acquiring the official stuff and so will be well able to confiscate it again in the US if such a move is deemed necessary.

My real interest has less to do with the mechanics of transporting the Black stuff and rather more with how it is accounted for through the laundering process that produces hall-marked and numbered bars. Could be a dangerous area to probe deeply I know but I feel the urge to ... to specialise shall we say.