What happened to gold prices last night?

With all of the market manipulation, paper markets and central bank printing, it’s anyone’s guess what happened to gold prices last night, but here are some of the more logical theories that explain yesterday’s 500 ton paper gold sell-off:

  • The paper gold market is collapsing, and smart money is dumping their paper before it’s too late.
  • Central banks are manipulating the market to make fiat money appear to be the only sound safe haven.
  • According to former Assistant of the US Treasury, Dr. Paul Craig Roberts, “the exchange value of the dollar is (being) threatened, and if that collapses the Fed loses control over interest rates.  Then the bond market blows up, the stock market blows up, and the banks that are too big to fail, fail.  So it’s an act of desperation because they’ve got to establish in people’s minds that the dollar is the only safe place, it is the only safe haven, not gold, not silver, and not other currencies.”

    The Federal Reserve is “trying to destroy gold as a haven from the dollar in order to carry on the Fed’s policy of negative real interest rates.”

trying to destroy gold as a (safe) haven from the dollar in order to carry on the Fed’s policy of negative real interest rates.

The Gold War: Physical vs Paper

There are two types of gold: physical and paper.  Everyone knows what physical gold is; it’s the shiny stuff you hold in your hands.  Paper gold, refers to a piece of paper (or digits in a computer) acting as a substitute for the physical gold.  With paper gold, you don’t own the gold. Many experts claim that there are at least 200 “paper” ounces for every ounce of physical gold.

As I mentioned in another post, the paper market is where all the price manipulation occurs, and currently there is a war between paper gold traders and physical gold holders.  If fact, according to John Embry:

“We are literally witnessing a war between the physical buyers (Eastern central banks), and the paper manipulators (commercials or bullion banks), and that is why there is such a fierce battle being waged in gold between $1,735 and $1,800.”

“If the commercials run into trouble (with their massive short positions), KWN readers will see a move in gold that will leave them breathless.”

The paper manipulators (commercials) are massively short gold, and every time they try to drive the price of gold lower to close their positions, they are blocked by a wall of physical buying.  Meanwhile, physical buyers, such as China, are happy to pick up physical gold at discounted prices.