Gold Prices To Take Off In The Near Future
In a recent article by Addison Wiggin, a scenario is described where on a Sunday night in October 2013, everything in the world carries the semblance of normal, but then all of a sudden all hell breaks loose in the precious metals markets. Right before the Commodity Exchange Inc. opens at 6pm the Comex makes the announcement that a large gold contract will be settled in cash rather than the promised gold. Essentially, Comex has defaulted on a gold contract. Everyone else holding on to a gold contract also wonders if they too will be stiffed. Once this occurs, it leads to a crazy cycle in the prices of gold. Spot price roars up to $1800, but gold Eagles that would normally sell for $1890 to include a 5% premium are selling above $2000 per troy ounce. Eventually demand is so high, that no one can get their hands on physical metal anymore.
Manipulation In The Gold Market Exposed
Are you familiar with the story “The Emperor’s new clothes?” The story regales a tale where a king has new clothing spun by the countries “finest” seamstresses. When all is said and done he puts on imaginary clothes and tromps through the kingdom in his birthday suit. Everyone embraces the king and his new wardrobe until a small child calls a spade a spade and points out to everyone that the king was buck naked. In a real life scenario, the emperor is the central banks, and the commodity exchanges. When everyone recognizes that they are stripped of the gold they claim to hold, it may force them to stop parading around naked and put on some real clothes.
Can We Really Expect This To Happen In The Gold Market?
According to Eric Sprott, who oversees $10 billion at Sprott Physical Gold Trust, the odds are almost 100% that this scenario will occur. Eventually people are going to realize that gold prices have been manipulated and that the true gold supply could never keep up with the rising demands. When this happens, it could really shake things up in the gold market.
Gold Supply And Demand Problems
As far as supply goes, gold supply has remained steady for a long time. Demand, on the other hand, has increased significantly in recent years. Since 2000 when the Bull Run began, many new demand sources have added strain to the gold supply. Those include:
-Central banks, ETFs, sales of gold coins by the U.S. and Canadian mints, Chinese Consumption of gold has quadrupled, Indian Consumption has gone up by 30%.
These new sources of demand have led to the increase of gold sales by 2,268 metric tons per year. (On top of the demand that existed prior to the bull run). Supply has remained the same at 3,700 metric tons per year. There are also many unofficial gold sales that cannot be tracked with official numbers. Those include purchases of physical metals from coin dealers, ebay and many other sources.
The Central Bank Gold Scandal That Causes Gold Price Manipulation
One further weight on the gold market is the reality of what’s occurring with gold sales in the central banks. Central banks are legally able to lease their gold out for 1% to commercial and investment banks. Those commercial and investment banks in turn, go and sell the gold for a price generating more than a 1% return. The financial statements record it as “gold and gold receivables”. The receivables are not real gold, it’s the leased out gold that has been pilfered off to other investment banks who in turn sold the gold to China or some other gold buyer. So the deep gold reserves we are convince the central banks are holding on to, are more myth than reality. When this is realized by the masses, price manipulation will no longer be able to occur, and we will see gold prices take off.
Gold Prices To Skyrocket
As you can imagine, it’s only possible to cover up gold demand for so long before it quite obviously exceeds known supply. When investors get wind of this, those with money in ETFs and other “paper gold” investments, will demand physical gold to back their investment. When this happens we can expect gold prices to take off and be unstoppable. For those holding physical metal, the profit potential is incredible.
For more information on the gold market and on holding physical metals, speak to a Redhawk Financial Advisor near you today.