Gold Gunfight at the COMEX Corral.....................from Rico

CME's COMEX has been manipulating the 'spot' price of Gold for years by dumping massive amounts of "Paper Gold' naked shorts at strategic times (like O'my God it's early, say 3:00 am before anyone is awake and trading) and seemingly on cue (NFP Fridays, FOMC, etc). This, combined with a chronic shortfall of physical metal that can be delivered to cover redemptions of paper contracts, has meant that as the price of physical Gold gets moved around the plate of the Bullion Banks, the only thing used to 'settle' these Paper Gold contracts has been unredeemable FRN's (aka USD).

- The game appears to have changed suddenly.

 

Of late, the spot price of Gold has been moving in seeming correlation with the USD/CNY exchange rate instead of the COMEX. This suggests China has increasing influence over setting the Gold spot, while COMEX has decreasing influence.

- I'd suggest watching the USD/CNY exchange rate in future. Gold could reach $1400 if the US revalues to below 6 Yuan, and it could reach $1600 @ 6.25 Yuan if China revalues Gold to the Yuan.

 

Either way, owning COMEX Paper Gold is a lot like bringing a picture of a gun to an actual gunfight, and right now China-Russia-India have the real/physical Gold, COMEX does not.

- Decide for yourselves which you'd prefer to hold when this gets ugly. Paper is infinite, but the ability to pay with paper is not; on the other hand, physical is finite, but the ability to pay with physical is not.

 

Paper or physical? 

- Now, just as an exercise in fun, consider the USD priced in Gold and then answer the above question.