Could This Be the Start of Something Big for Gold and Silver?

SpotGoldOn Thursday of this week, the dollar tanked and the euro rose dramatically on political air. Gold, which is supposed to benefit from a weak dollar, didn’t do much of what it was supposed to do the day the dollar tanked. But it surged on Friday, Dec. 4, the day afterwards.

Given the fraudulent paper gold market activity generated by the likes of J.P. Morgan, Goldman Sachs and other legal but criminal enterprises, you are justified if you believe the Friday rise is a one-day wonder. And indeed it might be.

Then again, I have always believed that eventually Nature’s laws will prevail over the criminals. So we have to wonder if “eventually” has yet arrived or will the criminals continue to rob, rape, and pillage honest citizens around the world by slamming the price of real money so the fraudulent stuff they create out of nothing continues to serve as their clandestine means of robbing all humanity of material comforts.

chartThere may be a ray of hope that justice is about to be served. Let me explain. On your left are GoFo Rates for gold. The GoFo rate = (LIBOR-Gold Lease Rate). In other words, what this tells you is that short-term gold is more expensive to borrow than U.S. dollars. One reason that might be is that a growing number of investors may be starting to doubt what we know has been true, namely, that the paper gold market and the real gold market are two different markets. The paper market pretends to be all about the real thing—physical gold. But that’s a lie. Not only has the paper “gold” volume recently skyrocketed to a high of 300:1, but also, the amount of gold at the LBMA and the COMEX are at all-time lows. And based on the work of Koos Jansen and others, there is every reason to believe much if not most of the gold that the U.S. Treasury and other western governments pretend to hold has been sold off to China. I have read recently that the amount of physical gold available from the LBMA is down to about 6 tonnes, which is miniscule compared to paper volumes. As long as people believe they can take possession of gold bullion if they want to, they are satisfied to keep “their gold” in paper form. But if confidence is lost in the existing system, a still small but growing number of investors may be asking for delivery. We know that huge amounts of gold have been leaving London via Switzerland for China. And so, as David Jensen has thoroughly documented at, it is only a matter of time before the gold market blows up. Given the enormous amount of “paper gold,” if even a small percentage want to take delivery of gold, it will send the yellow metal into a moon shot. The GoFo rate suggests this may in fact now be starting to take place. All I can say is it’s a good thing the stock market rallied today (very possibly with Plunge Protection Team manipulation) or we might have seen a deluge out of paper into gold. When that day arrives it will be akin to trying to force Niagara Falls through a garden hose.

Perhaps more telling are the following statistics on silver, passed on to me and a group of other Austrian economic thinkers. Here is what this person said: “It simply cannot be coincidence that, with bank leverage at unprecedented levels on the Comex, reaching 325:1 registered to open interest yesterday, that Dec15 deliveries are non-existent. Check this out:

• In Dec15 silver, where the leverage ratio is near historical norms at 19:1, there have been 3,507 posted ‘deliveries’ this month while Dec15 open interest has fallen from 4,078 last Friday to yesterday’s 591.
• In Dec15 gold, however, where the leverage ratio is the aforementioned 325:1, there have been a whopping 44 posted deliveries while open interest has fallen from 7,849 to 3,799.

“The scam/sham/illusion plot thickens.”

Could this be why the Fed is pushing now to raise interest rates? We know from the work of professors Summers and Barsky of Harvard that they know the real rate of interest must be positive to squelch the price of gold. Indeed, Paul Volcker was able to crush the gold price at its $850 peak in 1980 by raising real interest rates to the highest they had been since the Civil War. What could be more important to the thieves at the Fed and in our elite banking system than to keep people believing in the dollar? Otherwise it’s “game over” for the ruling elite, who have kept the masses down on the mushroom farm, believing that the dollar is better than gold.

Another matter of concern is the growing conflict between the NATO countries on the one hand and the BRICS on the other. We know now that Russia is selling huge amounts of oil to China in exchange for gold, even as China continues to siphon off most of the gold from the west. Notwithstanding the IMF’s acceptance of China’s currency into the SDR basket, making it an “acceptable reserve currency,” China and Russia in particular may well be keeping the pressure on the West by setting up their own banking system with gold as the common currency. Indeed that seems to be happening. And irony of irony is the fact that Iraq is also selling its oil to China, but you can bet your bottom dollar it is not accepting dollars from China or if it is, it is trying to rid itself of dollars as soon as possible.

DollarIndexWith the dollar the inverse of gold, I think the chart on your left from Michael Oliver on Thursday, the day the dollar bit the dust, very, very hard is worth noting.

On Wednesday after the markets closed, Michael sent out a chart for both the dollar and gold. His momentum chart, combined with a double top for the dollar (March 2015 @ 100.39) and (Dec. 2 @ 100.51), convinced him that a top was in for gold and that we were getting very close to a turn in direction for the buck. The day before the dramatic turn down for the dollar, Michael suggested that a turn below 99.25 on the dollar index would constitute a downward trend, at least in the short term. Now we certainly have gotten that. The dollar index closed on Friday, Dec. 4 at 98.25 and with that gold rallied by nearly $25. Now it could be that I’m simply engaging in wishful thinking, as I am positioned to benefit from a weak dollar and strong gold price. But I think the negative GoFo rate, dwindling supplies of real gold to deliver against those fake gold contracts, and now a dollar that looks like it likely has peaked are all very bullish signs for the dollar. Dr. Robert McHugh’s call for $1,425 gold by the end of 2015 may be off in timing. But I’m thinking now we may see that or much higher prices during the first quarter of 2016. It’s all about confidence and with geopolitical events, a global economy near the crash point, against trillions upon trillions of worthless fiat currency units out there to bid up the price of gold, there is no way to predict “how high” gold will rise against currencies that have value based only on con artistry. The day when gold rises toward infinity will not be a happy day. But sadly it is a predictable event, even if it can’t be timed.

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.