Real Wealth #215 02/10/2009
Dear Gold & Energy Subscriber,
There’s an interesting interview of Marc Gugerli who is the Fund Manager & Advisor of Gold 2000 Ltd. entitled 'Paper gold market will crash at Comex'
Mr. Gugerli points out ...
“The majority of investors purchase Paper-(Gold)-Futures at the COMEX. The sellers or counterparties of those Gold-Futures are just a few very dominant players. Some of them have an in-official close link to the
He thinks this is about to change....
“I believe that the COMEX will default and the entire paper gold market will crash and gold could rise very quickly to $2000 even $3000 US Dollars (an ounce). When this happens it will be too late to exercise or to try purchasing physical gold. It’s the same with a house insurance, which you need before the beds are burning!”
This is one of the themes I have been hammering over and over again the past several years as I have been warning about the “Death of the U.S. Dollar” and the growing risk of a monetary collapse.
The price of gold has been abnormally held down simply because Comex allows its members to trade paper proxies for physical gold that vastly exceed the actual amount of gold in Comex storage. Worse, the amount of “paper gold” trading also exceeds the amount of physical gold that can be purchased if the majority of those owning COMEX contracts decided to take physical possession instead of a cash settlement on the expiration of the contracts.
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The theory behind this imbalance is entirely based on the belief that there will never be a genuine gold run. The regulators have set up a situation that is far worse than the supervision that took place on Wall Street and in the financial services sector which has ended up with massive banking and financial service collapses. The difference is when the banks, financial super firms started to fail the government started stepping in with cash bailouts. In order to prevent the paper gold market from collapsing, the US Government would have to be willing to pay off the COMEX paper with gold from Ft. Knox. There are some that say “yes of course, if it looked like the Comex would collapse the US Government would step in.” Here’s the rub.
If the US Government stepped in and started selling or lending its gold reserves to save Comex it would literally drive gold up another $1,000 $2,000, $3,000 even $5,000 in a frenzy of panic. The realization that the paper gold market amounts to a ponzi-scheme could well trigger the overall monetary collapse I am predicting could take place.
While this may sound like the hysterical warnings of a diehard gold bug, please keep in mind that when I warned that gold was heading to $1,000 an ounce back as early as 2002 and I was mocked by all sorts of Wall Street experts including analysts Bear Stearns, Merrill Lynch as well as many other Wall Street analysts, not only was I right about gold, many of these analysts and their firms are out of business.
When Dr. Doom warned that the stock market will melt down and the world’s banks were heading for disaster, he was mocked. He’s right, the worst lies ahead not behind us and a COMEX gold panic is, in my opinion, one of the catalysts we’ll see as his prediction becomes true. It’s not a matter of if -- but a matter of when.
Anyone not holding physical gold, 15% of their wealth, and who reads my warnings will grow to hate the mention of my name. Being right has a big price when making these kinds of dire warnings. Still, I repeat: those who don’t take immediate action and buy physical gold will face catastrophic crises.
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