04 December 2015

NAV Premiums of Certain Precious Metal Trusts and Funds - Stay Right, Sit Tight

“If you shut up truth and bury it under the ground, it will but grow, and gather to itself such explosive power that the day it bursts through it will blow up everything in its way.”

Émile Zola

The above quote was on the header of this blog the other day.

I mentioned that gold was oversold and that sentiment was at a washed out low.

The question to ask is not, why is gold going higher today? It is obviously a short squeeze that was set up and fueled by a concerted effort to push the prices much lower to unsustainable levels for the past two weeks.  I think there were multiple motivations for this.

For some, it took the luster off gold as the ECB and other central banks continue printing money, fruitlessly, but they do.  And for others, it was a chance to knock down the December open interest, given the excessive number of claims on a shrinking supply of deliverable bullion.

Silver has been moving freely at The Bucket Shop, thanks in large part to CNT, but physical gold has been in a virtual lockdown.  I include the scorecards for this 'active' month of December below.

The real question to ask is why do we permit such blatant price rigging and market manipulation, without regard for the real world consequences?

I will not say that this is 'over.' The markets have not suddenly become transparent and honest. And the hedge funds and some individuals are getting a punishing lesson in that this morning, being suckered into a bad bet by the usual jokers and their enablers, who spread stories designed to manipulate sentiment.

But increasingly there is a recognition, of almost one person at a time, that this pricing is heading towards a dislocation because of a long term action to control it against the market trend.

If Gresham's Law has any validity at all, and I firmly believe that history shows that it does, and if the markets stay 'free' enough to allow people to buy and sell things at anywhere near a voluntary price, then gold is going to continue to flow from West to East, and will not cease until the gold rigging ceases its operations.
"When a government overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation."
Real gold is flowing from West to East. And what it is leaving behind is a pile of 'synthetic' gold positions and IOUs.

While I am glad to see this rally, I will get excited when gold starts going up 100$ at a time,  mostly overnight.

And you do not wish to be on the wrong side of that when it comes, although there is little enough security in this world, when lawless men are allowed to have their way.  And that raises the all important question of our time, of transparency and reform.

Stay right, and sit tight.