How A Metals Dealer Works

jsmineset.com / By Jim Sinclair / October 19, 2012, at 10:01 am
Jim,
Happy to have brought a smile to you yesterday. Days can be long and trying at times, so a laugh is welcomed. I have hesitated for weeks to write this but I am not in sync, so here I go.
The action in the ‘Crimex’ this week was not unexpected. The political demands and possible (a hair’s breathe from) commercial signal failure, meant the paper gold printing machines would be pushed to emptied toner cartridges. As said, not unexpected. Temporary but not unexpected.
My head scratching comes from the question, where does the ‘physical’ metal come from to satisfy the growing buy stops hit as price comes down? And to piggy back on this question, do foreign entities, Central Banks , and investors ‘take’ delivery; in other words, leave the Bullion System with the metal? Or does it sit in their care? (lol)
Realizing they are ‘Bullion Banks’, could you step through how they receive their physical metal from miners/refiners and the mechanism used to arrive at that price (I am familiar and understand the ‘FIX’). But it appears that the industry ‘allows’ these banks to paper push the price paid around based solely on the Bank’s own contract positions.
This is where I scratch my head , WHY??? The miners hold the commodity and are at the mercy of the Bullion Banks for their very survival, as it appears to me . Where am I wrong?
CIGA Earl
Dear Earl,
Many are asking themselves the same question.
In order to explain to you the proper answer to this question I need to ask you a question. What is the “Strong Dollar Policy” of the US Treasury? The answer is it is a policy of support of the dollar at key technical points so that the dollar will decline in an orderly fashion. This has been in place since the dollar was trading in the mid one hundred and twenty-five area on the USDX. In comparison the “Weak Gold Policy” has been in place since $248 which means gold’s appreciation will not be an insult to the dollar by spiking to $3500 and beyond, but rather rise in an orderly fashion. How could you not have noticed this in both the dollar and gold? This opens the bonanza to the metals dealer to run what looks like a huge short but rather to operate their business where I was pleased to make one half a dollar unwinding the spread (a long position versus a short position offsetting between my buying product from the producer versus Comex short).
Today the metals dealer want to make fifty dollars, not 50 cents on that spread.
I owned a metals dealer here and in London. I made a cash market for gold. I know about what I speak. There might be outside of the gold banks less than five people who understand the big short that is always being screamed about by the so called gold experts, and COT is a crock. You are looking at least seventy-five percent at a managed spread position. What happened at $1800 then at $1775 and again at $1750 was the long side of the spread was dropped, leaving the short side exploded and the gold banks pounding the market to make a 50% profit by putting back on the long side of the spreads, locking the huge physical long versus the Comex short into a no risk position that reads on COT like the greatest short in human history. The same is true of silver. In this financially debased world, with the rules of a metal dealer’s company and a little help for standard financial fraud and you will never find this in the COT numbers.
I am telling you the truth. I am telling you how a metals dealer works. I know because I was successful in the entire 1970s gold bull market play against this game.
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