Is A Force Majeure Of The Comex Gold Exchange Really Just A Tinfoil Hat Theory?

On Thursday Reuters reported again on the tight supply conditions out of Asia. The story in the press has been reported as “high premiums for physical” but in reality the following quote is more descriptive.”Honestly, we don’t have enough physical gold to supply to the Chinese said a dealer in Singapore.  ”This is mad.”
Such stories are widespread and extend even to South Africa. According to the U.S. Census Bureau’s foreign trade division, 20,013 kilograms of unwrought gold worth $982 million left New York’s Kennedy International Airport for somewhere in South Africa ["Is South African Mint Short of Gold?"].

I’ve been posting articles on the complete stoppage of delivery to the Shanghai  Gold Exchange (SGE). Night after night there have been no deliveries made. The gold is “somewhere else.” Thursday, before the Friday POG dump du jour, demand was picking up again as 19,527 kg traded in the Au 9999 class. Then ignoring Chinese demand after the Shanghai closes, the bear raids commence. At least Chinese grannies who missed the first swoon will get a second chance. With the extreme storage of actual gold available — if we get another spike over 25,000 kg in SGE demand — the paper gold tigers kiss their crazy asses goodbye.

The other story that gets big play in the American press is the large-scale dumping of the gold ETF by institutional investors. This is now an old story. The GLD ETF coughed up 96,000 oz in Friday’s rout. That’s not completely inconsequential, but since I’m  convinced that this bear attack is designed to spook ETF holders out of gold shares that can be exchanged in 100,000 share lots for physical, this is really not much of a take. So the whole institutional dumping story is exaggerated at this point. The way the market traded Friday, I was expecting more. The managed-money Boyz may have spit out some more paper contracts, but those players are already at the lowest levels of paper gold exposure since the gold bottom of late 2008 (see last chart). (more)
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