“It’s pure short selling in the paper market, and the focus of all of this all is to reach and target as many long-stops as possible which they have done this afternoon. Then they can obviously cover these paper short sales.
Historically, in order to succeed when the official sellers have come in, they have relied on being able to back up the paper market interventions with real physical supply, albeit, hypothecated or re-hypothecated, borrowed or leased bullion….
“It’s easy to look at the technicals today and see this cascade down, that’s the long stops being tripped. But what we are seeing now is none of the physical supply is appearing. None of it is going to back up these sales. So this is a clear sign of weakness.
Now the bullion banks are really trading the Fed’s ‘virtual market book,’ but they are constrained. They are really constrained as to how far they can push these paper prices because the … Eastern hemisphere central banks, who are competing with each other to buy (physical) bullion, these are the guys that are picking up this discount. This (smash in gold) results in an exponential ramp-up in their physical buying.
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