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Where’s the Gold?

-- Posted Monday, 25 August 2008 | Digg This ArticleDigg It! | Source:

By James West

Last week I read that a fellow named Richard Smith who is a coin dealer in Phoenix, Arizona had upbraided Chris Powell, secretary and treasurer of the Gold Anti-Trust Action Committee, for mis-interpreting the suspension of 1 ounce Gold Eagles sales by the US mint as proof positive that the global inventory of central bank-held gold was probably much less than reported. According to Mr. Smith, the suspension was a temporary and normal-course-of-business inadvertent running out of the gold “blanks” from which these Eagles are minted.

I thought this was remarkable, because the article I read congratulated GATA for posting the criticism openly on its web site. Obviously, but apparently only to some, the surge in gold demand that caused the sudden shortage was the more eminently revealing piece of information than was the quibbles over cause.

And now here’s and with warnings prominently posted on their web sites that it might be tough to fill orders for certain gold bullion products due to unprecedented demand.

This is either a fantastic marketing job or there’s some real funny business going on in the gold market.

I’ve never felt sufficiently qualified to weigh in on the GATA premise that the gold price has long been suppressed by a cartel of major banks in collusion with certain U.S. politicians of the highest rank. To me, it’s a given that politicians seek office to exploit their influence for personal enrichment while pretending to have the public interest at heart.

Certainly the fundamentals of the economy relative to the price movement of gold have baffled every intelligent theory of pattern recognition postulated throughout the Internet that I’ve ever read.

If the U.S. Mint can’t get gold, yet the reported holdings of these central banks around the world can’t come up with enough to supply the sudden surge in demand, doesn’t that suggest that there’s severe discrepancy between the accounting of the central banks and the unfolding reality of no gold blanks? I mean, did the sudden surge in interest materialize while the CEO of the mint was having a burger somewhere?

I don’t recall seeing the sudden suspension of gold sales by any division of any mint during gold’s more meteoric price surges during 2006 and 2007. Gold has just come off one its most deeply corrective price drops of the entire 6 year gold cycle. Normally I would think that means that nobody is interested in gold anymore and so everyone is selling all they can. Obviously, I am dumb.

Supply and demand theory has clearly gone the way of the Edsel and some mysterious new economic force prevails – one that is not yet known to any save a special handful of (I must assume) carefully appointed individuals who are selected for their discretion and co-operative natures.

I expect the recent drop in the price of oil now portends that some major corporation must soon announce the suspension of gasoline sales, and the recent destruction in real estate demand means we’re running out of houses.

Another interesting aspect of this situation is that both and stipulate that they have plenty of other types of finished gold products in stock – its just the Eagles that have run out.

Is there something special about the these coins that make them that much more desirable than all of the other minted gold coin products? Perhaps its eagles that are really in demand, and its merely a coincidence that the shortest supply of them exists only on these gold coins?

I seriously had to go look in the mirror and check my beard to see that it had grown while I inadvertently napped for 100 years. Seriously – how else can you explain this brave new world?

I am told by gold traders that the gold market is tiny compared to other commodities and derivatives markets. If this is the case then why does “gold surge on concerns regarding Russia and Georgia”? Is this tiny little group of traders connected by some private intranet so that they can ensure their collective scampering hither and thither into and out of gold based on arcane media interpretations of their activity?

As it turns out, US and Canadian mints are having difficulty fulfilling orders, as is UBS, due to an “unprecedented level of demand”.

To which I can only wonder – Where’s the gold?

-- Posted Monday, 25 August 2008 | Digg This Article | Source:


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