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The Federal Reserve Is Selling Paper Gold and Buying Physical Gold
The good ole "American way"—through proxies

BY ROB KIRBY 10/04/2010

A couple of weeks ago, I pitched an idea to some associates of mine who are involved in SERIOUS [tonnage] PRECIOUS METALS procurement—physical metal only—let's just say HUGE money. I asked them if they would be interested in purchasing an “option”—cash up front—for the exclusive rights [first right of refusal on off-take] of a gold producer [miner] for a set number of ounces for 3–5 years "at the market"—using LBMA pricing [a.m./p.m. fixes] in the future. The answer I got back from my associates was "show us a terms sheet, we definitely have interest."

So, I spoke to a friend who is very close to an intermediate producer who is in the mode of raising money right now. I had them ask the producer if they would have interest – the producer said, "YES, we are interested—but just to let you know—J.P. Morgan has been asking us if we would sell them the same option." So, while gold producers have shuttered their "gold hedge books"—the Bullion Banks are "synthetically" trying to keep physical output captive—I would suggest FOR THE EXPRESSED REASON THAT THEY SELL EVERY PHYSICAL OUNCE AT LEAST 100 TIMES OVER.

Gold is going to get EXTREMELY scarce in the future folks. Big money interests are now cutting off [or bidding for / gaining exclusive access to] the traditional bullion supply chain "at the pit."

The shorts of "paper gold" at J.P. Morgan [the Fed in drag] are selling the daylights out of the paper market and simultaneously buying exclusive rights to producers' future production so they can try to fudge their way through an unmitigated fraud and settle a big enough chunk of their bad bets to keep this "systemically ruinous" precious metals Ponzi scheme alive.

Price of Gold and Interest Rates Are Joined at the Hip

The academic research that outlines the inter-relatedness of gold and interest rates is succinctly laid out in a 2001 treatise, Gibson's Paradox Revisited, by Reg Howe. From this one can deduct that ANY rigging of the gold price must go hand-in-hand with simultaneous rigging of interest rates.

Folks would do well to realize how neatly emerging details of Fed surrogate Morgan's "stealth" activity in the bullion market dovetails with their obscene, obsequious activity elsewhere in their derivatives book—particularly their JUMBO TRILLIONS sized interest rate swap positions.

Continue to read:
http://www.financialsense.com/contr....-and-buying-physical-gold

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