has the co-o mill been commissioned?, page-29

Legume,

The US Fed QE ($85B/month) is not about gold, it is being used to hold up Treasury Bonds and Mortgage Backed Securities in order to attempt to keep rates low.

With so much Federal, Corporate and Private debt the control of interest rates is the number 1 priority.

The take-down in gold appears to be directly related to Central Banks beginning to require the return of their gold from the main global depositories in London and New York.

One of the easiest places to gain gold (which had been leased out and then sold) in order to repay Central Banks their gold has been that which is held in ETFs - GLD being the largest. So a major price drop (a la April 12th & 15th) has created the bearish environment which has allowed large financial institutions (bullion banks, et al) to gain large quantities of the physical metal.

The price plunge in April obviously triggered numerous stops and margin calls which became a self-perpetuating waterfall decline.

However, it also caused a major increase in buying physical in the Far East and Middle East. This major demand in turn overloaded the refineries who became very busy re-smelting LBMA 400oz good delivery bars into smaller quantities for the retail trade. Doubtless, most of this West-to-East transfer is unlikely to be reversed!

Pre the September 2012 latest QE by the US Fed, the GLD holdings stood at c. 1,340 tonnes - it has now reduced to c. 920t (ie -420t or 31% reduction).

On the US COMEX, the unallocated (registered) holdings have reduced from c. 80 tonnes to c. 30 tonnes (ie -50t or 62% reduction). At the current level of holdings in the COMEX there is a c. 1:42 ratio of gold oz per paper claim!

Goodness only knows what the equivalent ratio of oz to paper claims are on the LBMA but daily trading volumes have remained huge (c. 4,000 - 8,000 tpd).

An interesting aspect of all this has been the silver market over the same timescales. As gold and silver tend to be reasonably well correlated, you would expect similar drawdowns in the SLV (silver ETF) and the COMEX silver holdings. However, SLV has shown a 100t increase and the COMEX has shown a 200t increase (c. 18%) ???

So, although the silver price has tanked along with gold, the actual drawdowns in metal have only occurred in gold.
CPDLC