OK, I'll have a crack. However, the reasons I will give only hold water if you believe that the price of gold is deliberately manipulated by the US Govt.
OK ... the main Gold "paper" trading market is the COMEX. The idea is that anyone can buy or sell Gold (I think 1 Contract is 100 ozs) or Silver (I think the Contract is 5,000 ozs) ... I may be wrong here, but I can't be bothered looking it up ... in any case, it's 'about' these sort of numbers. Little guys can (and do) Trade, but "who cares" ... Sinclair and Murphy were encouraging the little guys to take physical delivery (and some did), but once again, "who cares" ... the big guys run the show.
The big players that trade on these markets are Central Banks, Bullion Banks and the like. There are a lot of "Bucket" Shops that MAY trade here as well ... although the majority of them take the other side of the Trade themselves as they know that over 90% of punters that play in their yard are likely to do their dough (eg: Oanda, Easy Forex and so forth) ... SOMETIMES (if a Trader is 'good') I understand that they will cover the Trade in the real world, but I digress.
Normally the Contracts settle in paper ... ie: the Metal never leaves the Warehouse. For this reason, there is suspicion that the Trades are leveraged and that there is not "real physical metal" in store to make good if all trades were liquidated for physical delivery.
The theory is that JP Morgan, Goldman Sachs and the rest of the "cartel" are "instructed" by the US Govt to take the Gold and Silver price down by selling heavily. Because it is a paper market, who knows whether they really have the physical metal to "make good" ... and who cares, nobody wants it anyway. They are just another formula in the hedge managers automated fiat trading platforms. At the end of the day it generally washes out.
Now, how do they make money selling Short (presumably for less than they purchased for) ... well, given that they have been instructed to bring the price down, the quid pro quo is probably inside knowledge on a profitable Trade to compensate. Alternatively, they could even by funded via a secret slush fund. Nobody knows for sure and nobody will ever know. This is HUGE and implicates the whole rotten lot of them.
Why would they want to supress the price of Gold ... well, that's easy ... Gold is MONEY. It is in direct competition to fiat and the Bankers love fiat because they can create it out of thin air and generate more fiat profits. Gold is nobody's liability. You have it or you don't have it. You can't "make" any more of it. It is a finite resource and, thus, you can't "create" any paper profits ... well, except for this scam ....
We have all heard of Central Banks "leasing" gold to the Bullion Banks. Well, the rationale was that the gold was sitting in vaults just loafing about and doing nothing. The CB's thought "well, let's lease it out and at least get something in return" (the rate of return is historically very low ... way less than 1% and sometimes NEGATIVE [go figure ... well, that in itself really uncovers the scam for what it is ... why would you PAY someone to lease your Gold]). They were comfortable with this as the Lease terms were for a period of time and at the end of that period, the Gold was supposed to be returned. OK, here is where it gets muddy ... the theory is (and this is where GATA, LeMet and Bill Murphy come in to play) that the Bullion Banks took physical possession of the Gold and then immediately sold it into the market and invested the proceeds into safe haven assets (Bonds and so forth) ... so, they made good profits with absolutely NO RISK PROVIDED they were not required to return the Gold at the end of the Lease Term ... if they did, it was absolutely critical to them that the current Gold price was less than the purchase price, else they were in real trouble. My understanding is that CB's are not asking for the Gold back (yet), but are simply rolling the Leases. As a result, the Bullion Banks have a very real reason to keep the price of Gold down (and Silver). The issue here is that the LEASED Gold is NOT reported separately to PHYSICAL Gold by the CB's ... so they are complicit in the scam. As a result, there is speculation that the CB's only have about 50% of what they report they have.
Now, I may be a crank with respect to all of this, but that's my take after reading piles of stuff on this subject over many years.
Now, who thinks this isn't better than a Robbert Ludlum novel!
Anyone else want to throw a theory in the ring (or expand on mine)?
