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Turk:  “This is option expiry week for gold, Eric, so here we have yet another instance of the gold price getting hit as options come to the end of their life.  This pattern of downward pressure on the gold price during option expiry has repeated time and time again over the years. So this long track record of these price slam-downs is just another piece of evidence demonstrating how the gold market is rigged....

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“Today the Comex options expired.  The over-the-counter options expire in the next couple of days, so I suspect the downward pressure on gold will remain a bit longer.  But that selling pressure will stop as we get closer to the end of the week.

A lower gold price is what the central planners want.  It gives them an opportunity to claim that inflation is under control, even though central bank printing presses are running overtime, which of course is the reason that world stock markets continue to climb higher.

A lower gold price is also what the Chinese want because it enables them to get more physical gold for their dollars.  Lower prices are also what the shorts in the hedge fund community want because they have been piling-on and building up their short positions in anticipation of the downtrend in gold prices continuing.

But the rubber band is stretched pretty far at the moment.  So the relief rally, when gold and silver bounce from these levels, should be a good one.  We only have to wait for the options to expire for some sort of relief rally to start, and hopefully that rally will finally mark the beginning of a new and prolonged uptrend.

I expect that the relief rally will begin as shorts cover before the US Thanksgiving holiday.  Liquidity tends to drop over holidays, which makes it harder for shorts to cover in size. Given the huge speculative short position now being carried by hedge funds, anyone short should be focusing on being the first one out the door.  Others who follow during periods of low liquidity will typically end up covering their shorts at higher prices.

It is important that the June lows in gold and silver have not been broken.  Nor has the June low in the XAU, but it is threatening to do so.  The HUI has already slipped below its June low.  This drop in the price of mining shares is no doubt contributing to the all of the negative sentiment.  The pessimism seems worse now than it was back in June, Eric, and I think this has happened because of the news coverage.  The media is not covering all of the Chinese buying the way they did a few months ago.

I guess they think this continuing flow of gold from West to East is old news, and maybe from their perspective it is.  But this exceptional demand for physical metal remains one of the most important factors in the gold market today.  As a consequence, central banks continue to struggle to find physical gold to meet this insatiable demand for physical metal.

It was therefore not a surprise to me that the central banks are trying to do a deal to get their hands on Venezuela’s gold.  The bankers were undoubtedly irked - and I am sure caught off guard - when Chavez demanded a couple of years ago that Venezuela’s gold reserves be returned to Caracas.  It took the central planners months to get their hands on that 200 tonnes.

To get to the heart of the matter, Eric, the overall most important factor today that investors should be focusing on is central bank money printing.  Stock markets are soaring because of it.  And have you seen what is happening in the art market?  Record high prices are a regular occurrence.

There are people out there who would rather pay $100 million for a Warhol, than have $100 million sit in a bank.  There’s an important message here.  That Warhol is not going to be debased like the dollar.  There is no printing press turning out more Warhols, which is I think the key point.

The people with big money get it, Eric.  People with that kind of money are not dumb.  They know what’s coming and they are preparing for it.  They are dumping their dollars as fast as the Federal Reserve prints them.  And that means it is only a matter of time before the rigging of the gold price blows up.

Remember, hyperinflations don’t start with the middle class dumping the currency.  They start with the rich.  The rich - the so-called smart money - sees what is happening first, and responds to it.  That’s why stock markets and the price of collectibles are soaring.  These events are a clear vote of no confidence in the dollar.

It won’t be long before this message about the debasement of the dollar works its way down to the middle class, but by then the hyperinflation of the dollar will be even more obvious.  So we should keep doing what the Chinese are doing -- accumulating physical gold and silver.  This is how individual investors can place their money right along side what the truly ‘smart’ money is betting, and that is China betting on dramatically higher gold prices.”

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© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

The audio interviews with Michael Pento, Andrew Maguire, Gerald Celente, David Stockman, Art Cashin, Dr. Stephen Leeb, John Hathaway, Bill Fleckenstein, James Turk, William Kaye, Eric Sprott and Jim Grant are available now. Other recent KWN interviews include Marc Faber and Felix Zulauf -- to listen CLICK HERE.

Eric King

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