Magurie:  “This tapering announcement this week will only accelerate China’s move to internationalize their currency with a gold-backed yuan -- something they are aggressively doing now (by purchasing gold)....

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“And with such divergent prices and contrived negative sentiment, there is no doubt that a major part of this Fed and Bank for International Settlements strategy in selling gold short, in defense of the dollar, is actually to force producers to hedge and sell forward production at these low levels -- in order to repay some of these rehypothecated bullion positions.

This has had some success in the $1,300s, and the mid-$1,200s.  But with some miners having sold forward production through 2014 it’s become far too stretched.  These same bullion banks, and China, are taking the long side of these forward sales, and they are going to profit immensely.

Just like when Barrick, Anglo-Ashanti, Newcrest Mining, and others were forced to unwind their 2008 and 2009 hedges, ultimately costing them billions of dollars to sell gold substantially below the spot prices to the bullion banks who had contrived the selloff in the first place in gold and silver futures.  This (forward selling had begun) at the time when Bear Stearns collapsed in 2008. 

But with most producers at or below the cost of production now, this window is closing.  Most producers will not be able to convince investors to lock-in prices below the cost of production.  What this means is mine supply is going to be reduced dramatically.  This is the perfect storm brewing.

The primary bullion banks such as Goldman Sachs, UBS, ScotiaMocatta, have been busy currently doing the rounds trying to sell the idea that gold and silver will decline significantly in 2014.  The primary targeting for this marketing is the producers, with the bullion banks trying to trick them again into forward sales at current low prices. 

The bullion banks are trying to scare and influence producers to jump on the hedging bandwagon before gold drops, and I quote from a closed-door presentation (at BlackRock) just last week by Simon Weeks of ScotiaMocatta, who is also the Chairman of the LBMA, ‘By another $400, to $800 in 2014.’  How ludicrous is that?”

KWN will be immediately releasing a second interview with Andrew Maguire discussing why gold will actually rise dramatically in 2014, and also what is happening in the physical market as the war in gold heats up.

IMPORTANT - KWN will be releasing interviews all day today with Andrew Maguire, former US Treasury Official Dr. Paul Craig Roberts and others.  Also, Andrew Maguire’s remarkable audio interview is available now and you can listen to it by CLICKING HERE.

Andrew Maguire’s trading service has returned over a staggering $134,000 for each and every (single) contract traded in the gold and silver markets over the past 16 months.  For those who would like to get more information on Maguire’s incredible trading service and to sign up you can do so by CLICKING HERE.

© 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 Dr. Paul Craig Roberts, Andrew Maguire, Michael Pento, Rick Rule, Gerald Celente, Dr. Marc Faber, Bill Fleckenstein, Eric Sprott, Grant Williams, Egon von Greyerz and David Stockman are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.

Eric King

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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.

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