Maguire:  “The question that keeps coming up to me is how long can this paper market selling continue?  How can it continue to drive price when at the same time we are actually seeing such a massive transfer of physical underway into the Eastern trading blocs?

This recent heavily margined forced capitulation was absolutely Fed-induced.  And the only short-term goal of this was bailing out the defaulting bullion banks.  If you remember, we talked about this back in April after ABN AMRO exposed the whole LBMA system to a probable default.  This was a (major) crack in the system....

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“The result of this official intervention:  There’s a tradeoff involved here because it’s tipped the balance and irreversibly broken the relationship between the paper markets and the global physical markets now.

The majority of all traded volumes are actually paper gold in the far less transparent over-the-counter foreign exchange markets.  People believe it (the manipulation) is all happening on the COMEX, but it’s not.  This (over-the-counter trading) is actually much more of a tool for the Fed and the Bank for International Settlements (BIS) than directly intervening in the COMEX.

You have to understand that gold/currency crosses are the primary focus of these official interventions that we see daily.  In other words, unlike all other commodities, gold and silver are first and foremost a heavily central bank manipulated (market), and are traded as a foreign exchange cross.

Now, Eric, here’s the rub.  This has created a huge problem for the central banks.  As a tradeoff in supporting the dollar it forces the shorting of gold, which then in turn leads to the Eastern central banks exercising the other side which is their long (gold) side.  And they convert that into real physical allocations at the daily precious metals fixes (in London).

In the past this (activity) was just a thorn in the Fed’s side.  The bullion could be borrowed or replaced at a later stage.  But the sheer volume of bullion being transferred out of the LBMA has now become a major threat to the Western central banking system.”

Maguire also added:  “On one hand the Fed is forced to prop-up the foreign exchange and financial markets to avert an imminent global crash, (which has the undesirable effect of) allowing the gold to be consumed by Eastern trading blocs.  The demand for physical gold has never been higher.”

IMPORTANT - The extraordinary audio interviews with Eric Sprott and Andrew Maguire have now been released and you can listen to them by CLICKING HERE.  KWN will also be releasing written interviews all weekend with billionaire Eric Sprott and Andrew Maguire.

Andrew Maguire’s trading service has returned a staggering $98,715 for each and every (single) contract traded in the gold and silver markets over the past 12 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.

IMPORTANT - This is part II of a series of written interviews which will be released and it is only a small portion of what Maguire had to say in his extraordinary audio interview.  The KWN audio interview with Andrew Maguire is available now and you can listen to it 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 Eric Sprott, Andrew Maguire, John Hathaway, Dr. Paul Craig Roberts, MEP Nigel Farage, Rob Arnott, Egon von Greyerz, Gerald Celente, Jim Grant and Art Cashin are available now.  Also, be sure to hear the other recent KWN interviews which include Marc Faber and Felix Zulauf by CLICKING HERE.

Eric King

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