Barron:  “Gold and silver are having a fierce rally on the heels of a release from the World Gold Council, but I will discuss the remarkable events which are taking place behind the scenes that are the real reason for this rally in just a minute.  First, this World Gold Council report discussed outflows of gold from the ETFs.  They were also confirming what KWN has already reported -- that this gold is going straight into Asia.

Somebody from UBS was interviewed this morning, and they were also saying, ‘The gold leaving the COMEX vaults is likely headed to Asia.’  It’s obvious this is what has been happening for many, many months now.  If you look at the premiums in Shanghai today, they are running at a steep $22....

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“So it’s become quite apparent that bullion banks have been taking the gold out of the ETFs and capturing the premium in Asia by selling the ETF gold overseas.  But the interesting thing here is the physical demand, and I have been discussing this on King World News for some time. 

There was a 37% increase in jewelry demand, a staggering 78% increase in gold bar and coin demand, and there was also a 63% increase in investment demand.  These are remarkable numbers.  There was a stunning 71% rise in total demand from India, and an 85% rise in demand from China.

There were some additional jaw-dropping numbers that have come out of China in a separate report.  During the second quarter there were 385.5 tons of gold consumed in China through jewelry.  That is a huge percentage of world production, and that figure is double what was recorded in the previous year.  That’s absolutely astounding.

This data is also indicating a massive rise in the importation of gold into China from the previous year.  Demand for gold is just exploding all over the place.  In India they just increased the gold import duty once again.  It’s been rising steadily from 2% to 8%, but India just raised it again -- this time to 10%.

It is highly likely that the Western central planners, the Fed and the ECB specifically, have demanded that the Indians impose these taxes and duties in a desperate attempt to choke off physical demand for gold in India.  Western central planners can’t use much influence on China, but they can strong-arm India.

So there has been an attempt by the Central Bank of India to greatly decrease the amount of money going into physical gold, but it’s not working.  People always find another way to get physical gold.  Gold is now the most seized material at the borders and at the airports in India.

There is a very, very healthy black market for smuggled gold into India.  This is what happens when you try to artificially kill demand.  The people of India want the gold, and the authorities are desperately trying to kill it off and they are not being successful.  So the gold is being supplied through the black market and smuggling, and that will just continue.”

Eric King:  “These desperate attempts by the Western central planners to stop the flow of gold into India.  It feels like whatever gold is left in Western central bank vaults is quickly being depleted.  Meaning, they don’t have the gold to continue to supply to India and the rest of Asia after the most recent failed attempt to discourage physical buying blew up in their faces.”

Barron:  “The Fed certainly doesn’t want to see the COMEX blow up.  In our last interview I said to you that this price suppression in the gold market is not sustainable.  You just can’t have this physical gold pouring, and I do mean pouring out of the West and going to the East without serious dislocations.  And it will blow up the COMEX.

The Americans certainly don’t want to see this because that would precipitate an even greater run on physical gold.  So the situation is becoming quite desperate and that’s why you are seeing the explosion in both gold and silver today.  The Fed and the ECB are desperately trying to hold the system together, but at the end of the day they are losing the ability to control the rapid loss of confidence that is taking hold. 

Western central banks claim that there is a lot of physical gold available for purchase.  That is pure propaganda and a lie.  I now have reason to believe that Asian central banks are requesting that their gold, some of which has been stored in the West, be sent to Asia.  This is what is causing the short covering rally in gold.  The Asians know the Western gold system is very close to collapse and they want the physical gold in their possession.

This is what is happening behind the scenes.  A very large part of the 1,300 tons of gold that was shipped out of the Bank of England, and gold that is being shipped out of the Fed as well, is going into the vaults in China and other parts of Asia.  There is a massive run on physical gold right now and this is creating a squeeze. 

The bottom line is the Western fractional reserve gold system is now on the edge of collapse and the Asians know it.  You can expect to see many more days like this in the future as the run on physical gold intensifies and the squeeze accelerates.”

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Eric King

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