Kaye:  “There is a huge defense of the $1,300 level in gold.  That has become the big number which is being defended by the Cartel.  Gold occasionally pierces $1,300 to the upside, but very briefly.  Right in the low $1,300s zone there is a huge defense barrier which has been constructed, where naked shorts are piled on naked short orders....

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“It’s an immense wall which has been constructed in that zone.  I think for gold to make a serious advance from current levels we’ve got to see some evidence that those shorts can be addressed.  There is no question in my mind that the Cartel is behind this situation.  The Cartel is led by the Bank for International Settlements (BIS), the Fed, and so forth.

What is changing fundamentally, which I think is far more important from a medium-to-longer term investment position, is the real world dynamic.  This deal that was signed by Gazprom with China is a game-changer.  Worldwide gold trading is absolutely enormous in size because of the hypothecation and the rehypothecation of gold, and the development of high-frequency trading and so forth.

So the volume of gold trading on a daily basis is huge.  It’s been said that the only commodity that gold can hide in, because of the size of that trading volume, is oil.  So let’s talk about gold and oil for a minute because over time gold and oil tend to march together.

Oil has been trending higher, even as gold has come under renewed technical pressure.  The importance of agreements such as the historic one between Gazprom and China really can’t be understated.  This unifies in a very important way commercial and strategical Russian and Chinese interests.

My sources in both Russia and China have confirmed that China received a pretty reasonable discount.  With the situation Russia was facing that was to be expected.  Regardless, this deal meant a lot to both countries.  But given what’s happening with Ukraine and given what’s happening with the encircling of Russia and the pressure that’s being put on Putin, there was a certain urgency to this deal.  I’m sure that helped to move along the negotiations. 

You have to remember that these negotiations had been going on for about 10 years.  And then, suddenly, it just happened.  Our contacts have confirmed that China got the deal they wanted from an economic perspective, but Russia got the deal they needed from a geopolitical and hegemony perspective.  Russia also secured an immense amount of forward energy sales to a reliable buyer in a currency in which the Russians have confidence.

Russia is clearly trying to divorce itself from reliance on U.S. dollars and U.S. banks.  So this is another very big brick which Russia has removed out of the Petrodollar fortress.  How many more bricks need to be removed for the collapse to occur is a good question.  Perhaps a bit more seismic activity would bring down the Petrodollar fortress, including Ukraine becoming more of a flashpoint than it already is.

But this is a very important development for gold investors because the demise of the Petrodollar will clearly be correlated with the demise of the ability of the Cartel to protect the U.S. dollar as the world’s reserve currency, and to maintain the Cartel defense of the paper and electronically suppressed gold price.”

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