On the heels of one of the wildest days of metals trading in history, today one of the most respected veterans in the gold world stunned King World News when he spoke about the real reason he believes the Dutch got their gold back from the Federal Reserve. He also covered the incredible action in gold and silver.
James Turk: “What a wild day this has been, Eric. The volatility and the huge price swings remind me of the 1970s, but here is the important point. After getting smashed in the frenzied selling in the aftermath of the defeat of the Swiss Gold Initiative, both gold and silver had key upside reversals….
Continue reading the James Turk interview below…
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“Gold has climbed above $1210 – well above key support at $1180, which was temporarily broken early this morning – while silver is back above $16.50. It is hard to believe that silver touched $14.10 in the early Asian trading hours this morning.
I actually stayed up to watch what was happening, and one thing was clear: the selling was driven by the paper markets. At one point, I actually saw a quote for spot silver 20 cents above the March contract.
I don’t ever recall seeing a backwardation like that, but there is a clear message here — the buyers of physical gold and silver were waiting last night with open arms to scoop up whatever physical metal they could. This buying was a big surprise for the shorts who piled on after the news about the Swiss vote and thought they were in control. In reality, the shorts had their heads handed to them.
It goes to show where the power really rests, Eric. While the paper market can drive the price of gold and silver all over the place, those who own and want to buy physical metal are the ones who really call the shots. This is a reality that cannot be changed by the anti-gold propaganda of central planners and authors of reports like the one claiming that gold is in a 6,000-year old bubble.
The absurd title itself gives a clue as to the quality of this report. We all know that bubbles are temporary phenomena lasting weeks or months, not millennia.
People who have a vested interest – like the guy who wrote this report – are always going to state their point of view. Similarly, I also state my pro-gold point of view because of my vested interest in gold. The difference of course is that I have 6,000 years of history on my side. His 6,000-year bubble report was a fountain of misinformation and anti-gold bullion bank propaganda.
So the war against gold and silver is heating up. And the precious metals may lose a battle or two – like the Swiss referendum. But here it was actually the Swiss people who are the losers, not gold, because the precious metals will win the war. It would be illogical to conclude that gold’s 6,000 year history as money ends here.
There is one other point I would like to make, Eric. It concerns the news that the Dutch central bank has returned 120 tonnes of gold to Amsterdam over the past 10 months from the vault in the New York Federal Reserve. People are asking why the German central bank is still waiting for the gold it requested long before the Dutch. Why are the Dutch getting special treatment?
There have been a lot of answers given, except what I believe to be the most logical one. It has been overlooked, but it’s obvious when you consider that the market for lending gold is centered in Europe. The gold has been given to the Dutch central bank so they can lend it out to help feed the insatiable demand for physical metal.
I have no hard proof to confirm my conclusion, but it makes sense when you consider that the Dutch central bank has been one of the most active lenders and sellers of gold. Looking first at what it has sold, as recently as 1992 the Dutch central bank had 1,367 tonnes, which was 4.7% of all the gold reported by central banks at that time. They now report 612 tonnes, which is just 2.1% of the gold reported by central banks.
The Dutch central bank has been one of the biggest sellers of gold. Remember too that it was the Dutch central bank that forced the pension fund of the Dutch glassworkers to sell the gold the fund held because the central bank said it was too risky. The good news here is that the pension fund won its court case, and the Dutch central bank noted in its annual report that it may be liable for damages to the pension fund.
So are we to believe that the Dutch central bank is now suddenly being managed by gold bugs that want to hold the 120 tonnes of gold in their vault?
Looking at how much gold the Dutch have loaned, unfortunately we don’t know the amount because like most central banks, they do not prepare their annual report in accordance with generally accepted accounting principles. The Dutch central bank books gold in the vault and gold out on loan as one asset, even though these two assets are fundamentally different.
So why should we believe the gold shipped to Europe is sitting in Amsterdam? Central bankers only tell you what they want you to hear. It is more likely that this gold has already been re-shipped to Asia to help out some bullion bank short of metal, all of which highlights why the Germans did not get their gold. The Germans want to store their gold in Frankfurt, not lend it. That’s why the Dutch got special treatment.
But regardless of what happened to the Dutch gold, it is a side-show compared to what is happening here in London. The fractional reserve bullion banking scheme is rapidly unraveling.
The driving force in both gold and silver as we head toward the end of the year is coming from institutions – probably central banks and definitely Asian buyers, funds and family offices – that are taking delivery on forwards purchased earlier this year. This demand has caused backwardation to deepen yet again today to even more extraordinary levels.
Each day as backwardation deepens, we are moving closer to the panic I’ve been warning about as the bullion banks scramble for physical metal that is in extremely short supply. Be prepared for anything.”
IMPORTANT – KWN has many more interviews being released today.
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