Here’s a portion of a very instructive and predictive post from the past, FOA (06/12/01; 11:23:21MT - usagold.com msg#77), when gold was trading at $270/oz. I call it the gold bug’s big bang theory, GBBBT.

“Onward
By now everyone should understand that for every dollar that can be bet on a rising price of “paper gold”; three dollars can be made available to create and sell them the other side of that bet. When the big political moves come later and change our currency game, therefore our gold pricing game, this very same fiat contract creating ability will stand against your receiving the later value of physical gold. As expressed in a paper price.

Truly, the market is not manipulated so much as it has found a short term opposing balance. A timely political balance that has used this unlimited fiat creation as the gold price controller. A force being used to smooth a transition from one currency to another. Gold Bugs use this very same fiat creation to buy long “fiat gold contracts” and then complain because the banking reserve system, we all use can do the same. These “Anti Gold Bug” traders can create and supply just as much fiat power to sell us gold as we can use it to buy gold. Then when our futures / paper price remains the same and it’s a cabal killing us. Actually, it’s the modern Gold Bug’s desire to shun physical gold ownership that’s killing him as that desire was discovered and exploited for political means. It’s free enterprise,,,,, Gold Bugs created a demand for something paper and a paper supply creation is delivered.

I marvel at how advocates of paper investing spend their time trying to determine when someone is going to buy up and corner this kind of paper market. Forget it, it’s not going to happen. No one can force a paper market that has unlimited creation potential. And only a fool would try to demand delivery of a good he doesn’t have the assets to pay for,,,,,, and do it in a market he knows doesn’t have the metal to deliver. I know this, you know this, the government knows this and the Giants know it. Far better to just keep buying gold that will one day be correctly valued when this market’s political use is done. So, have you somewhat positioned yourself for the great cornering of this “gold printing press”,,,,, or are you more smartly playing the Kings game?

Climbing now
So what are we looking for when I watch the paper gold prices and comex? What gets me excited when the market begins a little move? Well, it’s not the fact that it’s going up, rather we are looking to see if the impact of political change is working the gold derivative’s credibility yet? I am looking for some wild spurt of trading that lasts for several days or weeks. Open interest rapidly surging hundreds of thousands of contracts, then just as fast plunging away. A paper gold market, containing tremendous price changes ($100++ or more per day, both up and down) that begin to call into question the ability of Comex to function. Not so much question it’s function as an price setting exchange, rather question if it can later function at all in the metal settlement process.

Where the big positions on the opposite side of the longs (shorts) find themselves in a changing world market without physical supply,,,, at almost any price. Brought on by a currency transition. Where big physical bullion dealings (one tonne ++) between real buyers and sellers,,,, outside and away from the exchanges,,,,, begins to run at a huge premiums to our contract based paper trades. Perhaps hundreds of dollars or percent higher,,,,, even impacting the ebb and flow in the coins world as misguided investors quickly sell for profits only to find no market goods later at twice the price.

In this environment, the big shorts on all paper based exchanges will be selling these new “cash created contracts” to the very limits of their capital. And trust me, they will not reach those limits because an unlimited amount of credit will be made available to them. Remember,,,,, for them,,,,, regardless of the supply,,,, the demand,,,, or the price of physical traded metal,,,, as long as the paper contract price doesn’t close “up” too much,,,,, there is no risk or call on their capital. They can just keep on selling.

But, eventually (perhaps over only one day!) the outside the exchange demand for physical and it’s escalating premium, will most likely see legal force from their physical buyers driving long players to demand delivery. Even if it cannot be delivered. Long,,,,,, longggggg,,,, before these delivery demands ever fully surface, comex will state position limits, cash settlement and trade for liquidation only. For you new people, this is exactly what they did during the Hunt silver fiasco. They have to do this because the articles these exchanges were created under manifest these trading places as price setting and price hedging establishments. Where the greatest majority of their trading is meant for cash contract settlement, not physical delivery settlement.

In this light, only Gold Advocates understand that default on Comex is really the forced non metal settlement of a contract at a contrived paper price. A price far below the physical traded price. Most likely a last day of trading price that settles out hundreds of percent below the world price for physical metal trading,,,,,, as it appears the very next day.

Comment:

The real price of gold is what it is worth to you, not what some manipulator tries to make you believe what he wants you to believe.

Also, the longer you hold on to it in these times, the less there is available to others. This alone will increase the value to you.

If you don't agree, try buying gold right now on the open market and see what it costs. If anyone can get within 10% over posted price, please advise where.

Good luck to all!