The Comex paper gold market will be tested & busted in December,

Major players will finally test the delivery capacity of the Comex ,far to long has this banking group been controlling the price movement of the physical. If the supply of the Comex is put to the test and broken.We will see a huge run on the physical, Gold in the physical form is trading (every where )much higher then paper gold. the bankers are short a vast supply, December is the month for the raid .

I've heard this story a dozen times now from various sources, but none of them specifies exactly who is going to step up and take delivery. I mean, whoever did that would really be getting in the Fed's face, and doesn't the maxim "don't fight the Fed" apply here the same as anywhere else?

I say it won't happen for the simple reason that the Fed won't allow it, just as they won't allow certain major derivatives players (which by any rational measure are already bankrupt) to fail.

Comex shorts may be levered 4 to 1 against warehouse stocks, but that's not the only warehouse on the planet. LME has enough gold to cover a potential squeeze, so what's to stop Comex doing a swap with the LME, or for that matter the US Treasury doing a swap with BofE, and then lending the gold to the Comex? Flight time from London to NY is about 8 hours, time difference is 5. So, a flight leaving London at 5 AM reaches NY at 8 AM. Add a couple of hours ground time for logistics... you see where I'm going with this, right?

I'm not trying to be nasty here, just realistic. This panic buying of physical we keep hearing about bears an eerie resemblance to the peak of the last cycle when people were lining up around the block to buy gold from dealers, only now they have the internet, so they don't have to stand in the cold.

I tried to post a chart of gold on the pics section of this board but for some reason couldn't, but just pull up a 10 year chart of gold - Kitco has it. Now look where the primary trend line is that starts in 2001. Below $600. The secondary trend that's been in place since 2005 is now broken, and a clear down channel is forming. Yes, we rallied above trend on Friday (an options expiration day) but one day does not a reversal make, and we didn't breach the upper line of the channel which is somewhere around $850.

I'll just add that it's not the first time the secondary trend line has been broken. The first was a slight dip - you can ignore those - but this recent break was decisive. If we break again next week, it's turtles all the way down I'm afraid.

I'll anticipate the argument that technicals don't matter and that you have to look at the fundamentals. I agree... in the long term, but the fact remains that we can go all the way back to $600 and STILL be in a bull market, and I'm almost certain that's what's going to happen. There's just too many people calling a bottom here. You don't get that at bottoms. What you get is crickets and tumbleweeds. People throwing in the towel.

OK, before you all tear me a new one consider this: If I'm wrong, I'm going to look really stupid, so you can all have a good laugh at my expense. I'm not trying to be a smartass here, just putting my theory to the test, and the best test of one's theories is to hold them up to the light and see what passes through.

ebear