Your question - why should the November 28 Comex December gold contract expiry matter to us?

I am looking for my past posts on the subject but can't find them.

A key point is that "the most leveraged market for a commodity sets the price". For gold, the physical metals market is tiny, and the Comex futures market and the derivatives on the futures (very leveraged) are the tail that wags the dog. The notional stuff sets the price of the real stuff. Buying and selling real gold doesn't affect the price - shuffling paper does.

The total of Comex gold contracts likely represent more gold than all the gold that exists on earth (I know that's a fact for silver, and probably so for gold). So it's just a Vegas casino which pretends to be based on gold. Same as Credit Default Swaps covering more bonds than there are in existence - and you know where that's taken us.

Unfortunately, that Comex Vegas casino controls the price of the physical gold you can't lay your hands on nowadays. I have physical gold and you sure as heck can't have it for the Comex price. Try Ebay, where it's above $1000.

The Comex price is used by the big governments to prop up the dollar (by depressing the gold price) and to generate dollars by selling paper with "gold" written on it - trillions of credit default swaps are now due, and the money isn't there to pay them. Western governments are broke. That's why China is in the driver's seat and the only government in the world that can get the economy going again.

As an aside, this sort of thing happens every century or two. Spain had control of world money, and the Real was the reserve currency in the 1500's and 1600's. Then the Dutch pushed the world economy. Then the English, and then with WWII the US took over. The US used all its resources making the fat cats rich, turning the only Western country in the world with no public health care into a banana republic, and it has now bankrupted itself. Think for example Labour and black people who voted Republican - unbelievably foolish, but it happens. Like people voting themselves into jail. So China is now in control. The only thing they don't have is a reserve currency, in that it's a nonconvertible communist currency. So company stock, commodities and infrastructure in China (stuff the Chinese people can use) will stand in its stead.

The demand for physical gold (many of us want the real stuff now) will mean that some people (coin minters) will actually ask for delivery on the December gold Comex contracts maturing Nov. 28. However, the gold isn't there. They promise it's there, but only rarely does anyone do a physical audit. Price Waterhouse did the one for Comex Silver, and the amount of silver backing hundreds of billions of dollars worth of silver contracts is ... get ready for it ... $1.4 million dollars worth. It's like Scrooge McDuck opens his vaults and there's only 10 cents, one thin dime, really there. The rest is bare concrete. And he smiles - he's still showing off! In the meanwhile, you've been letting him dine on your dollar for credit.

Yes, the whole thing is a sham, but that's the system we've constructed. The last time the pressure was there on Comex to deliver it was the Hunt brothers. They had the contracts and naturally they got stiffed and went broke. It had to happen because the silver wasn't actually there - every mine in the world couldn't turn out enough silver to cover the amount pre-sold. Comex is just pieces of paper with the word "gold" written on it. Comex will most likely change the rules at the last minute - again - so for your Comex pieces of paper with "gold" written on them, in exchange they will offer only more pieces of paper with the word "gold" written on them. Even though they promise physical gold.

I have both physical and also Comex gold. I halved my Comex because of the risk. Something will happen. Either the market will hold - gold might or might not skyrocket - as the Comex participants will have to scramble to find physical gold - or Comex will fold and offer only more paper. This time round, however, there are two Asian markets for gold which may gradually take over, and as well China is starting to trade gold. Any guesses what will happen? I don't know myself.

Most of the gold position on Comex, people offering gold for sale, is "borrowed" gold, borrowed from the central banks. Being bankers, they can lend out the same gold 30 times over, which only works becaus nobody ever actually comes asking for the real stuff. They walk people through the vaults pointing to "their" gold, and then the next day a new group of gold owners walk through and get pointed to the same gold. They charge 0.20% to the Comex sellers borrowing the gold to sell, times 30 = 6% on a gold portfolio that normally doesn't yield anything - one of the main problems with gold. Not a bad deal if you can prevent anyone from looking behind the curtain. Of course, in the age of Fox "news", the truth doesn't matter anyways - we can look all this stuff up and - hey hey! Britney Spears is pregnant again!

Normally the contracts all settle and someone owes someone else some cash - simple as that. I've done it and some money either appears or disappears in my account. No gold moves anywhere, a good thing since it mostly doesn't exist. However, it's printed there that you can ask for real gold ...

Same thing happened on a country scale when Richard Nixon took the US off the gold standard in 1973. Back then, US dollars promised to be exchanged for gold. The US printed vastly more dollars than assets to back them. All the governments (under Bretton Woods) agreed that nobody would actually ask for the gold. However, France sent a battleship secretly, seeing the writing on the wall, and got a few billion in gold out of the NY Federal Reserve bank. The english tut-tutted about 'how could you do such a thing!', meanwhile sending their own battleship to pick up a few billion from Fort Knox. The same day Nixon declared the US dollar as only a fiat currency - no gold, just more paper for your paper.

Will this be the occasion that breaks the Comex? I doubt it. Whatever the coinmakers could demand is likely 0.01% of the Vegas roulette wheel paper gold in play. There will be a gradual shift to Asia. Will the price rise? The central banks can decide to lend out their gold 40 times over instead of 30 times over, the price collapses, and that's that.

Why does it matter to us KXLers? I matters a lot. The viability of whoever wants to buy our prospects depends on the Comex paper price of pieces of paper with "gold" written on them. If they knock it down to $200 we're screwed, as our deposits wouldn't be mineable. If they let it bounce to $1000, should be good.

So why do the big players keep the price of gold at the $700+ level now, or whatever level they wish? They don't want to kill the "golden goose". So long as they have us half-believing in their market, they can suck "real" US dollar out of us. They know ahead of time when gold is going down (they just lent out the same 1,000 tons again), so they sell and buy it back again later. Like candy from a baby (us).

Don't forget the old bankers adage. Just the same as some of the most aggressive countries talk about "peace" but truthfully that's the last thing they want (instability = land grabs), bankers love crises. They "return assets to their natural owners". Remember that phrase. Get the hoi polloi to buy stocks and property with their hard-earned dollars and then suck the dollars out of them. Wash, rinse, repeat.

But it's the system we're stuck with, so like remora eels along for the ride to pick up the scraps, we have to accept it and work with it. Don't curse the sharks - they're ripping our dinner out for us.

Another adage: "The market going up takes along as few participants as possible." Only when everyone is truly disgusted and sells out does it rise - and the fat cats were under no pressure so they didn't need to sell.

Hope that helps on why Nov. 28 is important to KXL.