this is the single most lucid explanation i have seen of the selloff in gold, silver, oil, and everything else. in "the great deception as gold hit all time highs" richard greene details the machinations of herr paulson as to the tactics he used to engineer the great selloff. i have seen bits and pieces of this explanation elsewhere, notably in don coxe's analysis, but this is the first time i've seen it all in one place.

the hard part was choosing only a few paragraphs to post here. this article spells out what happened, why it happened, and just as importantly, what is going to happen:

The capital that has been cut off from mining will most definitely create an upward explosion in the price of gold and silver like nothing we have ever witnessed. Demand for gold and silver continues to mount, particularly on the investment side while supply is in the early stages of absolutely plummeting. Gold production was down 6% in the first half of the year and will be much worse in the second half. Some companies we spoke to are moving to slow their production because they feel the Comex prices are just ridiculous. We agree and are glad to hear they hesitate to throw away scarce product for an inadequate price.

Silver production will likely skid sharply if the situation continues. The zinc price has dropped all the way back to .48 while industry breakeven is closer to the $1 mark. 32% of silver production comes to market as a byproduct of zinc and another huge portion over 25% comes as a byproduct of copper. The stage has been set for the most remarkable and likely rapid rebound of all time. The bull market in gold and silver and all commodities was catalyzed by a very long period of underinvestment and lack of capital. That situation is clearly being exacerbated by the events of the past five months which will cause an even more explosive upside than before. The supply side will be affected much quicker and deeper than any falloff in demand due to weak world economies.

One can not just decide they all of a sudden would like to go find a new gold or silver mine or uranium field. Physical commodities must be priced above their production cost or the supply will simply dry up which is exactly what we are seeing in the gold and silver markets. Intervention can last for quite awhile but eventually the artificial prices result in ever bigger shortages and upward pressure on prices. People know that gold and silver should really be doing better now with all we have seen transpire this year so some people are using that as a justification not to buy it. As John Embry has said, “that is exactly the mindset the guys driving the price down are trying to create.” You can be sure when they can no longer drive it down they will be the big owners when it all bottoms.

http://news.goldseek.com/ThunderCapi...