“One thing is certain today, the bullion banks are on the long side of all of this selling. We are seeing cracks appearing in the fractional reserve LBMA and COMEX price setting mechanisms. It’s really thanks to the most recent paper market discount that we are evidencing this accelerated migration of bullion from the West to the East.
The more obvious this becomes, the more it exposes these bullion banks as holding real naked shorts that are absolutely undeliverable fractional reserve bullion positions….
The COMEX inventories have been steadily drained, but it’s accelerated rapidly over the last three months. These mismatched leases are forced to be extended now beyond any historical extremes that I can ever recall, and I talk to other people in the wholesale market and we are all seeing this crack in the system. On April 12th we saw official defense come in (to the gold market) and it was to avert this imminent LBMA bullion bank default. But it was just the way it was executed. It was grossly misjudged.
And even though this activity (intervention) bought a little more time for these guys, the immediate and unanticipated but accelerated bullion demand (all over the world), actually ended up digging an even deeper hole for the Fed, the Bank for International Settlements (BIS), and the agent bullion banks. They have actually shot themselves in the foot.
By simply tracking the movements in the international wholesale market, it’s clear that a major supply problem is brewing. Where has this bullion gone? It is clearly Fed and Bank for International Settlements borrowed bullion. What they are doing is seeking to avert a fractional reserve delivery default. These are in the price setting centers of London and the COMEX. And it is further extenuated by arbitragers who are moving bullion out of the COMEX and reselling it at higher, real global prices. …
Holy cow people. We’re witnessing the breakdown of the debt-war business model. This may signal a totally orthogonal shift in the the very definition of “money”. The question is whether the shift will happen before or after WWIII.