What I mean by leverage is that only a small amount of gold controls a large amount of gold assets. Just like a bank account. For instance, if you deposit a thousand bucks in the bank, they keep on hand only a small fraction of that. The rest gets lended out.
The same kind of thing is happening with gold. Catch this quote:
If you have never taken delivery from the Comex, I suggest you give it a try. It's not easy. Even though the Comex is the primary price setting venue for Gold, the people in charge there have done their utmost to make it a huge hassle to take delivery. This is intentional. The promoters of Comex DO NOT want you to take delivery, but only gamble in their casino. If they win, great; if not, they can always pay you off in freshly printed casino chips (dollars) - just don't ask them for the Gold. If you did, the whole enchilada would come falling apart.[emphasis added]
It works just like a bank. If everybody wanted their money at the same time, it would be a bank run. The banks don't want you to do that. If you did, they couldn't operate.
Leverage is everywhere. Even in gold. That is, unless you are in physical gold, which cannot be leveraged any further. Got that? It may be hard to grasp, but remember this: they can't leverage it unless they've got some of it somewhere.
Now, get this:
The stunning activity of JPMorganJP Morgan has withdrawing their gold. Why? Does it mean that they are selling it? Or just withdrawing it and putting it somewhere else? Then they can go short it and make it fall dramatically ( my hunch ). Got it? They can leverage the decline. Just keep it safely somewhere else and then short it and make a killing.
Whilst many COMEX participants have been withdrawing gold from warehouses, one member has taken it to another level recently.
It may not have happened that way, but I am wondering why else would they sell, or in this case---withdraw.
No comments:
Post a Comment