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The following article, Into The Gold Labyrinth, by Sprout Money, is a must read.  It sums it all up, in an easy to understand essay.  If you want to know the linkage between China, the Fed and JPMorgan – and the reasons behind the low price of gold on Comex, but the high demand of physical gold – check this article out.  Highly recommended, which is why it is inserted in my column today.

Into The Gold Labyrinth

By: Sprout Money

The surprise of 2014 is gold! The yellow precious metal had its fourth week of gains in a row. It seems like the gold market has been ‘set free’ in 2014. This would mean the end of the cyclical correction, which indicates that the market is ready for the big and final phase of the secular bull run in gold. All of this fits perfectly with everything we have been saying for years about gold.

For those who didn’t notice, please read our free Guide to Gold.

One thing becomes very clear here: gold is moving from the West to the East. Chinese gold import from Hong Kong has been rising dramatically since 2011 and at the same time, the gold price has seen a 30% correction. This brought up a lot of questions from subscribers.

Source: Toqueville Funds / Bloomberg

“How is it possible that the price goes down when there is huge demand?!” To know the answer you have to look at the futures market. Because that is where the market price for gold is set. Yes, you read it well: paper contracts dictate the price of the physical metal.

Since 2011 there are a lot of ‘sell contracts’ for gold, better known as short positions. This caused huge downward pressure on the gold price. An ideal way for China to buy physical gold cheaply. But the Chinese were not the active shorters. American investment banks did that, with JPMorgan in the lead. JPM, AKA, the ‘banker’ of the US government.

JPMorgan built up an historical short position over the years. But at the same time, the bank was bringing in more and more physical gold to store it in its vault below the famous Chase Manhattan Plaza in New York. Where does this gold come from? Just look at the chart for the registered physical gold at warehouses with the COMEX, the American futures market.

To read full article, please go Sprout Money.com

Here is a terrific podcast interview with former Treasury Secretary James Rickards.  Rickards discusses the Fed’s dilemma with QE; why gold will reach the $7,000 – $10,000 range; why gold will become an official part of the new currency that will replace the US dollar; and why the Fed’s gold suppression will end.  This interview is important. You should try and fit into your busy day!


Written January 20th, 2014 by GoldSwitzerland

Presenting James G. Rickards; economist, lawyer. entrepreneur.

Podcast: “The Fed Wants Gold To Rise Orderly”

In this January 2014 Matterhorn Interview , Jim Rickards talks to German investigative journalist Last Schall. Jim is the author of bestseller Currency Wars and soon to be released sequel The Death of Money.

The brilliant economist, lawyer and entrepreneur Jim Rickards is again in very good form in this podcast as he discusses the failure of the Fed, as well as the Fed’s suppression of gold. He explains why gold must rise to at least $7,000 – $10,000. Rickards also discusses China’s gold purchases and that the people with the most gold will have the most to say in regard to a new monetary system.