Monday, September 14, 2009

China to blow open COMEX and send gold/silver to the moon

Derivatives Collapse and the New China Gold and Silver Markets

The Chinese government is currently encouraging it's citizens to buy gold and silver. As a consequence China is considering walking away from responsibility on certain OTC derivative contracts held by foreign banks as counterparties.These unlisted OTC derivative contracts include massive short positions in both gold and silver, but especially in silver, and are used to back the listed COMEX short positions of the large commercials in both gold and silver. Sticking with these contracts could force the gold/silver price down. If the price of gold/silver were to fall it would be suicidal for the Chinese government, following their advice to their own citizens to invest in gold/silver, as revolution could follow on the back of financial losses. Boom goes COMEX then, and gold to the moon!

Posted by general congreve @ 12:35 PM (1418 views)
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8 thoughts on “China to blow open COMEX and send gold/silver to the moon

  • And what do the Sun and the National Enquirer say about this?

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  • General Congreve,

    Personally, I’d not be complaining if gold rose but this article really belongs in the forums. There seems to be a ultra bullish and ultra bearish story almost every day in kitco or market oracle concerning precious metals.

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  • It’s articles like this that made me stop reading Market Oracle.

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  • little professor says:

    Exactly. Stop ramping on the news blog please, there’s enough of it in the forums.

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  • general congreve says:

    @2 quiet guy – You’re right about the bullish/bearish story everyday, although I’d say the bulls seem to have the majority.

    @1, @3, @4 – Nice hostility guys, point taken, thank you.

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  • Investing for Lizards

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  • Another silly American rant piece – full of wild and unsubstantiated claims.

    – Worthless trash

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  • Couldn’t be bothered reading the post, but the Chinese are, from what I can tell anxious, about the value of their hard won $ holdings. Whether this is justified depends on how far the Fed will do to offset deflation. For now they are not doing enough as the velocity of money continues to fall despite ramping reserves and introducing spending programmes and tax credits.

    My hunch is that the FED will eventually do enough but only eventually, given the crisis monetary policy has been far more conservative than it might have been. When eventually comes this must drive up commodities in particular, and stores of value such as gold to an extent.

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