Bullion Banks Now Net Short 26 Million Ounces of Gold!!!

http://www.caseyresearch.com/displayGsd.php ^ | 09-05-2009 | Ed Steer

[John123]

I think it's an indication that China has realized that the New York investment houses are basically organized crime syndicates and [they're] selling paper instruments of no value that really only enrich the N.Y. investment houses themselves, so if anyone ripped them off, we would not be too unhappy about it. - Chris Powell, Secretary Treasurer, Gold Anti-Trust Action Committee, Inc.

[mountn man]

Why would you melt down gold bullion coins? A 1 ounce coin is 1 ounce whether its a coin or a bar.

[John123]

Interesting... thanks man!

[The Duke]

My pleasure.

BTW, one of my contacts there had his home broken into last week and a few things stolen. Because they are not allowed to own guns there (without special permission) he and his wife had to "sleep in shifts" while the other guarded the house.

Now they have an alarm installed, but I can imagine that only helps a little since they are basically defenseless.

[eyedigress]

A minted coin is actually worth more. Coins sell roughly 50 bucks over ground(spot) right now.

[Windcatcher]

Can someone explain this to the layman? To me a short position means an expectation of a falling price. Is the article saying that they expect the price to fall, or that they erroneously expected it to fall and are now stuck?

[John123]

Is the article saying that they expect the price to fall, or that they erroneously expected it to fall and are now stuck?

Bullion banks expect to make a profit... the massive short position allows them to control the markets... unless of course they get overwhelmed with buyers...

So the answer to your question is this... who knows what will happen? It is going to be very interesting for the next few weeks...

[Kozak]

No thanks... to have the equivalent holding in silver... you need storage space that is 10X bigger...

Closer to 60X bigger actually....

[UnbelievingScumOnTheOtherSide]

Can someone explain this to the layman? To me a short position means an expectation of a falling price. Is the article saying that they expect the price to fall, or that they erroneously expected it to fall and are now stuck?

A short position means they put up money security (a margin) in order to borrow gold and sell it now with a contract to pay it back at a date in the future when it might cost less and you can pocket the difference. If the price goes up however (against the short), the margin covers the increased cost of repaying the gold. If it goes up too much, the margin becomes too thin and the borrower is required to either put up more margin money (a margin call) or reverse the contract (pay back the loan) immediately.

You, as an individual investor, could have other financial and personal assets seized to pay back the loan, even over and above the margin if that was wiped out entirely. Countries just declare "force majeur" (inability to fulfill the physical contract, usually temporary but not always) and the lender is stuck.

[UnbelievingScumOnTheOtherSide]

I should say, the lender is stuck only for losses above the margin when buying back the gold (which is usually in or owed to individual investor accounts when the lender is a brokerage) since the lender is holding the margin and principal.

[UnbelievingScumOnTheOtherSide]

I should say, the lender is stuck only for losses above the margin when buying back the gold (which is usually in or owed to individual investor accounts when the lender is a brokerage) since the lender is holding the margin and principal.

[Atlas Sneezed]

Actually, $1000 of silver has 100x the volume, because gold is 69% denser than silver.

But even $1,000,000 (60,000 [troy] ounces - 1866 kg, or 600 paperback-book sized 100 oz. bars) in silver can be stacked in a cube 57 cm (22”) on a side.

The challenge with silver really is not space, because you can fit a million worth in a thousand dollar safe. The challenge is weight. What do you do when you want to *sell* two tons of silver? Send it in to the broker in 70 lb Priority Mail flat rate boxes?

How about if you want to move it in a hurry?