Gold & Silver Futures Market Heading for Crisis!

• I do not know how the bullion banksters will get out of their ginormous net short positions without losing tens of billions of dollars. One possibility is the revaluation of the gold (and silver) price sharply higher for eg. US$3500/oz. (This could happen this Wednesday 12 Dec 2012.) The Crimex will then announced a force majeure and all contracts will be settled at the last traded price ie. about US$1710/oz (US$33.30/oz for silver). In this way the bullion banksters will be able to cover all their ginormous short contracts at a relatively cheap price compared with covering their short contracts in the open market.
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• I believe the western central banksters via the FedRes need to stem demand for physical gold ie. protect the world reserve currency the USD.  The major demand for physical gold are from eastern central banks, BRICS and emerging economies. These are strong hands. They want to dump their USD for physical gold. The only way to stem this demand is to raise the price sharply higher ie.a 2X-5X revaluation of the gold price. Once this is done, the existing amount of currency reserves in these central banks will only buy them 20%-50% physical gold compared to the original price of US$1710/oz. Higher prices will also induce more physical gold holders to sell and take profit!
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• If the western central banksters allow the gold price to go into mania mode, the USD will collapse overnight. And the bullion banks may lose hundreds of billions of dollars when they cover their shorts at parabolic rising prices. The rational way, IMO, therefore is for the US Treasury and the FedRes to jointly announce the revaluation of gold (and silver) price and use the excuse of defeating deflation, shoring up asset prices, real estate prices …. to boost the economy. But then again, what do I know?! (Excellent article by Alasdair Macleod below!)
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• Gold futures market heading for crisis! 
  by Alasdair Macleod, http://www.goldmoney.com/
  I thought I had a good idea what disasters we might face in 2013, and then I saw the most recent US Commodity Futures Trading Commission’s Bank Participation Report for gold and silver. On the basis of recent BPRs these markets are heading for a crisis, which is generally unexpected. I shall break the reader in gently by looking at gold first.
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  The first chart below (see top of post) shows US banks’ net short exposure to gold up to December 4. Between February and August the US banks managed to reduce their net shorts from 104,717 to 57,689 contracts against a background of a declining gold price. This is logical, to be expected and sensible position management. However, when the gold price turned up after the August BPR, net shorts rapidly rose to new highs, and over the last month unexpectedly increased again while the gold price actually declined. This is a sign that the US banks, of which only five made returns for December, are having difficulty keeping a lid on the market that emotionally at best is neutral, but most probably somewhat oversold. This differs from an over-bought market with potential profit-takers to shake out, as was the case when gold traded at $1,900 per ounce and the same banks were able to bring the gold price back under control.
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  The next chart is of Non-US banks’ net shorts, which tells a very different story. From October 2011 these banks increased their short positions, with a sudden jump between August and October, before sharply reducing their net positions to 44,707 contracts this month. It appears that some of the shorts have ended up on the US banks’ books, pushing their shorts to uncomfortable levels as shown in the first chart.

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  Conclusion
  The silver does not exist to cover these short positions, and it will take very little further buying to set off a crisis in this important market. In the case of gold, there have always been central banks with physical bullion available to ease market shortages, but so far as we are aware the strategic silver stockpiles of previous decades are exhausted. There is therefore no price at which these shorts can be closed.
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  Bank positions in both silver and gold seem to have been adversely affected by “events unknown” from the August BPR onwards. All attempts by the banking community to regain control of these important markets appear to have failed.
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  Since the date of the latest BPR (December 4), there have been three serious attempts to reduce these short positions and each time the same $32.60 level has held firm. This suggests that a buyer or buyers larger than the banks are prepared to take them on by buying the dips. This price action supports anecdotal evidence that physical bullion in important markets such as London is in short supply.
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  On this evidence, and assuming the trend continues, there will shortly come a time where NYMEX will be forced to declare force majeure in this market, which they can do under their rule book. The consequences of this extreme action could well be destabilising not only for the price and demand for silver but also disruptive for gold.
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  Therefore, we must add the breakdown of precious metals markets to the list of systemic dangers we face in the New Year.
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  read the entire article here!

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