Gold Backwardation: Short Squeeze or Buying Panic?

• Short Squeeze or Buying Panic? 
  by Bill Holter, http://blog.milesfranklin.com/ 
  I wrote yesterday that when gold starts moving up (I believe the process has already started) that the movement will be viewed differently depending where in the world you are situated.  I say “situated” because the view of gold is different between those in the West and those in the East.
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  In the West, gold is considered just another commodity to trade.  You buy low and sell high or in the case of financial institutions you sell, high, low or wherever and hope to push the price down …and then cover at a profit.  Gold is seen by very few as money and in fact because of years of “psy ops” it is seen as scary, conspiratorial or just plain useless.
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  The East on the other hand sees gold for what it is money.  Gold is savings, it is better than money in the bank.  I say “better than money in the bank” because paper money was invented in China.  The Chinese have blown up more paper currencies over time than you have fingers and toes…the people know this and have an ingrained distrust (just as most Americans do with gold) because they have a long history of debauching whatever it is that they print.
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  The West will call what is coming a “short squeeze” and in essence this will be correct because gold has been re hypothecated 100 times over.  Shorts will be forced to cover or deliver which we know that at these prices and inventory levels is impossible.  The East will see the exact same conditions with prices rising and scarcity the norm; they however will view what is coming as a buying panic rather than a short squeeze.  I say this because the mindset of “shorting” gold is just not prevalent in the East.
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  I would like to also mention that as this process unfolds, I believe that silver will become “remonetized.”  I know I’m crazy right?  I believe that the Chinese will be the ones who do this.  They have had a long history of using silver as money and their “word” for money is actually the same and interchangeable with the “word” for silver.  There is a problem with this however; existing stockpiles and inventories held by central banks don’t really exist.  Also, much of the silver mined annually is used.  It is used in electronics, medical applications etc. and only a small percentage ever makes it to investors.  Another small problem is that at current prices it has been suggested that silver mining will cease to exist in 10 years or less and the only silver production will come as a byproduct of gold, copper, zinc, lead and other mining.
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  As the revaluation process gets rolling I will be shocked if silver doesn’t do at least twice as well as gold does.  When gold is marked up to $10,000+++ per ounce it will pretty much be out of the reach of the common man.  Under this scenario I think it will be easy to see $500 of silver as “commoners” scramble to get their piece of the pie.  The current silver/gold ratio is roughly 65-1, 20-1 should not be a high hurdle to clear especially if gold is priced up and out of reach.  There are 7 billion people on the planet, as these people realize that their savings is evaporating they will move to protect themselves.  7 billion people!  At what price would silver trade if each person on the planet bought just one ounce?  Or even just half an ounce?  This movement has already started and will be a sight to behold when it gets into full gear.
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  So, “short squeeze” or “buying panic”…is all the same, only the perception is/will be different.  It makes no difference how you see it or perceive it as the end result is the same.  The thing is, the West will not be making the rules as their gold…and power moved East over these last years as we tried to hold on to the status quo dollar reserve policy.  We held power for a short while longer than was deserved, the only problem is that shipping our gold East has given away for MANY years in the future the ability to sit at the table where the rules will be made.

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