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Precious Metals Markets: Welcome To ‘The Matrix’

November 14th, 2013

gold silver metalsJeff Nielson: There will be few readers who are not at least partially familiar with the stylish, thought-provoking film classic, The Matrix. For those readers not among that group; The Matrix is a sci-fi drama which postulates a future where intelligent machines have seized control of the planet, and enslaved humanity – by hooking-up all of them to a gigantic virtual-reality machine.

These human Drones (the energy-supply for the Machines) are entirely oblivious of the fantasy-world in which they dwell (as slaves). They waste away their lives, content to be Drones in the Matrix. At this point, informed readers have already heard enough to know this comes very close to describing our own “reality.”

Clearly, there is one, crucial difference: we have no secret, gigantic virtual-reality machine – into which all of the minds of humanity are plugged. No, our Matrix has been a creation of our own minds, fueled by year after year after year of saturation propaganda. Many readers will see such an allegory as hyperbolic. Not for long.


In general terms; how would we describe any fantasy-world/Matrix? While the English language is rich in adjectives, I would suggest that the following trio encapsulates the concept here completely and precisely: perverse, absurd, and unreal. Indeed, simply use those three adjectives together, and readers will deduce from the context alone that one is referring to some sort of Matrix/fantasy-world – without even the need to explicitly include any noun.

Now let’s look at the Precious Metals Matrix. The usual starting-point in this trip “through the Looking Glass” is with a  visit to the entity which claims to represent the global gold industry: the World ‘Gold’ Council. Recently, the WGC issued its own proclamations on third-quarter global gold demand:

Global gold demand fell by 21% year-on-year in the third quarter to 868.5 metric tons, mainly due to a further exodus out of exchange-traded funds by investors in Western nations, the World Gold Council said Thursday. [emphasis mine]

It doesn’t get much clearer than that. According to the WGC, the gold market collapsed in Q3 because investors were selling a lot of “gold”.

What happens when you sell anything into a market? Inventories go up. What happens when you sell a lot of something (i.e. an “exodus”)? Inventories go straight up.

What happened in the gold market during the third quarter, in the real world? Inventories went straight down. Indeed, during this entire, supposed “exodus” out of the gold market, faithfully reported by the WGC; Comex gold inventories have plummeted now by 80%, in aggregate.

This is the Real World. A sustained collapse in gold inventories, at a rate unprecedented in the modern history of markets. There is no more single piece of conclusive evidence on the status of any market than inventories. The report by the WGC is perverse, absurd, and unreal.

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