Precious Metals Markets: Welcome To ‘The Matrix’

November 14, 2013 12:00am NYSE:GLD

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.

There are only two possibilities in this Precious Metals Matrix of the WGC. Either everything reported by the WGC about the gold market is simply complete fabrication; or investors were selling something in Q3 (and Q2), but they weren’t selling gold. In other words, some/most (all?) of these paper-gold “funds” are nothing but paper, paper-called-gold.

Can we be more certain about our conclusion here? How about a confession directly from the Bankers who flog this paper-called-gold that they are knowingly (i.e. fraudulently) selling paper, but calling it “gold”?

Any reader even slightly familiar with the gold market knows that there has been a “crisis” in the Indian gold market. This is the home of (traditionally) the world’s most-voracious consumers of gold,  and they buy gold primarily as “savings”: a more-secure method for storing their wealth than our ever-depreciating paper currencies.

There has been, historically, a massive gold deficit in this market, as India produces virtually no gold itself. Now, with (real) inventories of gold collapsing; how did the Bankers propose to “solve” this crisis? Through selling Indians lots more of their paper-called-gold.

As a proposition of elementary logic; what is the only way in which selling paper-called-gold can alleviate a “gold” deficit (and simultaneous inventory-crisis)? If one is simply selling paper – and calling it “gold.”

Perverse, absurd, and unreal.

As these Masters of Paper knowingly/maliciously flog their paper-called-gold fraud-funds; what does the World ‘Gold’ Council have to say about this banker-scam? It refers to this paper as “gold-backed ETF’s” – despite the fact there cannot possibly be much (if any) “gold” in them – and it recently it sent its own officials to India to promote this fraud, itself.

Perverse, absurd, and unreal.

What happens in any market when inventories collapse? Prices spike, in order to invoke the dynamics of supply and demand. Higher prices restrain demand, while simultaneously stimulating supply – allowing a market to move out of (extreme) deficit, and back to equilibrium, as inventories rebuild.

What has happened in the gold market? As inventories have collapsed by 80%, prices have simultaneously fallen by 30%, a phenomenon which is mathematically/economically impossible in any free-and-open market.

Perverse, absurd, and unreal.

Indeed, the simultaneous collapse of prices and inventories in any market is absolute proof of some form of (malicious) manipulation. Ipso facto, any phenomenon which could never occur naturally must be man-made.

We don’t have far to look to find a parallel market, and a similar “smoking gun” of manipulation: the silver market. During the same period of time in which prices were being driven to a 600-year-low (in real dollars), inventories were collapsing by 90%. Simultaneously, nearly ever silver miner on the planet was driven into bankruptcy.

It was/is the most-sustained, savage manipulation of any commodity market in history, and it persists to this day, as silver – alone among all metals – is still produced primarily as a byproduct of other metals mining. Silver prices have never been allowed to rise back high enough to allow silver to be produced in a normal manner, via primary silver mining, as was the case for more than 4,000 years prior to the malicious attack on this market.

Yet what did the senior regulator of this commodity market tell us when it issued its “findings” after a (supposed) five-year probe? It couldn’t detect the slightest signs of wrong-doing, and reported that the silver market looked perfectly normal – in its eyes – in every way.

Perverse, absurd, and unreal.

Of course in producing any allegory which attempts to compare our “reality” with The Matrix; demonstrating the mere existence of a perverse, absurd, and unreal world is only ½ of the equation. One must also show that the Drones, themselves, fully believe their Matrix is reality.

This brings us to our own Drones. What happens if one tries to simply get them to look at the conclusive, empirical evidence, which established beyond any possible doubt that precious metals markets are subjected to extreme-and-sustained manipulation (with so-called “regulators” simply looking the other way)?

They look at you with an expression which does not even require any words to articulate: Conspiracy Nut. In the eyes/minds of the Drones; anyone who believes in reality is “crazy.”

Welcome to The Matrix!

This article is brought to you courtesy of Jeff Nielson From Bullion Bulls Canada.

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