By Dominique de Kevelioc de Bailleul
As the S&P rallies on any particular day while the ongoing sovereign debt crisis plays out in Europe, American traders could be seriously misinterpreting the meaning behind any move higher in U.S. stocks, and conversely, the deceptively less-than-spectacular move higher in gold that traders have come to expect during the heat of the sovereign debt crisis now reaching panic levels.
As recently revealed data from the Census and Statistics Department of the Hong Kong government, the Chinese have escalated purchases of gold bullion through its Hong Kong proxy. In addition to the record-breaking gold import data, Beijing has maintained a standing order to its gold producers to desist from supplying the gold market outside of China. All of that should ring alarm bells loudly to anyone paying attention to the stealth stampede into gold—physical gold—and that it’s very likely that some nasty global devaluation of paper assets is being hatched in the not-so-distant future.
Chief Investment Officer of Sprott Asset Management’s $10 billion investment pool told King World News that he agrees with KWN’s earlier interview with money manager Egon von Greyerz, who said, “There is no solution” to the European debt crisis. Central banks are preparing for a “massive worldwide package” of “money printing” to devalue currencies on a global scale. Paper assets will lose significant value against gold, according to Greyerz.
“The only way they can do that [to prevent an immediate Armageddon financial collapse] is with exactly what Egon (von Greyerz) suggested, and that is with a massive, global bailout,” Embry told KWN. “I think it’s absolutely essential that the listeners be aware of the depth of the problem, and not listen to the mainstream media which glosses over everything and tells you to be in the conventional assets and that everything is going to work out fine.”
In fact, to illustrate Embry’s suggestion to nix any mainstream media coverage for financial advice at this critical period, hours earlier to his interview with KWN, mainstream news outlet Yahoo Finance prominently placed an article titled, “Gold is 15% to 20% Overvalued: Jack Ablin” on its front page, which featuring a video interview with Harris Bank’s Jack Ablin. And as the title of the Yahoo article stated, Ablin believes the price of gold is 15 percent to 20 percent too high, though when asked to clarify his reasoning in the Breakout interview, he wouldn’t (or couldn’t) offer any metric to make his point. But Yahoo ran with the story anyway.
Interestingly, nearly three years earlier, on Sept. 18, 2009, when gold traded at approximately $1,000, Ablin admitted in a CNBC interview that he has no experience offering a fair value for the yellow metal. Instead, he recommended that investors stay with paper assets and that gold is a “psychological” investment that cannot be valued.
“I’ve never been able to get my arms around gold,” Ablin told Maria Bartiromo. “I think there are so many psychological factors which weigh on the price movement of gold that people like me, who generally like to look at the numbers, can’t come up with anything significant.”
But today, Ablin is confident that gold is overpriced at today’s level, though talk among the leadership of the EU regarding capital controls for the countries of Greece, Spain and Italy rippled through the gold market as he spoke.
As Ablin pitches stocks, those who can get their “arms around gold” suggest following the Chinese and other holders of unwanted U.S. dollars by accumulating gold bullion.
“Reuters reported today that EU officials are discussing capital controls,” Goldmoney’s James Turk told King World News, Monday. “The central planners want control of your money, which is another good reason to own physical metal instead of paper.”
As capital controls for the people of Europe are proposed by political leadership in Brussels, the Chinese, Russians, Indians, Iranians and a half-dozen other Eastern nations that hold dollars are dumping them as expediently as possible without markedly disrupting the price—a ploy which comes with the help of JP Morgan’s paper price manipulation scheme.
“China has purchased hundreds of tons of gold in the last couple of months,” the KWN anonymous London trader told Eric King on the day of Fed Chairman Ben Bernanke’s testimony to Congress. “China is not disclosing what their true reserves are. Russia is delaying disclosure and so is Iran. We saw record gold imports of over 100 tons through Hong Kong to China in April, as reported by the mainstream media, but what has been reported is just the tip of the iceberg.”
And to keep the unsophisticated investor off guard and ignorant of the undercurrents dramatically playing out globally in the gold market, JP Morgan has held headline ‘paper’ gold prices to range-bound levels while sophisticated central banks of Asia accumulate gold on ‘the hush’—a truly convenient arrangement for holders of the lion’s share of dollars. And throwing in an Ablin interview once in a while to distract the average investor away from the real prize, gold, the Fed can surreptitiously devalue the dollar that much longer.
The scheme aids the Chinese, Russians and Iranians, but hurts middle-class America.
“One full hour before Bernanke’s testimony, the bullion banks started selling,” Anonymous continued. “Over the next 4 hours, the bullion banks sold the equivalent of 515 metric tons of paper gold. This was in just 4 hours, and again, the selling started one hour before Bernanke’s testimony.”
Anonymous goes on to say that an astounding 515 tons of ‘paper’ gold were sold within a four-hour period, giving Eastern buyers of the physical metal an enormous amount of tonnage at cheap prices. “. . . this action did create tremendous supply for the Eastern buyers to lock in the spot price of gold. This will patiently be converted to physical in the coming weeks,” (s)he said.
That activity behind the scenes within the gold market is a clear sign to 40-year veteran of the markets Robert Fitzwilson of Portola Group that the financial system is in the throes of an epic event.
“Governments, economies and societies are converging on a common dead end, and it is a dead end of historic proportions,” he told KWN, and suggested that the only asset to cling to is the same asset that central banks of Asia have been furiously and quietly accumulating—GOLD.