Jim Sinclair: Comex must change its delivery mechanism soon
Monday, July 22, 2013
The cause of today's spectacular rise in the gold price is the continuing large decline in the Comex warehouse gold inventory. Because of the continued fall in gold inventory, within 90 days the Comex must change its delivery mechanism.
The highest probability is that the Comex will have to move to cash settlement rather than gold. Part of that settlement could be lots of 100,000 shares in the gold exchange-traded fund GLD, the threshold amount of lots that can be exchanged for gold.
But if GLD is part of the settlement mechanism for the spot Comex contract, convertibility eventually will destroy GLD. What is convertible into gold will in fact be converted over time.
Gold rose today because the knowledgeable know the inevitability of the changing of the Comex contract. This is the emancipation of physical gold from the fraud of no-gold paper gold.
Emancipation will cause physical gold exchanges to be born and to become the discovery mechanisms for the price of gold. This will end the use of paper gold futures contracts to make the gold price sing and dance at the will of the manipulators.
With manipulation coming to an end, the true value of gold will be discovered by the cash exchanges that are starting. The advent of cash spot exchanges around the world is the natural demise of the Comex setup as what is convertible is being converted.
As long as one can buy spot, pay insurance and transportation, have the gold recast by the Rand Refinery into Asian products, and sell it profitably, the demand for real gold will end the heyday and even the very existence of gold futures exchanges.
Gold is headed back to trading as it did before 1973. Gold will trade well above $3,500 and those like me who for 53 years have lived in the gold market know it.
A price of $50,000 for gold is not out of the question as a result of its emancipation from fraudulent no-gold paper gold.
GOFO is screaming this truth. The warehouse inventory of every futures gold exchange is screaming this. That there is no meaningful above-ground supply of gold is screaming this. That most of the central banks' gold is leased is screaming this.
There is no reason why gold cannot move up hundreds of dollars a day when the Comex changes its spot contract settlement, as it must and will very soon.
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