A Worldwide Run on Bullion Causes Concern

7-23-2013 from zerohedge.com

Gold surged over 3% yesterday due to the continual hemorrhaging of gold inventories from the COMEX.

Concerns about a default on the COMEX, once the preserve of a few observant market watchers, are becoming more widespread  as we appear to be witnessing a run on the highly leveraged bullion banking system.

Very robust physical demand from the Middle East, Asia and particularly China and a decline in the dollar also helped prices log their biggest one-day gain in over a year and their first close above $1,300 an ounce in nearly five weeks.

There Are Two Gold Markets

According to Chris Powell, former legislative Chairman of the Connecticut Council on Freedom of Information:

“[The] secret is that there are two gold markets–a visible market to mislead other markets . . . and an invisible market where gold is much different, and valued immensely more.”

A couple of days ago, I identified the two markets Mr. Powell is talking about.

The visible market is the 24-Hour Spot (Bid) Market. Some may prefer to call the London Fix Gold Price the visible public market. Either one fits Mr. Powell’s description.

The invisible gold market is the physical precious metals market. The most unregulated example of this market is eBay, where gold and silver coins are traded 24 hours a day between two private parties.

Mr. Powell claims that the invisible market values gold more. Why?

Because the visible market is imaginary: buyers and sellers are using paper chits to track bets between themselves about the number that the London Fix will set for the paper trades of precious metals. (ETF’s and other publicly traded investment vehicles mostly use this paper-based betting market for selling gold or silver.)

The invisible market, on the other hand, is real: it trades in actual metal, the kind you hold in your hand.

Do you doubt Mr. Powell’s assertion? Let me give you an example of what he means.

On Friday, May 24th, the following amounts were the numbers from each market:

Visible Market–Paper Trading

24-Hour Spot market closed at $1,386.30 per ounce for gold

London Fix $1,380.50 (Thursday’s quote)

Invisible Marekt–eBay Physical Metal (in your hand)

American Eagle one ounce gold coin (actual sales 5/23) range $1,590-$1,705 each

Gold, in the hand, is selling for $200 to $300 more per ounce than imaginary paper-based gold. One is a tanglible (you can touch it) asset, while the other is intangible.

Will Texas Secede?

Hang onto your gold jewelry, boys and girls. It could become money in places like Texas. And Texas may become a new country.

100,000 persons petitioned the White House to allow Texas to secede. President Obama said no. The movement continues in spite of the President’s answer.

According to “The Daily Ticker,” a lawmaker has proposed a bill to create a Texas Bullion Depository, which would allow the state and its citizens to store gold bullion in its own facility in Texas, with the protection of the state.

If passed, the Texas bill would tell Washington to “shove off” under the 10th amendment power given the states, if we ever saw the kind of currency craziness we saw during the Great Depression when President Franklin D. Roosevelt mandated citizens hand over most of their gold.

Texas isn’t the first state to think about hedging its monetary destiny with precious metals.

Citing concerns over the value of the U.S. dollar, Arizona lawmakers are the latest to pursue legislation that would declare privately minted gold and silver coins legal tender. In 2011, Utah became the first state in the country to legalize these precious metal coins as currency. Lawmakers in states including Minnesota, North Carolina, Idaho, South Carolina, and Colorado have debated similar laws.

If people were to lose faith in the dollar, Rickards concedes Texas could have the foundation for its own currency, of sorts.

Which could come in handy if they, say, push forward in trying to secede.

Fake PAMP Gold Bars in NYC

Gold bars are not what most people own. Common people own gold jewelry or maybe a few gold coins. However, as the interest in owning gold spreads, some collectors may be attracted to the small one ounce bars but out by countries like Switzerland or the one ounce coins of countries such as Canada, Australia, South Africa and such.

Gold has had a  large run-up in price in the past decade. Historically, high price and demand for a product draws predators and con-men like cow poop draws flies. It appears that counterfeiters are at work in the gold bullion market. First, there were reports of tungsten bars in the large bars like those stored in Fort Knox. Fraud in 100 ounce gold bars usually affects only the ultra-wealthy, central banks and national governments. Now there is a report of counterfeit PAMP bars that have been sold to precious metals dealers in Manhattan in New York. The bars in question are small and apt to be sold to common folks.

Kitco.com’s gold forum reported the following:

The NY Post reports:
The Post has learned as many as 10 fake gold bars — made up mostly of relatively worthless tungsten — were sold recently to unsuspecting dealers in Manhattan’s Midtown Diamond District.

One outcome of the fakes surfacing could be an exodus of investors in precious metals who fear getting caught with worthless assets. If the news triggers a dumping of gold by small investors, the panic could drive prices much lower.

Fiscal Cliff 101

Illinois attempts to gather data on who is buying or selling precious metals. Why? Why does government collect data on anything–to find a way to control it.

Utah has passed a bill (HB 157) to provide for an alternative currency to the paper dollar, also known as “fiat money.” In Utah, gold and silver coins based on the market price of precious metals can be used to buy goods. This is the real money called for by our U. S. Constitution.

Is there a movement to return to the money of our constitution? Our founding fathers predicted the problems we are now experiencing in our economy–problems that are directly caused by our government using “fiat money,” paper dollars backed by nothing.

A preacher gives a very plain explanation of what has befallen the US dollar. He says plainly what economists, bankers, the Federal Reserve and the US Government have done to ruin the US dollar. Let he who has ears hear.

After listening, are you scratching your head? Maybe you have questions like this guy:

or this guy–Jim Cramer. You know him from CNBC’s Mad Money. According to Jim, the preacher from above is right:

So what’s an American to do?