Via: barondayne.blogspot.se/2013/09/shit-or-get-off-pot.html

The suspense is painful… like being trapped in some kind of interminable Vulcan Death Grip, or something…

• Western paper traders won’t bid up the paper (spot unallocated, GLD shares, futures, forwards, options, XAUUSD longs, swaps, leases, whatever) gold $price, while their technical analysis tells them gold’s in a bear market and headed for the S bend (or even just circling the bowl).
• Others buy physical, and they much prefer to do that on price weakness… but if the strength seems sustained then they seem to buy a little anyway, perhaps grudgingly, but certainly less so (at least by weight, if not $cost).
• The mines can’t feed more physical through the system reserves stream, while the $price is too weak and their costs to bring to market haven’t fallen at least as hard.

So we either need to see:

• something to make the paper traders think “gold” has escaped from the bear, so that (a) the Eastern physical buyers drain less weight from the system reserves, and (b) the miners can increase the physical coming through the market (i.e.: to see the quiet run on the fractionally-reserved gold banking system’s reserves stopped, even reversed).

or

• the physical system reserves will finally fall below a critical level, and the system will break when the next call comes for allocation or delivery.

In life, all things have an inverse. Good is a derivative of bad; beautiful of ugly; hard of soft; light of dark.

Without the presence of a competing measure, a relative benchmark, it is impossible to properly appreciate anything.

The current quoted gold price is a function of supply and demand in the market for gold-denominated credit. Today you can buy gold-the-reserve-asset-in-strictly-limited-supply, for approximately the same $price demand places on its derivative… infinitely-available gold-denominated-credit from the nice people of the COMEX and LBMA.

The anomaly is a lack of distinction between the asset and its credit derivative – they are treated as equivalents by all but a few market participants. Gold owed is considered equivalent to gold owned.

Debt is the same as equity?

As the underlying asset reserve base is progressively drained from the current pricing system, this perception of equivalency cannot continue indefinitely. At the point of divergence, physical gold will finally be free to find its own distinct equilibrium price in the market… with gold-denominated credit also free to find its own. Beyond this point of divergence, it may become apparent to all that derivatives cannot really perform as hoped. Demand for them may wane. Prices in the two markets may cease to be approximately equivalent.

Physical gold may return to being properly appreciated as the prime wealth reserve asset that it always was. Gold-denominated credit may no longer be worth the paper it’s written on.

via: barondayne.blogspot.se/2013/05/the-emancipation-of-gold.html