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If the COMEX is determined to under price its physical metal, then they ought not to mind seeing it leave their warehouse for the popular physical market.
It is perhaps the ultimate irony in this great crash market of 2008. Exactly when precious metals ought to be soaring on safe haven demand; when they should be stronger than a acre of garlic as a place for people to store wealth away from the hurricane of uncertainty that has become of the forex market (and the bizarre fluctuations of its now hugely inflated fiat currencies); the two most popular precious metals are instead being sold off on the futures markets just like all the other overly-leveraged commodities.
In 1929, the dollar was protected by the gold standard. In contrast, today the dollar is not backed by physical gold but is instead controlled by the federal reserve. The current head of the fed, Ben Bernanke, believes that the great depression only ended when the US weakened the gold content of the dollar, devaluing the currency. Let me repeat that , the current head of fed, Bernenke, believes the solution to deflation is to devalue the dollar in order to keep prices from falling.
When physical demand overwhelms the COMEX gold market and gold prices explode, it will blow a hole in the whole deflation argument. Investors will ask, "If the purchasing power of the dollar is supposed to increase, why is gold skyrocketing?" They will look back to what happened in1929 and discover that the dollar's purchasing power only increased back then because it was limited by the gold supply. In horror, they will realize that the true safe asset today, as it was back in 1929, is gold. It is this realization that will trigger the collapse of the dollar.
Originally posted by Yarcofin
Now is the absolute worst time to buy gold. The whole commodities sector is about to crash, starting with gold. Look for $400-450 gold by this time next year, mark my words....