BELOW IS A POST FROM ANOTHER BOARD-I think he makes dome valid points.

Let's deal with known FACTS and not conjecture or theory:
1) FACT: It is confirmed from many sources and particularly the big dealers who have the right contacts that almost all gold and silver is now unavailable in any sizeable quantity at all. I know people at a dealer in Phoenix and they are getting 50 calls to buy for 2 wanting to sell. They have NO bullion left except some junk silver and numismatic gold and silver coins. The US mint has already rationed eagle coins due to "unprecedented demand".

2) FACT: Silver became in short supply many months before gold did indicating more scarcity in silver than gold.

3) FACT: Two US banks in July sold short 20% of annual silver supply and 10% of annual gold supply in less than 4 weeks.

4) FACT: After years of rejecting all evidence the CFTC finally agreed this month to investigate manipulation of the silver market and then added manipulation of the gold market afterwards. This is being investigated by the Enforcement Division. This is the first time in history such an investigation has been launched. This may well be to make sure they have an excuse when the markets explode to be able to state they were investigating.

5) FACT: Silver and gold are selling at prices that are much higher than COMEX spot price. On ebay silver sells for $18-$20/oz. I have verified this myself. Gold is selling for over $1000/oz. Dealers are offering large premiums over spot to try to attract sellers to replenish their stock. So the COMEX price does not reflect the price in the physical market anymore.

6) FACT: COMEX only has enough silver to deliver on 17% of the contracts outstanding. They have only enough gold to deliver on 10% of the outstanding contracts.

7) FACT: GATA now knows of three entities who are taking advantage of the COMEX manipulated price. They are making agreements with refiners to take the 1000ozs silver bars off COMEX and 400oz gold bars and melt them into smaller sizes for the retail market and sell at very large premiums to the artificial COMEX price. This will very quickly draw down COMEX stocks and drive up the price to reflect scarcity

8) FACT: Shippers in London and Zurich are seeing record shipping volumes from their vaults to Middle East and India. People who have been in the business for 40+ years have never seen anything like it.

9) FACT: The US FED is issuing loaned money at its discount window at the rate of $100 B$ per day which is $36 Trillion annualized. The 100 B$ daily rate is actually increasing each week. These quantities of money will never be paid back because the national debt is 10T$ which it took 95 years to accumulate. This is highly inflationary

10) FACT: Every bank account has been guaranteed to 250K$ with unlimited funds to back up FDIC insurance. This is highly inflationary.

11) FACT: The US financial system is in complete panic. Even the chief officials tell us it is on the verge of collapse and required a bail-out. The mortgage industry has been nationalized. Two investment banks have collapsed. The world's largest insurer AIG was taken over by the FED. Stock markets around the world have responded to this clear signal that the entire "State of Denmark" is rotten.

12) FACT: While the financial markets were on the brink the US dollar has rallied! This is not logical especially as the FED fund rate has been dropped to 1.5%. However, we know that the FED has made currency swaps to sell foreign currencies and buy dollars to prop up the dollar. At the same time the dollar was making unusual levitations gold and silver made swan dives on the COMEX at 9 AM or 10AM exactly on several days. This started when gold was about to break out from $930. If during an economic and financial crisis the dollar can manage to keep appreciating this will be the first time in history. The press reports this as "forced liquidations" yet the Open Interest hardly moves and in fact often rises on the supposed days of liquidation! The volume traded also does not infer massive liquidation.

13) FACT: The major gold and silver shorts on the TOCOM have been reducing their net short positions for almost 3 years to be almost neutral in gold and net long silver. These are experienced dealers who know the market very well. They do NOT want to be short after many years of having been consistently so!

14) FACT: The Bond market initially reacted to recent stock market routs by receiving safe haven investment sending the yield plunging. The bond rates have since been rising (falling bond prices) indicating an exodus from bonds is beginning (as per my latest article). If the bond market starts a sell off the dollar will fall precipitously due to inflationary concerns. When the dollar falls metal prices go up.

15) FACT: Trichet and Sarkozy are pushing for a G8 meeting to change the world financial system. They no longer want the $ as the reserve currency. They have also mentioned returning to the discipline of Bretton Woods. This explicit reference means gold backing of currencies, which is what Bretton Woods was all about: having the dollar gold backed and linking all currencies to the dollar. Once it becomes clear that the $ will lose its privileged position then all those who hold it as reserves will start to unload it. This has the potential to be dramatic. Again gold and silver would be the beneficiaries. So contrary to the unrealistic and illogical price on COMEX gold and silver have not gone out of fashion. In fact they are sold out in the retail space and foreign governments are starting to indicate a return to some sort of currency backing a la Bretton Woods.
These are facts. What do they mean? I see several possible routes to explosively higher precious metals, which is nothing more than the metals reverting to a price that reflects true supply & demand fundamentals. These metals are already scarce but the paper futures price is not reflecting that.

1) Money creation at the FED is absolutely out of control. They lend each day what until recently was lent in 2 months. The government is making free hand-outs of money to banks through purchase of 'equity stakes". But the banks are broke so they have no equity to sell so this is just cash injection. Again this is inflationary. The use of unlimited currency swaps to boost the value of the dollar has a limited life span. It is fighting against lower interest rates and a bond market that is on the edge of breakdown. This manic manipulation may well fail on its own and the resulting free fall of the dollar will make the metals explode.

2) Entities are starting to respond to the enormous arbitrage between COMEX and real physical markets to take delivery from the COMEX and convert it into retail products. This will eliminate COMEX supplies and the COMEX will default or the price will adjust much, much higher. If the COMEX metals markets are to survive they will need to become cash only markets, with no trading in future months. This would make the COMEX a physical market, and no longer a paper one.

3) European efforts to replace the dollar for world trade by another system or to have gold backed currencies will lead to a fall of the dollar and a rush to the metals.
Any of the three possible scenarios will lead to explosively higher metals prices and it will be this that drives the mining equities to unimaginable high levels. This should have happened as the financial crisis started and there was the sudden rush to precious metals that caused them to be sold out, as many experts had predicted as the logical path. The establishment frustrated the free market price mechanisms and has "painted the tape" through the COMEX. But they have not stopped the rush to precious metals. It is only a question of time before the COMEX price adjusts to a free market price. Unfortunately the ridiculously manipulated COMEX price is what drives the perceived value of mining equities. Clearly if the COMEX price is false the price of mining equities is also false.
Is there a possibility that the resolution could be that the physical market adjusts down to the paper market as some fear? There are no signs of this. In fact just the opposite! The COMEX price is being more and more ignored. In Indonesia the gold shop owners have decided to sell gold at what they see fit with respect to supply and demand and to ignore the COMEX spot price. Seller and buyers on Ebay are ignoring the COMEX spot price and selling at significant premiums to it. Dealers who used to buy at a discount to spot are now offering to buy at substantial premiums. There are no sellers in the physical market at the COMEX price. The growing interest in taking advantage of the arbitrage between the COMEX price and the physical market will adjust the COMEX price upward to the physical market.
How long will it take for the COMEX price to adjust to physical market price? October is not a delivery month on COMEX but December is a big delivery month. The G8 want a summit on a new world financial structure before year end. The bond market is on the edge of breakdown as I write this as it responds to the unfathomable amounts of new money creation. So from many angles it would appear that there are many factors which could in the next 2 to 3 months or sooner bring about the expected cataclysmic change in the metal markets as they break free from their manipulative shackles through being overpowered by market events that are too momentous to be frustrated any longer.
Cheers
Adrian