As We inch closer to the day of reckoning"

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Gold is not falling due to lousy physical market demand. Actually, the reverse is the case…

Premiums for gold bars hit 13-mth high on China

*Premiums at 13-month high in Singapore, Hong Kong
* Cash gold 11 pct below all-time high

SINGAPORE/TOKYO, Jan 29 (Reuters) - Premiums for gold bars jumped to their strongest since December 2008 as weaker bullion prices ignited buying from investors and Chinese consumers ahead of the Lunar New Year holidays, dealers said on Friday.

Gold bars were offered at premiums of $1.10 an ounce to the spot London prices in Singapore, up from 70 cents two weeks ago. Cash gold slipped to $1,082.30 an ounce, down 11 percent from an all-time high of $1,226.10 struck in early December last year.

"Concerns about waning risk appetite and the euro's slide are playing against gold," said Koichiro Kamei, managing director at research firm Market Strategy Institute in Tokyo.

"But at the same time lower prices are attracting physical buyers widely from Asia, particularly China," he added. Jewellery makers in China, the world's second-largest gold consumer after India, stepped up purchases ahead of the Lunar New Year in February, while a drop in bullion prices attracted buying from investors across Asia, said dealers.

Gold bars were also offered at premiums around $1 in Hong Kong from 80 cents two weeks ago. output jumped 11.34 percent to a record of 313.98 tonnes in 2009, the China Gold Association said on Thursday, securing the country's position as the world's largest producer of the yellow metal.

Metals consultancy GFMS said last month that China, the world's most populous nation, would overtake India, the second most populous nation, as the world's largest gold consumer in 2009, with total demand forecast at 432 tonnes.

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India gold buying continues as rupee rebounds

• Spot gold down at $1,084.95 an ounce
  * London Brent crude up at $72.45 a barrel
  * Rupee strong at 46.4200 per dollar

Is Soros Buying Gold Ready For The ‘Ultimate Bubble’?

By: Peter Cooper,

www.Ababianmoney.net.

Given the moves by rival hedge fund managers like John Paulson into the yellow metal, it would be surprising if that living trading legend George Soros is not buying gold at the moment.

Indeed, you should always buy when this man hints he might be selling. His comments at the World Economic Forum in Davos this week seem classic trader double-speak. What does Soros mean when he says gold is the ‘ultimate bubble’ asset class?

False prophets

Newspapers like the normally sensible Daily Telegraph fell for his ruse, immediately jumping the gun to a prediction about a massive tumble for the yellow metal. Yet Soros said no such thing.

He merely pointed out what even the most ardent gold bug would concede. Namely that if you study the history of financial crises then the credit-induced asset price inflation that causes them moves from one asset class to another until it reaches gold as the ‘ultimate bubble’ or the last of the bubbles.

Soros did not say that we are nearing that position with gold around $1,080, having last month touched $1,226 an ounce. What he did create was a buying opportunity, presumably for funds controlled by himself.

For why should gold be running out of steam at this point? Even if credit growth slows the gold market is still so small that only the tiniest fraction of this money is required to send the price much higher.

Trader talk

Soros knows that. He also knows that gold prices show no sign of the parabolic spike that we saw in oil prices in July 2008. Surely the next most obvious spike will be in bond prices – when the current stock market sell off really gets moving.

Only after the bond bubble has blown up will gold become a candidate for the next bubble, and given the relative sizes of the bond market and the gold market that could be one humdinger of an ‘ultimate bubble’.

Soros is playing his own book in Davos. Gold investors should not be alarmed but take some delight in what he is saying....

There are more and more rumors circulating about difficulties meeting deliveries of gold at the LBMA in London. George Soros who is not known for gold trading expertise suddenly is of the opinion that gold is in a bubble. George Soros has seen enough charts in his life to know that is not true. Soros has the same ethics as an alley cat. Soros is like all the other so called investing gurus who seem to have not noticed the only asset that has appreciated every year for the last 9 years and outperformed every other asset in the process. Are we to believe that having not mentioned it for 9 years that he secretly owned gold and is now selling his proclaimed “bubble top”? Yes, and pigs might fly. I think he has heard rumors about shortages and he would like investors to dump some so he can accumulate before it’s too late. I am sure he would prefer to suffer the minor consequences of admitting he was wrong later than suffer the financial consequences of not being along for the ride in gold.
Cheers
Adrian....

HSBC and JPM are likely the biggest gold shorts on the COMEX as evidenced by the fact that these two banks together own 90% of all the OTC gold derivatives held by US banks. So clearly the big shorts are having to deliver because there are a large amount of contracts standing for delivery in the FEB contract (see below). It should be noted that HSBC is the custodian of the gold that GLD supposedly holds for investors in its ETF. I have not seen anywhere in the GLD prospectus that the custodian of GLD gold is one of the biggest short sellers of gold futures and gold derivatives in the world. This is a material omission which is in contravention of SEC Rule 10b-5:

"Rule 10b-5: Employment of Manipulative and Deceptive Practices":....

It's been a trying few weeks for investors in precious metals with the Cartel plumbing new depths of chicanery and manipulation. The current gold price absolutely does not reflect the true supply/demand situation and even the purchasing central banks are complicit in the price suppression scheme. However, the day will eventually come when underlying demand will finally overpower available physical supply and the more the paper market for gold disconnects the price from its true equilibrium then the sooner this will happen. I have no idea when this day will come but I do know that it is going to come rather sooner with a headline gold price of $1076 rather than $1225. As always with gold it's a case of hunkering down (again) and riding out the storm. The level of official antipathy to gold is running at such a high level that I have to believe that the bad guys are just about "all in" and don't have too many tricks left up their sleeve....

( reasons why we may be near the breaking point for gold/silver suppression/manipulation.)

1 We are getting reports from numerous sources of gold shortage in London. Physical delivery is opposed in many ways that has never before been seen by london traders. Some have resorted to lawyers to force physical delivery.
2 The structure of the COTS shows that most of the shorts are held in very few hands. This is, of course illegal for anyone that does not have a get out of jail free card from the government. This is manipulation and is more extreme than at any point in the past.
3 Actual counterfeit "good for delivery" gold bars have been delivered. I have not seen any confirmation to the claim that there were millions of these bars created or that hundreds of thousands of the bars were swapped for bars in Ft Knox, but that could only be confirmed or denied with government cooperation. That will happen when Rosie O'Donell beats Husain Bolt in the 100m dash.
4 The new jerk mafia continues to develop more tools for manipulation. The latest being the pm ETFs combined with the government allowing options against the gold and silver ETFs. This allows two different levers in the US markets to put paper pressure on metal.
5 The rules for the crimex were altered to allow settlement of gold contracts with ETF shares. This is combined with 4 above to deflect fiat from escaping to physical.
6 Globally the demand for physical gold has exploded. There more markets opening for people to buy gold and silver, (notable in the near east and the far east/Asia). These are new markets that are intended to break the new jerk/london monopoly of international gold sales.
7 Billions of new private parties are now allowed and encouraged to buy gold. As the # of people employed in the Brick nations increases they increase the demand for physical gold. Individuals buy coins and small bars, not paper. Counterfeit coins have surfaced in the past, but they are easy to spot and have never been widely encountered.
8 The washington accord nations have turned from net sellers to net buyers.
9 Last month we read of gold missing from official Canadian bullion storage. This week we hear that Credit Suisse is being sued. Evidence has come that vast amounts of client gold bullion accounts are 'missing' from precious metal depots at two main CS depositories. The physical metal is gone.
10 Nations have started removing gold and silver from the london/new york cartel nations and bringing them to more trusted secure storage.
11 The amount of gold and silver produced each year is shrinking! Each new ounce is getting harder to find and harder to mine and bring to market. (New supply shrinking, new demand increasing.)
12 Nearly ALL fiat is being pumped (printed) by worlds in all corners of the globe.
13 Manipulation is stress in the market. As stress builds, it must either be relieved (Manipulation ceases) or the system (that which forces the price of the metals down) will break.
14 Slow deliveries of silver from official sources. The frequent stoppages of US minting of gold and silver bullion coins even though the law written to authorize then includes tha mandate that they be provided insufficient quantity to satisfy demand.
15 Short paper on the crimex pushing historic levels for extended time frames.
16 Manipulation has for years been ignored or condoned by the US government. The current state of the US government is on the path to set the record for underhanded dealing, cronyism, bribery, lying, ... you name it. The new democratically controlled DC cadre is desperate to hide the true state of the economy and the dollar in order to keep leading the sheeple to the slaughter.
This is my opinion is, of course, not scientific, but it is not hard to understand that the more stress applied to a system, the more likely the system will.....

…We don't know the real numbers of what is in the Comex inventory, but the calls seem to be in excess of their physical holdings. This is their last chance. If the calls don't quit and go for delivery, we could have the end of Comex. Fine by me.

So they are trying to get everyone to run as they paper the hell out of the market. Stocks pretty much tell the story. Probably a lot of shorts on them also.

If China follows through on what Jim Willie says, they will pick up enough pm this month to dry up inventory. Comex will be finished. The London market also. Then it would be interesting to see how long before China takes over this playing field.

Soro's stupid statement on gold being in a bubble was the panic clue to me. People seem to not know he is one of the elitists. He is behind some of this doing....

(anecdotal US fears)

...the system is collapsing. Just got done getting filled in on the massive cuts going on in my girlfriend's school district (she teaches high school). Jobs are being cut, classes consolidated, any kind of vendor-related services slashed hard. This is going on all over Colorado and I'm sure it's worse in other States. This will add many thousands to the jobless rolls. And that's this year. She said budget shortfall projections are way too optimistic. This is why they're smashing gold - or trying anyway. They want it as low as possible before Bernanke has to announce more QE. I think I have a handle as much as anyone about just how bad things are, but everyday I get a deeper understanding that it's worse than even I think...

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That’s just what many in our camp think. The real US economy is much worse than we are being told, or is being reported by The Muppets on CNBC. The Obama camp called in their cavalry to save the day and it worked to some degree, for the moment. But the now depleted cavalry forces have dwindled and there aren’t enough healthy troops in the rear to replace them.