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The Road to Bullion Default: Part I

Meanwhile, we no longer have access to reliable inventory numbers in the silver market. Since 2005, inventory numbers have been falsified through a clumsy record-keeping sham, so we have no idea of precisely how much silver remains. We do know that inventories continue to plummet, as each year 100's of millions more ounces of silver are used/consumed than are mined out of the ground.

We also have anecdotal evidence strongly suggesting that silver inventories are already stretched to the breaking point. Outspoken silver-bull Eric Sprott has revealed that silver he has purchased for his Sprott Physical Silver Trust wasn't even refined until after he had purchased it (and waited many weeks to take delivery).

Seemingly, a bullion-default in the silver market would/will be a very straightforward event. Some day soon (perhaps tomorrow?), we will have an old-fashioned "failure to deliver." Some large buyer of physical bullion will buy and pay for his order, and even after bankster-stalling; the bullion banks will not be able to scrounge-up enough newly refined bars to meet that demand.

However, in our fraudulent/convoluted markets things are rarely as simple as they appear to be and this is certainly true with the especially flagrant manipulation of gold and silver markets. The complexity of the dynamics become more apparent when we examine the gold market, where the existence of large stockpiles make a formal failure to deliver a much more unlikely event.

If a gold-default would not occur from an official failure to deliver, what other default-like event could occur as these fraudulent markets finally, inevitably rupture? To answer that question requires taking a closer look at the real, physical bullion market vs. the fantasy world of the banksters' paper-bullion market.

We begin with the revelation of outspoken bullion-basher and head of the CPM Group: ex- Goldman Sachs (GS) banker Jeffrey Christian. In testifying before the Commodities Futures Trading Commission, Christian blurted out what had previously been kept secret by the bullion banks: total "leverage" in the bullion market is somewhere at/above 100:1.

In other words, the total size of the "bullion market" exceeds the amount of actual, bullion being traded in these markets by a factor of one hundred. Here it's important that readers have a more precise understanding of the nature of that leverage. It is not direct leverage. That is, it's not a simple case of the bankers leveraging bullion positions in the paper futures market by 100:1.

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