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The Great Gold Scam

Stocks in this article: MS

This begs an obvious question. Where is all this gold coming from?

It's not coming from the gold miners. Currently, global mine supply is roughly 2,800 tons of gold per year. However, of that annual total, 2,000 tons is already committed to the wholesalers who supply the global jewelry industry. With demand for gold by investors surging more than 1,500 tones per year is siphoned out of the gold market by investors.

Note that by itself this already creates a large supply deficit in the gold market, one which can only be addressed by supposed "recycling." The mainstream media would have us believe there is virtually an inexhaustible supply of gold waiting to be recycled each year. This myth is fueled by the recordkeeping of GFMS itself.

In the fantasy world in which GFMS operates, supply perfectly matches demand every year, right down to the ounce. Gold inventories never change. If there is a supply-deficit of 1,700 tons in 2011, presto!, 1,700 tons of "recycled gold" appears in the marketplace to balance all the ledgers.

You don't have to be a cynic like myself to note the only "gold" that can be instantly/magically conjured up to meet any level of demand is the "paper gold" which banks like Morgan Stanley (MS) have been known to sell to their Chumps.

In fact, the mainstream media already acknowledge the supply of recycled gold is drying up just as the world's central banks begin their buying-binge.

With roughly 3,500 tons of gold per year committed to investors and jewelers, this puts current gold demand by central banks in approximately a tie for third place with annual industrial demand for gold. Thus, even though central banks are the largest individual buyers of gold, collectively they are still merely a small niche of the overall market.

This leads us to refine our earlier question. If more than 100% of annual gold supply is already committed to other, established users, where are central banks able to purchase gold by the tens of tons? The only known/official stockpiles of gold in such quantities are held by the central banks themselves -- and they aren't selling.

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