Paper-Gold Holders Flee to Real Metal

VANCOUVER, Canada (Bullions Bull Canada) -- During the recent, massive slaughter in the paper gold market, investors have been bombarded with a million and one "explanations" by the mainstream media as to why people are "fleeing gold."

The problem is that not one of them is consistent with the known facts.

It has been widely reported that holdings of gold ETFs have plunged by the largest amounts on record. At this point analysis becomes simple: If these people were "fleeing gold" there would be massive stacks of gold piling up in warehouses as people discarded all of this "unwanted" yellow metal.

So, where is the gold?

In fact, back in the real world Comex gold inventories (the same inventories from which the ETF's are stocked) have plummeted by the largest amounts on record. Instead of inventories increasing by the largest amounts on record (what the mainstream is expressly implying with their "fleeing gold" rhetoric), we have precisely the opposite.

Courtesy of Nick Laird, Sharelynx.com

After the most massive paper liquidation in the history of precious metals markets we don't see massive stacks of unwanted gold, only massive stacks of unwanted paper.

This brings us to the important question: What has really transpired in the gold market? Just follow the numbers.

We see simultaneously a massive liquidation of paper gold occurring along with a "run" on Comex gold inventories. In fact, there is only one explanation consistent with those facts: Paper-gold holders have been swapping that paper for real metal. Put into market vernacular, people have been redeeming their units of paper gold and taking delivery of physical bullion. A flight out of paper.

Naturally, this leads to a secondary question: What could have caused the most massive flight out of the paper-gold market since Western bankers created this gigantic paper market? Regular readers have already answered that question: the Cyprus Steal.

As I've written before, with that "precedent" Western governments put all paper holders on notice that none of their paper is safe. Concurrently, we discovered that most Western regimes had (quietly) already put in place their own "bail-in" mechanism -- with Canada's Conservative government notably "carving it on stone" in its latest, official budget.

We now have an explanation for the massive selloff in paper gold that not only is perfectly consistent with the facts but also comes with a perfect motive -- which sprung into existence at the exact moment that the paper gold liquidation began...sort of.

At this point any readers still wearing their rose-colored glasses are urged to remove them to get a very close look at the dates involved here.

As we all know, the choreographed Cyprus Steal was perpetrated in late March. However, both the liquidation of paper-gold holdings and the collapse of gold inventories (i.e. the flight out of paper gold) began in February.

Isn't this extraordinary? We have our governments creating and announcing the risk for any/all holders of paper assets held in financial institutions in late-March. And we have the Big Money responding to that sudden threat to their wealth (in a very dramatic, and very obvious way) in February.

How do we know that it was the Big Money that was dumping their paper gold at the fastest rate ever and swapping it for real metal? Because the gold ETFs are structured to only make it possible for large unit holders to "take delivery" in this manner. Small gold holders are unable to access the Comex "physical" inventories. The fact pattern makes it crystal-clear this is Big Money on the move.

Already the cacophony of the media apologists can be heard. This is a "conspiracy theory!" Yes, and one with a very interesting "precedent" of its own. As all those who have closely followed the Cyprus Steal have already heard, it turns out the Big Money had been tipped off there, too, and had begun withdrawing their funds from Cyprus banks accounts (you guessed it) in February.

As has been previously explained, the planning for the Cyprus Steal (i.e. the "bail-in") goes back at least 18 months, at least as a concept. The precise choreography -- including obtaining the secret cooperation of the Cyprus government -- is obviously more recent than that. Following that, we had the Big Money commence their flight out of paper in February and then the rest of the world was "surprised" by the Cyprus Steal in late March.

This "explanation" for the liquidation of paper gold is composed 100% of known facts and extremely obvious inferences from the dates involved in this chronology. Conversely, mainstream media rhetoric on this subject is 100% inconsistent with the known facts and is also entirely bereft of any motive/explanation.

Why would paper-gold holders suddenly "flee gold" at this particular moment in time? We get nothing but circular reasoning. Because the (paper) price for gold has fallen, "this proves..." one thing or another. Those readers not familiar with the term "circular reasoning" are encouraged to look up the definition (and the pseudo-logic behind it) to determine for themselves that these are not explanations. This is anti-logic. Why has the paper-gold market crashed? Because the price has fallen. Drivel.

At this point, all those readers residing in the real world have a very clear choice before them. They can accept the "explanation" of the mainstream media for the collapse of the paper gold market. And they can do so despite the fact that this explanation is completely contradicted by all known facts, and is "backed up" by nothing more than the anti-logic of their circular reasoning.

Or readers can choose to accept an explanation that is 100% consistent with the known facts and comes readily equipped with a perfect and obvious motive.

None of your paper is safe is any financial institution. Our governments have formally and publicly declared this to all of us. As we have seen with their Cyprus bank accounts and their paper-gold holdings, the Big Money is taking this threat very, very seriously.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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