Everything is in place to flood dollars through the world. What's needed this time? Something like $2-3 trillion? More?

The solution is not possible with the proceeds from current Fed asset holdings. That flow can barely keep the US itself going for a little while longer, let alone Europe. So either release the bank reserves which is as inflationary as printing money (more so because the banks will eventually have to be recapitalized yet again), or just print more using a base built from bank lending (circulating bank reserves instead of depleting them in one shot) - essentially the Repo market method.

Your participation in the discussion is appreciated, but it would be better to contribute hard data instead of opinion.


SSRI wasn't me, but thanks for the rest. 

Now for one more dip below $1,600 to deploy the last of the orders that didn't get filled...

You bet. Calls on GDX, GDXJ, NEM, RGLD, SLW. Some GLD for good measure. The puts (not very many yet) are on TLT.

Some quality junior and dividend-paying major shares, more TGLDX and of course - bullion. What can I say, I'm a metals man. My forays into ag, energy and tech are tiny by comparison.

This punch down is impressive. I wasn't sure there'd be enough clout to put all of the upward pressure off until next month, but they were able to squeeze another couple of weeks out of the same ol' tactics as those used in 2008 - European-style. That makes October (a major futures delivery month for silver) even more volatile than it would've been. Unlimited Monopoly money helps, but none of it matters if the separation of paper & physical finally hits.

My remaining options haven't dropped much from the low $1,700s where the last big round of accumulation was made, and there's plenty of time for the next set of volatility. There'll be a few big opportunities coming up before year-end.


It's a sad fact. So the private investors get saddled with junk - duped. If funds they provide are used to recapitalize and provide liquidity to the institutions that bound themselves up in the first place, it's a guarantee that the same mess will happen all over again.

The banks have to create destructive financial instruments just to survive. I don't expect they'll act responsibly while drowning in panic. Investor funds will be levered to the nth-degree in order for financials to keep their heads above water, creating an even bigger problem than before and staving off that final deflation a little bit longer... again.

How about this: instead of arguing back and forth over whether gold will continue to rise over the next few years, you call the interim tops and I'll call the bottoms. Right now, I see gold as a buy anywhere under $1,650. From here on up, you call the major turning point to head back down.


Ah, the short-term view of wherever money can be made... good advice on protecting what you have, though.

Yes, easier mostly due to temporal availability/liquidity within the established infrastructure (i.e. "convenience"). Other currencies also benefit in relation to whichever region is under pressure at the time, so the principle you've outlined applies across the board. The Euro and numerous other currencies (as well as asset classes) benefited from USD depreciation during its time in the crisis spotlight.

That's the forced demand. Gold (with silver & platinum to lesser degrees) are in demand by choice. The Swiss Franc was experiencing this relentless demand because it was the only currency not being debased, but its much smaller quantity relative to the Euro and USD meant that its price would shoot up far more rapidly than the other two would decline. Such a rapid rise in currency value causes structural instability within the respective economy, and without anything else to alleviate that building pressure, the SNB intentionally devalued.

The only way to debase gold is with a composite tungsten core and a pile of hope that the buyer doesn't realize he's being duped...

Gotcha. It can be a little tough to pick up on at times in text format.


You've got that right... and how! The US-centric view is soooooo linear.


"Management" is more palatable for Mish-types.

That depends on the market, and the extent of the dip. In a bull market like the one gold is in now, absolutely.

With the burst of demand on the latest massive price drop, I'd say the knife has fallen and it's time to pick up the goodies. Especially after so many dealers ran out of silver. Downside is limited while upside remains out of sight; we're still too far offshore to see land.


Does he really want to destroy the markets? I'd say it's more realistic to assume the Fed is seeking to maintain overall stability, making concessions and sacrifices where necessary. Political drama serves as an effective smokescreen.

I understand your sentiment - it just goes a bit extreme, unless good ol' Ben really is a psychopath.


Agreed - those are big ones.

One major issue I have with Mish is that he dismisses readily apparent factors that have the whiff of collusion or conspiracy. He reminds me of an ostrich on these matters.

Add to the list: HFT and/or direct central/bullion bank management of precious metals.


With trading, perhaps. We seem to have different objectives, his being short-term profit and mine being accumulation. Any trading profit I make will be on an extended time basis. This week will be one of additional accumulation (options, shares & bullion).

Professional gold buyers, relaxed and waiting for the sellers to exhaust themselves:



Professional gold sellers, scaring the amateurs off with fake weapons and ammo:



Bitcoin seems to have reasserted its quasi-status as an equity currency with almost a predictive element toward equity markets. Not that I have any empirical data for any of that yet, but it certainly seems to move as equity markets do shortly before the big ones shift, and stabilize a bit earlier as well.

You'd be correct under normal circumstances, trading in a legitimate market environment geared toward price discovery instead of perception management. This is a non-linear aspect.

Which is in a bull market? Gold or USD? Backing and filling isn't guaranteed for the bull, ratio or otherwise. The GLD gap at 132 will not be filled until the paper/physical connection fails. Then GLD will appear to be in a bear market. Again, that will just be the paper or official pricing, not the actual asset price. The illusion will be maintained even in spite of decreasing effectiveness so as to prevent a precipitous decline.

The facts are glaring, yet opinion based purely on heavily managed price data reigns. How linear is that? What has your study of game theory told you about rigged games? You need to have accurate information.

Data for Friday was made available from the CME Group. I've reproduced numbers to date of September's deliveries made, delivery orders outstanding and the all-important December contract information.

As of Friday, 09/23/2011:

Deliveries made

Futures	Deliveries	Month Total
Gold:	65	2,886
Silver:	18	1,269

Delivery orders outstanding

Futures	Open Int.	Prior Day Delta
Gold	89	+16
Silver	179	-34

December contracts

Futures	Open Int.	Prior Day Delta
Gold	311,141	+3,355
Silver	72,367	+112

After such a massive down day, open interest should have fallen - and heavily. Instead, demand has increased to a very large degree. Also of critical importance is the difference in deliveries and front-month open interest. There were 65 gold deliveries, but open interest rose instead of falling. Yesterday, there were 73 contracts outstanding; with 65 deliveries, that would mean that only 8 should be left today. Instead, there are now more contracts awaiting delivery of physical gold than there were yesterday, by a sizable margin. It is normally very rare for deliveries to be requested during the month, yet it has been a regular occurrence for the past two months.

Silver had been seeing increases in front-month open interest until today, and this only pushed out a pitifully small handful of contracts. Meanwhile, the December silver contract rose to far more than offset September's 34 contract decline. October also saw an increase of 22 contracts (not shown in tables above), making the overall near-term open interest increase by 100 contracts (Oct 22 + Nov 0 + Dec 112 - Sep 34 = 100 rise for 2011). If we go to the March 2012 contract, it rose by an enormous 855 contracts. Futures open interest rose for both gold and silver in all but four monthly contracts, and the declines were miniscule by comparison to the increases. Demand is unrelenting.

With the declines in precious metal prices from yesterday, demand is being brought forward from the October and December. It is also having an opposite-of-intended effect, wherein demand overall is increasing relative to past declines in price that moderated demand. There is less than a week to go before the delivery deadline and there are only tiny amounts of metal being supplied. This means that the banks are loathe to part with physical metal, opting instead for other methods to secure contract completion.

COMEX warehouse stocks, in troy ounces:

Futures	Registered Supply	2011 Remaining Demand	Deficit/Surplus
Gold	1,930,640 oz	34,039,900 oz	-32,109,260 oz
Silver	31,041,080 oz	365,295,000 oz	-334,253,920 oz
Palladium	548,400 oz	1,797,300 oz	-1,248,900 oz
Platinum	230,700 oz	871,150 oz	-640,450 oz

2011 Remaining Demand is the total open interest remaining for September, October, November and December in ounces (gold: 100 oz/contract; silver 5,000 oz/contract; palladium 100 oz/contract; platinum 50 oz/contract).

The banks must ensure that much less than 10% of oustanding futures contracts for gold and silver stand for delivery, and that less than 30% of palladium and platinum call. This is why the massive volatility is occurring - the banks are trying to shake off demand to avoid contract default.

Failure means complete annihilation of the major financial institutions associated with commodities, first from trading losses, then through lawsuits for breach of contract. Success gives the banks more time to save their own asses by trying to procure more physical metal in various ways.

Political games are a cover for this hidden war, only buying some time. If the banks do not rectify the situation in a timely manner, the effects will spill over into the larger economy and force nations to engage in actual warfare because of a dislocation in supply of basic resources (esp. energy - oil, and food) triggered by the destructive price action of precious metals and fiat currencies that try to manage them.

These delaying tactics have disproved the call for the GLD Puke Indicator triggering by Friday and for Japan engaging in intervention during the same week. However, delay does not mean it won't happen. If anything, the likelihood has risen for both of those events to occur in the very near future. Keep in mind that specific events might be shocking, but they do not change the trend - they are caused by it. It is very important to determine cause and effect appropriately.


Key words.


Ad hominem and baseless assumption.


Opinion, again based on unfounded presumption.


Speculation.

Where are your facts? I trade options. I buy physical gold and cheap equities, mostly in the mining sector (some ag & energy). All of this is done without margin. The metal is in no way in "trouble". The shares pay dividends and some have increased those. My return is not so dependent upon the rise and fall of gold as one might think.

Your emotions appear to be running the show. Is it because of dismissal toward facts, or fear that you might actually be very wrong? These are questions only you can answer.


As pointed out in the facts above, buying is far greater than selling. The selling is illusory and creating a false image. Demand is being brought forward now because shortages are being seen and there is a building stampede to procure physical metal.


More opinion presented as fact.


Once more, the facts show demand is overwhelming supply on all fronts: it just can't be seen yet because of the smoke and mirrors games. I actually hope there's a dip below $1,600 this week - it's the perfect opportunity to grab a deep, risk-free discount before the next launch. It's also earlier than I was expecting, which is an added bonus because now I only have one direction to be concerned about for a short time.


How can you know what they're saying without listening to the data? Price movement is not properly reflecting the data.


I bought the hell out of silver and made a fortune. What's your point?

Bulls and bears get rich; lemmings and sheep get slaughtered.

The difference here is that you were willing to throw away the actual asset in favor of an illusion. I'm glad you're holding onto at least some of it regardless of your short-term trading. Everything is pointing to progressive moves that will shatter the disguise which has allowed the paper junk to masquerade as gold, leading to an upward revaluation of real assets in terms of depreciating paper "assets".

Assets themselves will remain in close relation to each other, with the monetary precious metals' valuation (gold & silver) rising in proportion to the amount of global accrued wealth; what will amount to a century of growth over the span of less than two decades.


Key words. Confusion. Also misdirection, leading the herd to the short side.


A better buying situation. As mentioned earlier, I use no leverage. Options allow for leveraged return without margin. Physical metal pulls the real wealth out of illusory fiat.

The paper price moves are painted to be picture-perfect. Any 2-bit technician will drool all over them and pile on with all the other lemmings.


The Fed decision is a maneuver designed to deflect attention and guide the psychology of market participants. It does not to reverse the underlying long-term trend. Delaying tactics are extremely effective. The longer the delay, the more the weak-willed and uninformed investment categories drop off or reverse position.

As the dollar rises, it is rising against other fiat currencies. Assets can just as easily rise along with it. Of course, once the Euro arena is declared "fixed" sometime within the next few months, the course will reverse. Either way, real assets will rise overall. Short-term shocks such as we are seeing now do not depict secular shifts without accompanying changes in fundamental factors. It's like a fly buzzing around inside a big glass jar: the fly is wildly active and attracts attention, but it doesn't get anywhere unless the jar is moved as well.

The individuals presenting their viewpoints are obviously very proficient with charting and savvy at financial analysis, but I haven't seen any ideas other than technical methods based on assumptions that work in a situation with stable, well-defined rules and generic explanations based on traditionally-accepted investing knowledge. There is little in the way of stability now and the rules are being changed rapidly. Wave analysis has limited function under such circumstances. Remaining unaware of factors that change the rules will make the short-term gains seem paltry and fleeting compared to buying the dips in gold.

It would be prudent to close half your shorts; at least set stops at a little above break-even. No sense in watching such a nice profit evaporate.

Hold all physical metal. I'm buying real metal hand-over-fist. My usual dealer is sold out until next week. Price can't decline with no supply and high demand. Waves can't change the fundamentals of reality.

The gap being backed and filled so forcefully introduces a larger wave of demand than would've been expected without that having been achieved - it's now a launching platform. More long call options to be opened throughout next week. Some were closed at a small profit; the rest are good until early 2012. Upper price targets still in play, although with this push down they may actually underestimate the resulting rebound. If you're worried about the downside (because of fear or margin trading), you shouldn't be in this market.

Predictable that the paper price of the metals was severely hammered after they were stabilizing; a blatant assault designed to force a margin squeeze prior to futures options expiration on the 27th. Odd that it was such a quiet final day of the week for all other markets. Not to mention margin hikes, bringing the exchanges ever closer to a full cash basis. Who do you think will be buying on the way up? I guarantee the banks that have massive outstanding delivery obligations on the horizon will be among the biggest buyers, closing out their own untenable short positions.

Japan is finally making noise about the Yen's "fair value" being between 80-90 per USD. The final week of the month will be a vicious bout of deflationary excess, creating even more pressure and delaying the inevitable. Shorts have over-extended themselves against a tidal wave of buying.

Support broke in July and is now being retested as resistance. Just as the gap in gold below $1,680 was filled, the gaps between 0.043-0.047 will be filled. That is also a rally based on "least worst" and not any form of value.



My advice: take some of your short profits now and sew your mouth shut so you won't have to pick your jaw up off the floor in a month.

Premiums have been discussed previously. I still haven't been able to find any long-term data set, but there is a good resource for a general idea on current rates.

As limited as it is, 24hgold's Ebay pricing data for gold and silver is very interesting, especially being that it includes global information instead of just US-based data. Assuming that at least some of the bidding is done by savvy investors, the prices there indicate that the real view of gold's value (and silver's) is rising. Current premiums are around 10-20% over spot for gold and ranging between 30-70% for silver.

When the relationship between the paper markets and physical detach, this type of tool will be invaluable. The only other way to determine price will be from direct dealer quotes, not all of which are available online.

It would be interesting to see a categorical breakdown on certain items from MIT's Billion Prices project.

No problem.

Anything below 30mm oz registered silver is critical. Gold... well, let's just not go there. There are charts for gold and silver from 24hgold.

Who knows if the major futures markets collapse can be staved off? It would be a pretty horrific event with far-reaching effects. As long as they can keep the illusion in place to prevent gold from rising too quickly and the dollar (all fiat currencies, actually) from falling too quickly, there's a possibility that Europe and the US might survive intact. They'd just be so emaciated that it'll take decades to recover. I actually hope fewer take delivery so the time to prepare is longer, but spreading demand increases run entirely counter to that.

Hey pot, the kettle says hi.

There's a simple solution regarding cgminer: run a fully separate instance for each blockchain.

From my understanding about the idea itself (I could be wrong):

The front month for delivery is currently September. Current month delivery information is here. From that report, the columns to pay attention to are "DAILY TOTAL" and "CUMULATIVE" for the respective date. The former shows how many deliveries were made that day and the latter shows how many total for the month. As an example. as of 09/22/2011 there was 1 gold contract delivery made which brings the total contracts fulfilled so far this month to 2,821. This is normally a month that only sees a few hundred contracts standing for delivery, not thousands. All numbers from the current reporting day pertain to the prior trading day, so numbers from 09/23/2011 are for 09/22/2011 activity.

On the COMEX Volume and Open Interest Report page, generate a report for the appropriate day and desired item (in this case "Asset Class/Totals: Metal" and "Product Name: Gold"). The information will be present under the "OPEN INTEREST" column. For 09/22/2011, gold futures open interest is "73 - 50" which means the present OI is 73, down 50 from the prior trading day's reading of 123 contracts outstanding.

Now we know that, on 09/22/2011: 1 contract was delivered and the total open interest fell by 50 contracts. This leaves 49 contracts disappearing into the ether with 73 still to be delivered and only a week remaining to do so on what should be a negligible amount, so why the delay? Since the full amount must be paid on the delivery notification day in order to request delivery, there is no margin involved here. Therefore, the most reasonable assumption is that these contracts were settled privately, most likely for cash instead of the physical metal.

Since the requesting party wanted physical metal, it is also reasonable to expect that a sizable premium is being paid for the receiving party to accept cash in lieu of metal. How much, we don't know - it could be 5% or 50% above and beyond the agreed-upon contract price. In other words: a gold contract for $1,800 being $118,000 (100oz per contract), if the premium paid for the recipient to accept cash instead of metal were 5% the amount paid would be $123,900. This is irrespective of current prices and wholly dependent on availability of whatever product the contract is for, again in this case gold.

Only the banks and the recipient of payment know how much the premium is and there hasn't been any information I've found regarding that. If the premium on $1,800 contracts is 5%, the effective price of gold would be $1,890 and for 50% premium - $2,700/oz. As mentioned, Harvey Organ does this daily so you don't have to, but understanding how this information is obtained does help a lot.

Another piece of information that may or may not be entirely forthcoming, but is still very telling, is the warehouse stocks report. The eligible numbers are owned by a third-party and being stored at COMEX warehouses. The registered numbers show the amount of metal available for delivery. Thus registered is the important value, especially when considering that Thursday's raid only brought the October open interest down 728 to 29,569 contracts from just over 30,000. I'll convert the contract values to ounces in the data below.

Current COMEX warehouse stocks of registered gold:	1,930,640 oz
Current October contract open interest in ounces:	2,956,900 oz

Translating in reverse, the amount of available gold can only supply 19,300 contracts. As you can see, demand is far greater than supply. Now consider the OI of 307,786 for the December contract, which hasn't budged much at all even with the massive raids. There is no way that the COMEX can supply 30,000,000+ ounces of gold without truly drastic measures, such as raiding the GLD trust.

Silver is even worse.

COMEX registered silver:	31,041,080 oz
December contract OI:	361,275,000 oz

Failed delivery means a bank run ensues among the highest echelons of the financial world. That leads to a complete collapse of the global economy with the greatest impact on those nations most heavily tied to western banking institutions. The games being played to put this off are saving all of us by providing some time to acquire the assets which will provide means to be self-sufficient and/or escape the regions which will be hardest hit (expatriation).

Price information alone is not enough!


All markets are being manipulated now. That doesn't change reality. As mentioned earlier, pushing down monetary metal prices (gold & silver) has created an undercurrent of demand that will eradicate physical supply. The result is that paper markets become nothing more than fiat trading houses because there is no way to supply the amount of physical metal demanded. Everyone will be throwing in greater amounts of cash while competing for a dwindling share of real assets.

Once again: if the paper/physical link is broken, ALL market control is lost and gold will rise on a daily basis with no pauses as we have seen so far. There will be no corrections, no slow-downs, no reasonable entry points. The banks and governments are playing an incredibly dangerous game, for if they fail, the consequences will be immensely destructive. Not just to the markets, but to peoples' lives - many will die should the financial system freeze up.

I do not believe that will happen this time around. The people manipulating the system certainly aren't stupid. Gaming the system is just like fishing - you don't want your quarry to swim off because of a broken line, so you give some slack to tire it out. The problem is that banks and governments might be professional, commercial-level fishing operations, but the beast they're hunting is many times larger than their own vessel. If they don't let the line out soon, it will either break or everyone on-board will be dragged under.

I'm more concerned about gold rising rapidly than I am of the value falling into the abyss, mostly because the latter is an impossibility at this point. Official numbers might obscure the truth for now, but that will only last for so long. Short term success will be met with long-term reversal.

For the final point, I defer to Jim Sinclair: Market Violence Will Create Large Bear Trap

No time to rewrite everything about certain trading techniques. It's simple: beat the grass to startle the snakes.

FTA (emphasis mine):


Obviously, no market can go straight up for a sustained period. As pointed out, the gap below $1,680 needs to be backed and filled. The move wasn't quite vertical, but it was approaching a runaway breakout. It's been consolidating approximately between $1,740 and $1,880 since the August low. A genuine correction should involve the aforementioned gap being filled.

With the double-top formation, the trailing edge is as important as the leading edge. Yes, the second push up was labored, but the second push down was more so. In addition, consider what it took to actually push gold down - nearly global financial destruction that caused an indirect, forced liquidation. Instead of being decidedly thrown away as undesirable, gold was one of the only remaining positively-valued assets that was sold to provide escape from other failing positions.

Major double-tops since 2001 have exhibited the weak trailing edge to a forced liquidation, targeted at trading margins to trigger the squeeze. Physical is changing the game by gradually taking away that power.

The best bit from the site:


That can't be reiterated enough, especially when fundamental ocean currents are moving in a different direction from the technical wind.


This is critical - the separation of paper and physical pricing. The official numbers don't include premiums.

Very important is today's drop in silver: this is risking massive global demand for physical metal. The COMEX is already at risk of default in silver next month. Thus the vicious raid in silver and the additional round now, during illiquid market hours. With the price under the 200-dma, big players will notice on the daily/weekly closing. When they buy, they buy for the next several months, so it will be a monstrous influx. The banks are hoping to squeeze enough current players out to prevent default on delivery or encourage cash settlements in lieu of physical delivery before the big players start piling in.

What's most dangerous about this is that if the paper price is pushed too far, the premiums won't follow at all and will even begin to go in the opposite direction because dealers simply can't source physical metal that inexpensively. They won't care if the market says silver is only worth $30 - if they'll only break even at $35, the premiums will rise above $5 to provide a profit. Now imagine the spot paper price at $10/oz in the same situation where a dealer can't remain profitable without charging $35/oz. Premiums will then be at least $25/oz. What is the real value of silver then? Will paper markets matter at all by that point?

In the above scenario, the banks lose all control and credibility. None of the established futures markets will be trusted and private contracts will have to be negotiated on a case-by-case basis among producers and merchants, dramatically slowing business down. Small timers won't even be able to participate without serious connections. Oh, sure there'll still be futures markets, but they'll be more like currency exchanges - trading nothing of real value, only shuffling numbers back and forth that buy fewer real assets by the month/week/day.

That leads to a resurgence of the monetary metals, and offers a potential large-scale proving ground for Bitcoin.


CME Group daily reports, including deliveries. There are also trends in volume and open interest that can be contrasted with price action to provide direction as to whether buying or selling is occurring. Some of the information can also be calculated by using the disaggregated Commitment of Traders reports in coordination with trends from reported warehouse stocks. Harvey Organ does an excellent job of posting most of the information on a daily basis, although his site and written grammar are horrible.

The information in paper price data is not enough. Physical metal data as found from CME Group and the CFTC provide insight into the inner workings that cannot be gleaned from the price data.

People simply don't realize the difference between paper and physical yet. Banks have been playing on that ignorance and even encouraging it for decades. It's the basis of their power, so as more people realize how the game works, the less power the banks have. It's really just a matter of time; awareness accelerates as it spreads, which culminates in the real parabolic rise. Then the early adopters and quick learners to figure out the next base of power in the new system will take the reigns, but by then we'll all have sexbots and flying cars.

Even Bloomberg is starting to wise up:

Gold-Backed Dollar Puts ‘Fair Value’ at $10,000 an Ounce

No problem, glad it helped.

Use screen. On your headless miner, run:


Then, after logging back into the mining system via SSH:


To detach from a session, allowing it to continue running:
Ctrl+a, d

Yes, it's exactly what was expected, only a day late. The gap under $1,680 still defines the area that will build the next long-term consolidation/support level. Until it can be filled, buying demand remains (confirmed by activity and numbers behind the scenes) and a spike high is still in the cards. The bull trend in gold has not changed.

Every time a major triangle breakout to the downside has hit, it's been in the face of increasing buying pressure. A price collapse doesn't gain steam when running into a base like that. Besides, $50 daily ranges have been typical of late, so the latest drop has been nothing major - in fact, considering what it took to make the dip occur, I see it as a buying opportunity (esp. GDXJ, RGLD).

Japanese intervention has been officially denied. That generally means it is more likely to occur in the near future, but if it isn't used within days, I think that may be withheld to put a damper on the next spike in gold's price. If it took a global unwinding to knock gold down 5% (esp. when 10-20% in one day would've been expected, as happened in 2008), the greatest effect of a JPY devaluation wouldn't be seen until another rise.

Holding off gold's buying demand for as long as possible and preventing a breach of $2,000 is more important than crushing it. There's too much buying demand to do that for long, though: the pressure must be released at higher prices to entice strong holders into selling.

I'm expecting the GLD Puke Indicator to trigger this week. Also of note is that GOFO rates (outside the US) have steadily risen to well over double what they were six weeks ago - indicative of increasing demand.

Even more interesting is that, on August 22^nd, the GOFO rates for 3 months and longer took a dive while the 1-2 month shot up. To kick those rates around like that means that a lot of gold was needed somewhere for the next month or two: September and October; the months that are showing extreme levels of delivery orders in both gold and silver.

At present, there are over 300,000 open futures contracts that could stand for delivery this December. Even with the volatility in gold over the past few weeks, very few of the longs holding those contracts have been shaken out. If a little over 5% of those contracts are delivery requests, the COMEX would be wiped out. Normally, plenty of contracts close before then, but with recent action many longs are staying and requesting delivery. It wouldn't be surprising at this point to see 20-30% stand for delivery, which is why reducing the 300k open interest is so critical.

The games we're seeing now are efforts to reduce that 300k long position. Seeing as how there have been repeated failures to do so, a final option is to relent on selling pressure and allow price to rise so that some of those longs take paper profits. Since paper can be conjured by keyboard and handed out like Pez, that's a far better short-term solution than a bullion bank or commodity exchange default.

One issue with that is the paper profits may be employed in purchasing gold outside of the commodity bourses (just as China has been using its US debt reserves to finance real asset acquisition around the world and even bail out Europe), leading to reduced availability for the exchanges to supply further long contract holders in the future. The cycle continues with prices rising each time. This is a lose-lose situation.

That they definitely are. No other currencies can withstand global capital flows as readily without there being major disturbances in national economies. The Aussie is sizable, but experiencing 10% swings over the course of a couple of months is insane.

A problem exists with the Yen link, in that there might be a situation of diminishing returns as each of the major currencies are rotated through to provide USD support. It comes back to uncertainty and stability again. If capital starts flowing into gold (and silver) as well as JPY, both USD and gold will rise together.

Each time this wave moves back and forth, gold picks up additional flows. This is exactly the same as the flows into Bitcoin. What's good for Bitcoin is good for gold, especially if the fiat depreciation and/or destabilization continues - whether inflation or deflation take the stage. Deflationary phases just give gold and Bitcoin a rest during their rise.

Don't discount the way Bitcoin interacts with gold. Instead, figure out how they will interact. Gold isn't going to just disappear.

A single currency that provides all of the major functions of money is nearly impossible to implement. Demurrage might be close to that, but why introduce excessive complexity?

There is a concept involving a dual-currency system. Bitcoin is the deflationary side, similar to gold. It appreciates in value over time. The other side would be purely inflationary, but not a targeted method such as central banks use and politicians promote. Instead, use the same code as Bitcoin - only remove the hard ~21mm unit limit. That allows for price stability as the currency can expand to the needs of the aggregate economy.

Other technical issues exist, but the general idea is very similar to the existing financial system; the major distinction being decentralized control with auto-regulation.

Save in gold; spend in EUR/USD/etc.

Save in Bitcoins; spend in Altcoin/Aucoin/Mote/etc.

No need to mangle an existing and elegant solution. Only two modifications for the inflationary side: remove the hard limit and optionally limit the initial unit expansion rate.

The same thing happened with the announcement of QE2. US-related instruments went up (tin foil hat assumes PWG/PPT/G7/G20 efforts here), gold and silver were slammed - initially. Reality took over shortly afterward.

As the rest of the week/month plays out, intervention will give way to reason (then probably more intervention at the beginning of October).