With the world focused on news out of Greece and Ukraine, today one of the greats in the business told King World News that the West's great charade is coming to an end. The 50-year veteran also addressed the strange timing of the raid in the gold and silver markets and more.
Eric King: “John, what will be the ramifications of a severe misstep by the EU over this Greek crisis?”
John Hathaway: “That’s the $64 trillion question. Spain and Italy are both waiting and watching. It could lead to a breakup of the eurozone. But I can tell you that if it takes a bad turn for Europe, it would fall into the category of a loss of confidence in paper money….
“This situation with Greece is very tricky and you would think a small country like Greece, how could they put a monkey-wrench into the whole eurozone? Obviously the finances of various countries in Europe are intermingled, and extricating Greek credits from the rest of the eurozone is easier said than done.
Lawsuit Filed Against Banks For Rigging The Price Of Gold
Against the backdrop of the Greek drama, we have this lawsuit that was filed in New York. The lawsuit accuses the members of the London fix and other bullion banks such as JP Morgan of rigging the gold market.
The complaint is mainly centered on things that go on at the (London) fix, but by implication this lawsuit affects derivatives and paper contracts that are priced off of the fix. So it affects the Comex and a lot of interbank dealings.
Bullion Banks Want This Lawsuit To Go Away
The bullion banks have filed a motion to have the case dismissed. The judge is now reviewing the complaint and will decide whether to let the complaint proceed. If the case is allowed to proceed this would have two important outcomes: One would be that there would surely be a settlement for a very large amount of money — kind of like they did with LIBOR so the banks don’t have to put anyone on the stand.
The other option would be that we go to discovery and we find out what these banks have really been doing in the gold market. Either way this will be a win for the gold market.
Are The Bank's Lawyers Watching Today's Action In Gold?
Right now the internal legal departments of all these banking institutions that have been involved in price-rigging are carefully watching the desks that are doing it. This is why today’s drubbing in the metals markets is so curious. You would think these type of shenanigans would have stopped by now.
Meanwhile Gold Flows From West To East
The other thing I have been focused on is this drainage of physical gold from West to East. This flow of gold to the East continue and there is no way of knowing what the limitation is in terms of the capacity of the West to keep this price suppression charade going.
At some point price discovery is not going to be on the Comex or in London. It’s going to be Asia and it’s going to be driven by real supply and demand, which up to now has been so obscured by synthetic paper gold trading.
This will be another big win for the gold market because anyone who looks at the flow of physical gold can see that the consumption in Asia is much larger than the entire annual global production. So how can days like today continue to happen without the continued flow of physical gold out of Western central bank vaults into Eastern vaults?
The West's Charade Will End
I’m telling you, Eric, at some point the West is going to run out of physical gold. You will know when the West is actually running out of gold because you will see it in the price action. It will be anticipated by the markets well before it’s actually written about and makes headlines. As a side note, Eric, I wonder if the timing of the bear raid has anything to do with the legal action against the banks.”
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