Thursday, June 19, 2014

Diverge or Evolve?

So now I think the question becomes relevant to ask. Will the current COMEX paper pricing mechanism diverge from the SGE and related price discovery mechanisms of the East, or will it take cues and signals from these exchanges, which appear to be co-relating as soon as next month (?)

We know from the goldbug blogosphere and related alternative financial / geopolitical information sources that the intent of the Eurasion Union / BRIC / Dubai physical supply markets is to create a gold market that is divorced from Western influence, just as much as we see the clear evidence of a so called anti-dollar alliance, led by Russia, prompted by U.S. interventionism, yet inevitable even without that.

So the central question, which I have posed before, but which becomes more and more relevant with the consequences and developments of each passing day. "Will paper gold diverge or evolve?"

And this is not a clearly distinct East vs. West dichotomy either, as we factor in the rehypothecation of commodities on as large a scale as is now revealed by more mainstream sources - an understanding of the problem being almost as widespread as I have warned in earlier posts - though the understanding of certain derivative instruments which lie outside the scope of physical commodities alone has not yet been fully comprehended in terms of its systemic influence. But it will be. Believe me, it will be.

The two most systemic derivatives outside of paper gold (which is only thought of as a commodity derivative due to the concerted, decades-long effort to redefine gold as a commodity) would be the interest rate derivative (forward rate agreements and swaps) and of course the dollar derivative itself, and all fiat currencies today (including all forms of paper wealth) which derive their value from it.

As we begin to see physical gold unravel from it's derivative price control grid (paper gold) does the price control grid respond to the real world influence of growing physical markets, or does it defy them in an effort to preserve the larger global derivative ecosystem which has held a systemic lock on economies large and small, developing and mature, across the planet, for many decades?

Many believe that defiance is a foregone conclusion, and that the ubiquitous stranglehold of the global derivative system (which is truly what the international financial and monetary system is today) will fight, to the death, any encroachment of real world physical supply constraints as an impediment to the control of ALL things economic in place today.

Many believe that the dollar faction which will support the tremendous advantage that (fiat) capital derives from the system at ANY cost, including war, and with what we see today it is no fools errand to expect and prepare for such a development.

And yet my friends, the TRULY wealthy - who have held gold for generations since the Roths explained that capital advantage to the Morgans, in their collaboration of mutual interests - are truly playing both ends against the middle with their physical gold holdings.

Indeed there could well be a movement to the upside of paper gold, concurrent with the movement of physical AWAY from the paper-based derivative gold markets, as a final play to later dump all paper in the eventual inferno that Another always warned of.

Or ... we could see a self-perpetuating decline of paper gold, and divergence, as the final moment of truth.

And finally, there is this third layer of the onion which lies in the physical markets of the East themselves. Are they, and can they truly be, FREE, after years and years of being victimized by the exorbitant privilege. Does that tremendous paper advantage entice or repel? For much paper wealth has flown East along with the gold, and the ways of the West align strange bedfellows across the miles.

It was always meant to keep all but the most wealthy and well connected guessing by design, this fascinating derivative system, and timing is truly the play of Kings, or Giants if you wish to call them that.

And more than ever, as we watch the sequence of predicted events unfold, the time grows shorter and shorter which reveals all.

1 comment:

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