Gold $6400, Silver $80 - Why would they be at - Ref: 09-035A

8/14/2019 Gold $6400, Silver $80 - Why would they be at - Ref: 09-035A

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Ref: 09-035A of 1stDecember, 2009

Are you reading it correctly? Yes, you are. Am I out of my mind? No, I am not.

Gold prices are on upswing. They are going up at the moment slowly due to rising loss ofconfidence of the Investors in paper currencies and also people at large. Gold is going up notbecause of hedge against inflation no one consciously buy this metal with inflation in mind. Haveyou ever gone to a jewelers or gold shop to buy the gold as hedge against inflation? Definitely not.

The analysts and media who have been touting rise in gold as investors intention to hedge againstinflation must get their head and speech examined. They have been spreading LIE at the instanceof the officials of respective governments. With the loss of confidence resulting in steep decline ofUS dollar, the US administration has been reiterating its oft repeated stance of strong dollar policy;and when the world is not listening to buy the bankrupt dollar, they have been using media andanalysts to tell the world NOT to buy gold, adding that gold market is in bubble which is going toburst one day.

Anything will burst one day. Everyone will die one day. Does it mean that we should leave ourdesire to live and enjoy our life? It is natures cycle that what is borne today will die one day; andwhat is falling or rising one day will rise and fall one day. It is the eternal truth. We do not have togo to the Harvard or Wharton to learn that. This is the parental heritage.

Yes, Gold and Silver have been rising due to investors preference to getaway from paper assets to something real. They no longer treat RealEstate as really a Real wealth! This is why they are turning to Gold. Gold isGOD, Gold is Truth, and in India there is official state Sanskrit symbol

Satya Mev Jayte that means Truth Alone Wins.

This is the reason that even an illiterate Indian is buying gold all the time.He is not illiterate, todays Bankers, Investment Bankers, Insurers,Central Bankers, Finance Ministers, Governors are. How do you measurethe actions of all Central Bankers, including that of George Brown, thePrime Minister of UK who was the Chancellor of HM Treasury, sold Gold


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at the bottom of the cycle - $ 260 to $320? Almost all Central Banks sold over 3000 tons of gold atthe rock bottom prices during last 15 years.

Is there any demand supply imbalance that pushes up the gold? No. The demand-supply ruleoperates in normal times, not in emergency or 911 call. And why should Gold go to US$ 6400 andSilver to $ 80 as projected by this Author? Why?

What the World Doesnt Know..Is the hidden the fact that United States has lost almost all of its Gold during its covert practicefor over 20 years. YES, the gold may be there physically at Fort Knox or HSBC Bullion Vault inUSA. But that is NOT enough. Who owns the gold is more important than who keeps the gold. It islike your goods are in a warehouse or bank locker. The warehouse-keeper or banker can notclaim Title to or Ownership of those goods. These goods are kept with him in Trust.

The FED and Treasury appear to have been concealing lending of gold to hedge funds bycamouflaging transactions through various central banks. When those Central Banks lend to thesehedge funds to short the gold, they appear to claim the gold from Fed and Treasury who earmarkthe gold in its balance sheets. In other words, the earmarked gold shown in Fed / Treasurybalance sheets is in fact owned by foreign Central Bankers and is no longer owned by the

United States. If the shorted gold does not return to Fed/Treasury, they will be obliged to show itas sale one day. That day of reckoning will come when the Foreign Central Banks start demandingthe gold physically.

According to my own research almost 6100 tons of gold earmarkedin the Fed/Treasury balancesheets are non-returnable. The hedge funds who shorted it at prices $260 to $360 can not buyback at todays prices. If they can not return, their deposits will be at the most forfeited. In otherwords, the Fed/Treasury will be forced to recognize the forced sale of gold @ $260 to $360 ormore, but not more than $430 at the most. That is, Americans have lost their most valuable andprized asset Gold due to fraud perpetrated by the Fed/Treasury officials. It happened without

their knowledge because the Fed/Treasury balance sheets were never audited. The office of OCC(Office of Controller of Currency) conducts only physical verification of the gold, not the trueownership. This is why Ron Paul, Senator, introduced a bill to audit the books of Fed. That is notenough. The gold is handled mainly by US treasury Fed merely manages the operational part.

You must read my book Sub PrimeResolved Chapter 14 titled Where isMacKennas Gold which deals with thisissue comprehensively in 30 pages andproves beyond doubt thatUnited Stateshas lost almost 78% of its gold through

covert lending practices to certain banks,investment banks and hedge funds to

depress the gold prices with intent to

control the inflation numbers to help

them justify lower interest rates. Thebook uses same official figures churnedout by the Fed/Treasury.

There is further possibility of more selling after the writing of this book. Total loss could be 90%

It is a Great EXPOSE since the Watergate Scandal.


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The book goes to the bottom of the statistics and its couched language (with double meaning) toconceal the truth. Most of the gold must be belonging to European countries, Switzerland, IMF,World Bank and some other major gold owners such as Australia and Canada, who live in thedream world that their gold is safe in the vaults of the Fed.

When the Truth will come out?If there is a massive call from the States and Local Governments like California to launch acampaign against the Fed/Treasury to give them enough funds by selling part of existing goldreserve of 8134 tons, will meet with the denials from US Administration (Fed /Treasury) onevasive grounds.

Both Fed/Treasury know pretty well that there is no real gold ownership left with them, and thatselling of gold belonging to other nations would tantamount to committing breach of trust. Eventhe President of United States, be it were President Clinton, George Bush or Barack Obama, maynot be aware of the constructive loss of US Gold through the hedgers who acted solely at thebehest of same Fed/Treasury officials having ulterior motive.

The gold borrowers are obviously who is who in the field of banking, investment banking andhedge funds. If they are sought to be prosecuted, with the threat of perjury, they will come out inthe open with the truth. Some may even commit suicides rather than facing self - incriminatorycharges and face imprisonment for life.

When the market realizes that the US no longer has as much gold as claimed, in fact having lostalmost 77% as above, hell will break lose in the media, town hall meetings, White House, IMF HeadQuarters, World Bank, European Union, Great Britain, China, India and Switzerland. Many of themare the real owners of the gold who presumed that it is lying in safe place in United States. Theywill realize first time that United States is no longer safe place to keep gold owned by them.What they own is the piece of paper from United States promising them to deliver the gold on

demand.

This is why I always mention in many articles and reply to readers that Physical is Physical, andPaper is Paper Asset. One would be downright stupid if he entrusts tons of gold to some oneother than him. It is like entrusting ones wife in the care of another man. Gold is the kind of assetsthat must be held by the owner physically.

Turning to recent rise in gold prices, please look at the Open Interest for December 2009 andFebruary 2010. The shorter have been rolling over the contract every two months in the hope thatthe prices may drop so that they can cover their short position. However, the gold has been risingfor over 5 years, denying them comfort so badly required by them. Look at the following Open

Interest positions (our comments follow thereafter):

At the time of writing, the Open Interest position relating to gold for two key months December2009 and February 2010 were as under:

2009.12.01 GOLD Dec 2009 (NYMEX:GC.Z09) OI 12,041 contracts (= 1.204 Million Troy Ounces)Or 37.45 tons valued at US$ 1.442 Billions

2009.12.01 GOLD Feb 2010 (NYMEX:GC.G10.E) OI 364,298 contracts (= 36.429 Millions Troy Ounces)Or massive 1,133 tons of Gold- 50% of world annual production deliverable in One month


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Now, look at the following chart of 27th November, 2009 when the gold dropped over 4.5% inmatter of minutes:

In matter of minutes, massive volume of

over 111,000 contracts equivalent to

11,100,000 Troy Ounces or 345 tons

were recorded.

Some operators manipulated to crash

gold prices in matter of minutes so thatthey could buy back or cover the short

position for Dec 2009 period.

The contracts were rolled over into Feb

2010 contracts where the Open Interest

swelled to 364,298 contracts or 36.249

millions of troy ounces or massive 1,133

tons of gold. It represents 50% of world

annual gold output to be delivered in

one month only.

It is possible, the shorter may try to roll

over the Feb 2010 contracts into longerdated months, provided the music does

not stop here. If roll over facility is

stopped, the short sellers would be

obliged to default or doom to their

failure.

1. Just imagine. The gold prices have risen to US$ 1195 due to normal investment demand. Ifthose buyers or large investment funds/hedge funds get the wind that there is no real goldwith US, a massive rally may ensue due to heavy rush to buy back the contracts under OpenInterest. The gold could propel into uncharted territory. It is just wild guess where the goldcould possibly go to $1800, 2400, 3200 or 6400?


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a. The gold could go to$ 2400 due to normal Investment demand. The gold reached theheight of $ 850 in 1980s. If you use todays inflation adjusted dollar, the price could goto $2400 presuming other factors remain constant.

b. The US$ index now at about 74 could drop to psychological 71 level (intermediate) or4%. It could drop further to 65 and finally solid support at 61. This means that thedollar could drop by 4% in very short term to 20% in 9 months. In other words, the risein gold prices due to weaker dollar could rise by another $480 (20% of $2400)

c. The recent financial crisis has thrown Central Banks (Fed, HM Treasury UK, EuropeanCentral Bank, China, India, Australia, some smaller Asian nations, to print over $ 6.6trillions of dollars equivalent. Considering the global Gold Stock of about 80,000 tons inthe hands of Central Banks and Private individuals (like Indian/Chinese citizens). If youdivide $ 6.6 trillions/80,000 tons of gold, the Equivalent price of excess money will be $2,566/ounce.

d. Thus, the notional price of gold should be $2400 + $ 480 + $ 2566 = $5,446 ouncee. ADD to it if the short sellers have to rush to the market to cover their shorts which

could be any number $ 1000 to $ 8000. I am counting only $ 1000 as short coveringeffect, which would raise the price of gold to $ 6446 or say $6400 as the caption shows.

f. In reality, the price could rise much higher because the $ will weaken much further, byanother 40% ($ index to 40 or about). It will potentially add another $ 2000 per ounce.

g. The price in non-dollar countries may not rise to that extent, because the effects will bemuted to the extent of local currency appreciation.

h. Gold and silver has outperformed every other Asset class in last 5 years. See thefollowing table.

SILVERHistorically ratio of gold to silver in 80s was just 16 to 20 (When the gold reached $ 800 the silverpeaked at $ 50 giving Gold/Silver ratio of only 16. In that case, why our projections give Gold atarget of 6400 and only $ 80 to Silver? It should have been $400. But not so, because Silver is nosubstitute of gold anywhere. It is available plenty and also, an industrial metal. Every copper

producer has a bye-product of Silver. Gold is never a significant bye-product of any miningoperation. Further, the industrial demand of Silver may gain if new cell battery known as Ag-Zn(Silver Zinc battery) replaces the Ni-Cd or Lithium battery. The new Ag-Zn battery is reported tobe super conductor of electricity and heat, far superior to any other battery in the market place. Italso implies that Ni and Cadmium prices will turn softer due to lesser industrial demand.

TARGET QUALIFIER1. I have a Gold Target of $ 1500 (by March, 2010), $ 1800 (June, 2010), $ 2100 (Sep 2010),

$2400 (Mar 2011), $2800 (Dec 2011) and $3200 (June 2012) in normal circumstances due toinvestors demand and weakness in currency WITHOUT taking into account the short coveringrelated rise or additional Central Bank purchase (such as India)


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2. The target could be higher by 50% and time shorter by 25%. If the short covering takes place,Add 50% to the above target price.

3. Dollar weakness will add more. The dollar has more credential to go lower.a. However, if the Obama Administration adopts the measures suggested in my book, the

fall of dollar would be arrested or reversed.b. However, the gold prices of other countries will rise due to weakening of local currency.

In U$ terms they would be corrected.c. If dollar is demonetized or reverse split (cancelling current dollars and replacing them

5 to 1), then the price of Gold will decline to reflect the reconstituted currency.4. In less than 30 months, if the present liberal monetary policy is pursued, and short covering

does take place, the gold price could rise to $ 6400 in 30 months. Some major banks in theworld could be busted. (2 from USA, 2 from UK, One from Europe) and One from Switzerland)

5. Once the gold therefore rises to $ 3200 or about, the investors may adopt the trading strategy.Until then, they can afford to buy and hold for a period between 12 months to 18 months.

6. There could be predominant selling from India, including Central Bank to book profit. Manymay be tempted to sell gold and buy home which is the average dream of any young person.You have to allow reduction of prices on account of this factor.

7. The current prices of $1200 are therefore screaming bargain. They are still at 50% discount toinflation adjusted dollars.

8. The investor must read my book Sub Prime Resolved that cost only $ 59.95. It is advisable tospend $ 60 before committing large resources for investment into Gold or Silver.

a. If he disagrees wit the finding on Gold chapter, he may not adhere to above targets, butmay scale down by 30% to 50%.

b. He may ignore the effect of short covering.9. The investor may use the following table as guide. The figures input are dummy. See Excel

spreadsheet for Download. The investors may use it to input their own variables.

Item No. Description Constant/Variable SAMPLE DATA 2009.Dec - START1 OpeningPrices in Quarter Begin /TroyOz Variable - Input 980.00 -2 Current Interest Rate Variaole - Input 1.00

3 Current Trend - for Gold Up/Down/No change Up Up4 Current Trend - for Dollar Up/Down/No change Down Down5 Current Trand - State of Economy Up/Down/No change Down Down6 Current Trend - Interest Rate Up/Down/No change No Change No Change78 Rise/Fall due to Demand/Supply % Variable - Input Number 8.009 Formula - Locked 78.40 -

10 Rise/Fall due to Dollar (%) Variable - Input Number 6.0011 Formula - Locked 58.80 -12 Rise/Fall due to Short covering % Variable - Input Number - -13 Formula - Locked - -14 Fall due to Central Bank selling Variable - Input Number 10.0015 Formula - Locked 98.00 -

17 Final Price in USD Formula - Locked 1,215.20 -18 Local Unit = Rs. Rs19 Exchange Rate (Currency/US$ Variable - Input Number 46.6020 Final Price in Local Unit (Currency)/Ounce Formula - Locked 56,628.32 -21 1 Troy Ounce = Grams 31.1035 31.1035 31.103522 Price per 10 grams (Local Unit) Formula - Locked 18,206.41 -

Gold Value Forecaster

Anil Selarka, Author (Kalidas) Blog: http://anilselarka.com and http://subprimeresolved.comHong Kong, Ref: 09-035A of 2009.12.02Disclaimer:Please note that this is the considered opinion of the author. The author is not liable or responsible for any loss or damagethe investor may suffer if the situation does not develop as intended or forecast. This article is meant for only experiencedinvestor or professionals who understand the vagaries of trade. Copyrights 2009 by Anil Selarka (Kalidas)

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Gold $6400, Silver $80 - Why would they be at - Ref: 09-035A