Friday, October 1, 2010

Remember, there are two gold markets

the physical gold market and the spot market.

Spot is rising again to the $1317 level as the NY Fed head talks about the need for more QE.

Physical spread to spot has narrowed quite a bit from the heady days of late 2008 when certain gold coins commanded near double the spot price. Now the spreads are down to $25 to $50 per ounce. What's going on? 1. the potential for over regulation via the Congressman Weiner gold disclosure bill and 2. the 1099 rules. If Weiner gets passage and 1099 is not overturned in its present form, the market now is signalling a confiscation end run -- almost the perfect storm. Gold suppression schemes at their finest. Confiscation without having to do a 1930's style confiscation.

But throw a monkey wrench into the picture. International holders. Will China or India, for example, allow for a wholesale depreciation of their gold at the hands of US regs? I don't think so. So in the end the US PTB who want to keep gold from rising further because it exposes the true nature of the dollar's standing may end up being frustrated.

Gold is an internationally recognized store of value that you may not as an American be able to buy in the future. Yes, the combination of the so called consumer protection legislation of NYC mayoral wannabe Anthony Weiner and burdensome 1099 rules will be a one two punch to most industry gold and bullion dealers. More in coming posts. I remain bullish on gold with a good supply of Maalox on hand.

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