Last week while China's financial infrastructure was primarily closed for their annual Golden Week holiday, one or more entities slammed the gold price down by dumping billions of dollars worth of contracts on at least three separate occasions. And without opposing buy pressure from the usual counter-parties in Asia, the price was pushed down from a high of $1317 on Oct. 3 to an inter-day low of $1246 on Friday.
However, most of the trades that created the drop of $70 over the course of four days occurred almost instantaneously, with billions in contracts being dumped onto the market in less than a minute each time.
So what was the cause and reason for this attack on the gold price, especially since there was no news or events at all during the week that would spur traders to divest their holdings in such quantities? Speculation has been rampant in the alternative media, but nothing conclusive as to why...
On Oct. 6, well known and respected statistician and analyst Dr. Jim Willie gave an interview with Perpetual Assets to discuss the current state of the economy, and in particular events such as Deutsche Bank's insolvency and the recent takedown in gold. And during his over two hour interview, Dr. Willie laid out a scenario regarding China's desire to buy Deutsche Bank's gold derivative book, and the pressure put on the German bank by London and the U.S. to counter the move by forcing them to sell their contracts onto the market, even at a loss.
Dr, Jim Willie: What is Deutsche Bank's biggest problem right now, outside the law?
Will Lehr: Their derivatives book?
JW: It's cash. I don't mean where they are in trouble, but rather what is their challenge. Cash. They are having liquidity nightmares.
So what I am hearing is that the Chinese are coming forward, and remember they are off all week for some holiday, and that's one reason that gold got slammed. But the Chinese have offered cash... I've heard they've offered something on the order of $100 billion.
And I go WHAT? Just for Deutsche Bank? And my source said no, no no, they aren't interested in the whole bank... they are interested in their gold derivatives book.
Because what we're hearing in the buzz among bankers... you know, New York, London, and European centers is that indeed China is looking to buy their gold derivative book, and the word has it that the derivative book involves more gold than is in the Comex.
More than what's traded in the Comex in a year.
It's bigger than the Comex by an order of magnitude.
Ok, so Deutsche Bank is interested in the Chinese deal, but what they're experiencing from what I'm hearing, is that the Deutsche Bank officials are being forced by London and Wall Street, to dump their derivative book. And I don't know if it's at a loss, and I have the feeling the Wall Street and Londoners don't care whether it's at a loss, they just want this derivative book to slowly be dissolved and sold off so that the Chinese don't get it.Fast forward to 31:20 in the video below to hear the entire story behind the Chinese gambit, and the pressure by the Western gold consortium to force Deutsche Bank to dump their derivatives onto the market to keep it out of China's hands.