Adrian Douglas: The imminent failure of the second London Gold Pool

The growing divergence between the physical and paper price gold, or subtle changes in the footprint of control, is also illustrated by Intermarket relationships.

Once such example is the premium paid for physical gold over paper. The independently audited Central Gold Trust (GTU) to gold ETF (GLD) or “paper gold” ratio (GTU/GLD) also spiked in April 2009 on surprise news of Chinese buying. While the premium has since pulled back after an aggressive paper attack, it is clearly trending higher since 2007. As Douglass suggests, the physical, slowly at first, is beginning to overwhelm the paper market as it did in 1968.

Central Gold Trust to Gold ETF Ratio:

Manipulative selling of gold on the daily London PM fix has failed to suppress the gold price since April 2009, when China announced that it surreptitiously had accumulated a large gold reserve over the previous five years, GATA board member Adrian Douglas disclosed today in a statistical study. Since then, Douglas finds, ever-increasing dumping of gold in London by central banks and their bullion bank agents has been having less and less effect on the gold price. He concludes that the second "London Gold Pool" -- a clandestine one, unlike the first -- is imminently facing a collapse identical to the collapse of the first as physical gold demand overwhelms the ability or the desire of the market riggers to provide the necessary metal.

Source: gata.org