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October 9, 2008
Issue 13  -  Gold Window Closing Quickly

As I have been talking about for several weeks now, the gold market is drying up amidst hoarding:

"Germans Stockpiling Gold Amid Market Panic

German gold dealers have stopped taking new orders for the precious metal as demand has skyrocketed. Gold is seen as a safe investment during the market turmoil.

In uncertain economic times, Germans are dumping stocks and shares to take refuge in precious metal, according to a Wednesday article in a Berlin newspaper.

German gold dealers report running low on stocks of gold bars and coins.

Heiko Ganss, head of the Berlin branch of gold merchant Pro Aurum, told the Berliner Zeitung newspaper that most gold traders were refusing new orders, as they couldn't meet the current demand.

"Demand is running well above our capacity to supply," he was quoted saying, saying retail banks in Germany were also unable to meet demand.

"Exploding demand"

Gold traded in London at $913 (656 euros) per troy ounce on Wednesday morning, up from $876.75 late Tuesday.

"Demand has exploded in the past few days," said Stephan Henkel, a gold broker at Umicore, which presses gold bars and coins and puts them on sale. Delivery times were running at two to four weeks.

"Currently, demand is about 10 times what it is at normal times," he said."

Remember the number of people buying gold right now is teeny tiny. It is virtually nonexistent. When the flood gates open, the price will not be able to be controlled. The bankers are starting to protect their gold. They are hoarding now as shown in this letter to lemetropolecafe from Austria:

"Dear Mr. Murphy!
As operator of the gold website today I received several messages that the European Union now wants to go after gold. They fear that a massive run into gold cannot be controlled in any other way.

There are several rumors in banker circles:

Rumor 1 (from a high-ranking banker in Germany)

If the current last ditch system rescue fails and there is a massive stock market crash happens tomorrow Friday, severe limitations will be implemented EU-wide over the weekend:

the sale and ownership of gold will be prohibited

withdrawals from accounts will be limited, companies will need to prove the purpose of transfers

even if this doesn't happen now, planning is underway

Rumor 2 (a former banker with excellent contacts: 

- There is a directive to banks to not any longer sell gold to the public
- Also there are efforts to reduce the amount of gold and silver which goes into the retail market to lessen the strain on the 400oz bullion bar market in London - this one determines the price. In this way they decouple demand from the price finding mechanism.

The system is now on its last legs on both sides of the Atlantic. More desperate measures are on the way as it looks. But according to Richard Russell: inflate or die. If rumor 1 becomes reality next week, it will be definitely "die" for the elites, because there will be a general uprising.

There is almost no gold available here in Europe. In Germany now banks decline sales (because they have no supply or because of this directive, I don't know). But here in Austria, gold is still available from some banks, although the quantities are limited. There is also a massive run on banks for cash everywhere, even central bankers admit it.

Probably this is of interest to your readers of Midas.

Best Regards from Vienna, Austria
Walter K. Eichelburg"

The central banks are hoarding, are you? Still not convinced? One more from lemetropolecafe:

Many thanks for forwarding this precious information.

Just one note on the French market. As you know, rumors of shortages of silver, then Gold at the current prices have grown and grown all over the world. I had not seen anything of the sort here, and I know all the significant dealers very well. Basically you could find large quantities of gold and silver coins at very little over spot price of metal.

This was about until a couple of weeks ago

The market has totally changed in a couple of weeks, and most of the dealers are out now. Prices have risen, and the main dealer has premiums of 20 to 50% over metal values for non numismatic coins. I believe that, at these prices, you will not be able to find any in a few weeks. More interesting, bankers I know call me for having my opinion (!) on what is happening. I tell them they are going bust (as I have told them for years) but now they realize it because one day they wake up as civil servants. 2 hot meals a day, guaranteed retirement in fiat and 50 layers of management over them.


I am serious.... good job woofer, holy moly, I have never seen this before in Canada

(This poster is a sophisticated Canadian investor/speculator.)



I was at Scotia on the Monday stock market crash, while the crash was happening. I looked at the lineup at the gold desk there were very few people lined up . So I thought, no big deal, it's not like there's a rush to buy gold.

I have occasionally phoned them in the past week, for instance to check for Ron, if they had gold available for sale. They really did .... this is the first time I have seen them not willing to sell gold.

And they have a TON. They really do have a lot. Take a look at their balance sheet if you don't believe me. They bought out Moccota (spelling wrong) and the largest single gold vaults exist under the Toronto banking center. They have a ton of bars, but are not willing to sell them."

It's really simple. There will be those with gold and then those without gold. I would wager that in 6 months the average citizen will not be able to get gold. If you still don't feel comfortable buying gold, let me know and I will help you. The next best thing is a major gold producer like Yamana (AUY) which I bought on Wednesday at $6.66 or Agnico Eagle (AEM). These are the best of the best and are internally funded and not affected by the credit crunch. Act as soon as possible, there isn't much time left.

On another not, it seems that AIG is now in need of $37 billion more. This company is a disaster. If you have any policies with them I would be switching companies before they are dissolved. It is not a nonzero chance occurrence and you shouldn't take that chance.

I also promised that I would be telling you how to protect your stock shares and I still need to work out a few more details so hopefully it is done tomorrow.