Jim: China has offered $100 Billion to Deutsche Bank to acquire their vast gold derivatives contract book.
The word on the street is that there is more gold in that book than in the entire COMEX. Deutsche is interested in this offer. But City of London and Wall Street officials are forcing DB to dump that book before the Chinese get their hands on it, even at a loss. COL and Wall Street don’t care if DB takes a loss on that dump. They just want those contracts sold off so that the Chinese don’t get it.
COL and Wall Street don’t want that book to get under Chinese control because the counter-party of those gold derivatives is the US Treasury’s Exchange Stabilization Fund.
Will: Whoa! And there’s your mushroom cloud.
Jim: Suppose China now comes back on Monday with an order to DB to cease and desist all gold book sales. We might have a situation where a giant block of Long positions is held by China via the DB office with the opposite party on that trade being the US government….
The Chinese could use that book to take physical delivery of gold. This could be the arena through which China finally converts their Treasury’s to Gold, using Deutsche Bank as a tool.
I don’t think China is happy that a bunch of gold contracts were dumped yesterday. There’s some “bad faith” going on here because China has an offer pending on those contracts. And wherever there is “bad faith,” there you find the US government. They are looting the country.
China likely will not give up on this Deutsche Bank issue. The Chinese are not interested in the Interest Rate Swap derivatives; they are interested in the gold derivatives because they can control the dumping of the US Dollar through that vehicle. And they can use that as the ultimate “force majeure” over the COMEX.