http://kingworldnews.com/kingworldnews/ ... psing.html
"The COMEX inventories have been steadily drained, but it’s accelerated rapidly over the last three months. These mismatched leases are forced to be extended now beyond any historical extremes that I can ever recall, and I talk to other people in the wholesale market and we are all seeing this crack in the system. On April 12th we saw official defense come in (to the gold market) and it was to avert this imminent LBMA bullion bank default. But it was just the way it was executed. It was grossly misjudged. "
This speaks to the discussion that has involved Jonflyfish on and off for the past couple years. Jon's point, I believe, is that the COMEX/LBMA was not constructed to back up every single ounce of gold or silver traded in the options market with the physical metal. It is simply a price discovery mechanism and as long as those few who do stand for delivery are satisfied with physical product the system will work as designed. If this is all true, is this apparent fractional reserve system widely acknowledged?
I suppose this system is workable if its true intent is price discovery and not price manipulation.