Following is an interesting letter from Bill Sardi on David Lew's article on gold market crash last week.

Yes, yes, David, the elites want to pry Gold from the naive, so they stage a bear market. And yes, gold price is dominated by speculative buyers. But none of the three reasons you suggest for a bear gold market are more than transient.

Where the value of an ounce of gold is in question is the surprising lack of overwhelming public demand in the face of many buy recommendations and the rationale that if paper money fails, there will be a gold rush that will be too late -- by then gold supply would evaporate.

Yes, the gold price rose, but not as it should have. There is so little gold if the 2% who are current gold buyers become 4% ---- there would be no inventory to buy. If you take all the paper money in the world and back it with gold you come up with a figure of $6900 per ounce. The call to back paper money with something tangible is growing.

People are creatures of habit, and they are paralyzed as their money declines in value in 401ks, savings accounts, stocks, etc. Demand for gold has been up, but inventories of physical gold should have disappeared in this recent run up.

You foster a collapse in gold price, then banks swoop it all up, and whammo, you've got a defacto gold confiscation underway. You think banks want to continue to hold that electronic funny money issued from the Fed? Banks are bullish on gold. What do they know? They are wringing their hands to get a hold of relatively cheap gold.

You tell me where banks will invest -- real estate, which is falsely propped? Stocks which are falsely propped? Treasuries? No, they lay in waiting to buy gold, at least 10% of their reserves probably.

There is virtually no demand for treasuries now, the only demand being falsely created by the Fed as they send money to overseas bankers to stage a contrived purchase. Only 20% of treasuries are being bid on, and they are staged bids. The money is being provided by the Fed. So you tank the price of gold and force investment funds to run for cover with treasuries? Maybe fund managers aren't going to fall for this, this time.

I have presented an imaginary scenario where the price of Gold drops to $500-700 an ounce, but paper money eventually folds as major world economies begin to devalue their currency and the others must follow in a race to the bottom to keep their goods affordable for export. So then what will shop keepers prefer in payment for goods and services, gold or that phony IOU-for-nothing paper money? The value of everything is declining, but that doesn't necessarily trigger a sell signal. The real bet is which will drop more, gold or paper money? You tell me.

I keep asking guys like you, where is YOUR money? If you passed up gold, at any price, and bet on stocks, bonds, treasuries, you are following a false bubble created by a run towards the lowest possible risk, not the best yield.

And do you think we are all so naive to believe guys like you who present the idea that market forces determine the price of gold? Come on, we have mass manipulation at the highest levels. There is more than strong rumor that COMEX has issued gold IOUs where there is no physical gold in inventory. An audit of physical gold around the world might reveal far less supply in the face of growing demand -- then what? Don't give me this "paper gold creating artificial demand" crap!

Commodities guys like you are shils to create movement in the market, since the number of trades spikes profits for brokers, not the value of the commodity. So you guys sell roller-coaster tickets. Keep the pricing moving up and down. Sorry, I always hated roller coasters.

Your advice is like warning investors about a rain storm when a comet is headed towards the earth. Tell your readers the US has 2035 banks to close (says the FDIC) at a price tab of $1 trillion, which will be covered with electronically-create money. We have a $1.5 trillion shortfall in what the US collects in taxes and what it spends. So there is another $1.5 trillion of fiat money that has to be created, since Asian bankers aren't loaning this time. The long play is gold, and just exactly what will you buy groceries with when we print another $3-trillion in fiat money and inflation finally swoops in?

--Bill Sardi

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