After several weeks’ analysis, the National Inflation Association (NIA) has concluded that the precious metals markets are currently being artificially suppressed by paper gold and silver that doesn’t physically exist, risking a major crunch when investors want to convert their paper into gold or silver.
The organization points out that at last week’s Commodity Futures Trading Commission (CFTC) hearings, Jeffrey Christian of the consultancy CPM Group admitted that banks have leveraged their physical bullion by 100 to 1, meaning that for every 100 ounces of paper gold or silver that trade, there could be as little as 1 ounce of physical metals in the vaults backing it.
However, because Christian appeared to brush off any concerns about this situation, saying that "it has been persistently that way for decades," NIA representatives spoke out suggesting that most investors around the world holding paper gold or silver believe they own physical commodities. That is why the organization fears that when these investors decide they want the physical precious metals, it will result in the biggest short squeeze in the history of commodities trading.
Pointing out that the physical silver market is more tight than ever before —in the first quarter of 2010, the U.S. mint sold 9,023,500 American Silver Eagles—up from 8,299,000 sold in the fourth quarter of 2009—NIA has called on its members to spread the word and help expose what could be "the largest fraud in the history of the world."