Antal Fekete Responds To FOFOA's Speculation On Gold Backwardation Manipulation

Tyler Durden's picture

A few days ago FOFOA drew quite a bit of attention with his post "Red Alert: Gold Backwardation", in which the topic of the GOFO rate receives prominent attention (GOFO is basically the difference between a currency lease rate, in this case dollar Libor, and the GLR, or the Gold Lease Rate, as per the LBMA). FOFOA draws several correlation between the GOFO and an implied backwardation, and asks the question: “Is the dollar bidding for gold, or maybe gold is bidding for dollars?” Indeed, while one read of the underlying material does substantiate the presented hypothesis, another is merely that there has been too much turbulence in the currency market, with Libor, not just USD, but especially EUR, surging recently, on very valid liquidity concerns out of Europe. As a result of the massive squeeze first in the dollar and then in euros, a topic much discussed here previously, one could reach a point where the GOFO is in fact negative, merely due to vol in interbank and money market, which in turn is driven by ever faster liquidations in the shadow banking system, another topic much discussed on Zero Hedge. Certainly, when both of these are in flux, it would be expected that GLR would also do some very peculiar things. Either way, FOFOA has conceived an interesting theory, and gold fans will appreciate the thought experiment of gold being in backwardation. We present Professor Antal Fekete's response to FOFOA's analysis. Both are an interesting read. (The FOFOA post can be found here).


h/t Captain Goodvibes


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Brutlstrudl's picture

Sooner or later it all comes down to ounces buried in your backyard

living on the edge's picture

I like the way you think. Someday, whether it's next year or 20-years, I think you will be happy with your decision.

living on the edge's picture

It really does help a person sleep. Most of the banks are in a near death state. The financial institutions are living in a make believe world. I guess you can say gold helps you stay well grounded. (pun intended)

Misean's picture

And the number of loaded clips.

DoChenRollingBearing's picture

+ 9 mm


Actually it pleases me to see fofoa and Fekete get more exposure, the 2 guys who seem to know the most about gold.

living on the edge's picture

I have to say I am down to one .40 cal and three 9's. Plus the AR's of course. I am spot on with the 9's so it is better to just go with what best suits you.

trav7777's picture

Military and police are 9mm and .40 by and large.  If TSH, then you would need to try to have something in common calibres.

That lets out some really good rounds such as 10mm or .357 Sig, for example.  A decent 9mm carbine would seem to be a must-have.  .45ACP is a great round, just not as widespread anymore.  I love that cartridge, but must concede that against the type of violence typified by 3rd world nations like Argentina or Brazil, that the "hail of bullets" response that a deep 9mm magazine gives you has a certain, shall we say, "allure" to it.

living on the edge's picture

Yikes, you read my mind with the Argentina or Brazil analogy.

DoChenRollingBearing's picture

7.62 was mentioned above.  7.62 x 39 is for my AK-47.

500 rounds each.


WaterWings's picture

I had the Beretta 9mm carbine and it was nice being able to use the same mags as the pistol but when I realized that I can only shoot one gun, accurately, at a time it had to be the M1A - they don't shoot back after one hit - which is the primary goal. And if you factor in the range of pistol calibers why wouldn't you want something that is effective at eight football fields instead of one? 9mm when I'm out of 7.62.

One shot. One kill.

AVP's picture


Great for up close and personal (pistol grip)!

WaterWings's picture

Guaranteed to ruin their day.

living on the edge's picture


Had you figured for a .45 cal guy. Appearances can be deceiving.

DoChenRollingBearing's picture

.45 cal too big.  I would never practice, make me flinch!

Spitzer's picture

I might be mistaken but Fekete is opening a school called "The new school of Austrian economics"

He changed some shit around because he figures there is liquidity issues in the Misus Austrain school. I lost some respect for the guy when I heard that.

scatterbrains's picture

I worry, probably needlessly, that leaving the mags loaded causes the springs to go slightly flat and possibly causing a jam during those few seconds over the span of your entire life when you need your mags to feed your rounds dependably.

Oracle of Kypseli's picture

load at 30-40% this way you have a few rounds ready for quick action and the springs still maintain pressure.


ColonelCooper's picture

This is an old wives tale.  Storing your mags loaded does not cause the spring to weaken.  It is loading and unloading, or release of energy that weakens the spring.  This has been beaten to death on many gun forums. 

UncleFurker's picture


Exactly. If your springs are going soft at room temperature, they're screwing you on metal quality.



DoChenRollingBearing's picture

Guy at the store where I bought my AK and my 9 mm Beretta told me that putting 25 rounds into the 30 (capacity) AK clip and 10 rounds into my 14 (Beretta) clip was the way to go for storing ammo ready to shoot.  So, I have gotten used to firing 10 shots per magazine with the Beretta and 25 with the AK.

I of course defer to the Colonel on this one, as I am a beginner.

living on the edge's picture

Dead on, fatigue from the cycling (variation of the load on the mag spring) weakens the spring over time. Besides an empty mag will do you no good.

ColonelCooper's picture


I'll give you a +5.56 on that.  But might I correct you and say mag.?  Unless you're top feeding something of WWII vintage, then I apologize.

fox's picture

Is it just me or is Fekete a little nutty?

Misean's picture

Like Fat Bastard's stool sample?  No.  He's spot on!

Übermensch's picture

In a world gone insane, nutty is the new norm.

LeBalance's picture

Even though FOFOA spells out that the published metrics can and have been gamed, thus the need for just observation of the "temperature" without a thermometer, Mr. Fekete continues to blither about an additional metric.  Mr. Fekete wishes to (again) be on the coattails of genius and has nothing to supply of note.  This has proven to be the case previously where Mr. Fekete's bills of credit were just another credit (eventual market death) money substitute. After pouring over his writings in that matter and finally figuring out his SOP (big ego small or zero contribution) I stopped following him.

Steroid's picture

Your reply qualifies you not Fekete. Ignore him to your own perill!

living on the edge's picture

Fekete is pretty bright and I enjoy also one of his associates, Darryl Robert Schoon. Granted each of the two provide an interesting perspective on gold, economics etc, and at times they delve deeper than most care to see.

They are just some of the many authors that realize something is wrong and rationalized a possible solution (gold).

Spitzer's picture

Yeah and he is opening the "New School of Austrain economics" because  he thinks he is smarter then Misus et al.

living on the edge's picture


Sometimes I have to read his stuff 2-3 times, he can be intense.

Übermensch's picture

FOFOFA is a beast.

Au Member's picture


Max Keiser on the Silver manipulation. Calls it the Achilles heel of the whole Ponzi scheme.

breezer1's picture

jeff nielson at bullion bulls has always said silver is the weak link and would lead the charge. he makes a good argument.

BrianOFlanagan's picture

Funny that these guys are saying that the LBMA is using a lighter shade of grey in their reports then they did before, thus they must be hiding something! Cue the cuckoo birds.

AR15AU's picture

Yes, TPTB are crazy if they think that by making the report harder to read the information will not get out. Actually, desperate is more like it. 

faustian bargain's picture

You must be someone who always reads the fine print.

I think I need to buy a gun's picture

gold capitulated today on heavy volume,,,that of course the paper price as one of my dealers got wiped out of physical today......


FOFOA is a beast

scatterbrains's picture

makes me wonder if a "gold dealer's" index could be created which interconnects all physical dealers with instantaneous transaction information that confirms that while paper is going one way physical is getting trounced with buy orders when ever the paper market is being pushed down.. even if the data had to be delayed days or weeks it would be interesting to see what the boots on the ground are doing during these periods of manipulated weakness.