Bert Dohlmen On Gold And Precious Metals Manipulation

Tyler Durden's picture

Doug Kass appeared on CNBC today and attempted to present a bearish case on gold (along with his 3rd, or is that 33rd, case for a market top...) based on a verbatim recitation of half of Howard Marks' letter that we posted as a must read over the weekend. Naturally, had he recited the other half, he would have had to defend a diametrically opposing view, as that is the difference between great minds, who present both sides to the argument, and, well, everyone else. Nonetheless, we thank the bottom and top-ticker for offsetting some of the fervor his far more amusing boss at theStreet has imparted on gold, and which we find extremely worrying, as any time Cramer stands behind an asset, it is time to sell, no matter how much we like it. That said, and since we enjoy providing Doug and others with reading material for their "original" content for the next time they appear on CNBC, here is an excerpt from Bert Dohlmen's latest letter which explains not only why gold is an "investment for the ages" but also ties it in with the much discussed here topic of commodity manipulation: a far more important concept that we are surprised receives far less attention on such momentum chasing shows as Fast Money.

From Bert Dohmen's Welllington Letter, December 18 edition:


All except new subscribers know: we are very bullish on gold for the next 5-10 years. We believe it is the one investment that will prevail during the unprecedented turmoil ahead. The governments around the world have only one response to the problems of failing banks, excessive governmental debt, potential sovereign debt defaults, and soaring unemployment: print more money! It’s called “monetizing the debt.”

And people around the world have learned that to protect yourself against the governmentally induced destruction of the value of paper currency you buy gold and silver.

We saw this during the turmoil in Ireland in recent weeks. As the dollar soared, gold and silver rose as well, which is contrary to past behavior when a strong dollar was bearish for the precious metals. That indicates that the precious metals are now a global hedge against depreciation of all currencies. As my friend Clyde H. always says, “All currencies are sinking, just at different rates.”

The U.S. is on the same path as Greece, Ireland, Spain and Portugal. The extension of the U.S. debt ceiling this week turned out to be a virtual “Christmas tree” hung with all types of goodies, i.e. “pork,” for everyone who has paid into the coffers of the politicians. It’s $1.1 trillion of additional expenditures. Fortunately, it was defeated. This was on top of the tax compromise package the prior day that contained lots of tax benefits.

Moody's warned that it could move a step closer to cutting the U.S. AAA rating if President Obama's tax and unemployment benefit package becomes law.

China and other holders of U.S. debt are cognizant of the U.S. debt problem.. In China, they plan ahead, 10-30 years. They see the trends and prepare. China is now the largest gold producer in the world. Furthermore, China is the largest gold importer in the world.
China’s state-run Xinhua news agency writes that China imported 209.7 metric tons of gold in the first 10 months of this year, a 500% increase of 2009. China encourages its people and financial institutions to diversify into gold. Remember the Golden Rule: “He who has the gold, rules.”

Once the large institutions worldwide start putting some gold assets into their portfolios, we will see a parabolic upmove in its price. And you want to be positioned for that. There are many ways, and many different ETFs. You must do some homework. We prefer ETFs that do not store physical gold in the U.S. We also like ETFs that invest in the mining stocks. Diversification among different ones is wise. And the day will come when you don’t want the gold ETFs traded on the U.S. exchanges.


Copper is looked at closely by investors, even if they never speculate in the metal or in other commodities. It’s almost like a bellwether for commodities and “risk-taking.”

There are several copper ETFs being formed now. That will create initial demand as they must buy copper to satisfy the initial investors. Could that be the top in copper prices and, therefore, in commodities? Many traders in these metals say that copper is highly manipulated, that there really is no shortage, and prices are kept artificially high. The same is said of oil. If that is correct, and we have a feeling that it is, then we have to look at the possibility of this game ending sometime in the future.

What will end it? A realization that the China real estate bubble is starting to deflate.

There are rumors that one trading outfit owns more than half of all the copper stored for the LME (London Metals Exchange).

We have also heard rumors that silver is being manipulated and that someone is trying to corner the silver market. Remember, the Hunt brothers tried that in 1980. They went broke as a result when the exchanges changed the rules.

Bart Chilton, a CFTC commissioner, said in October that he believed there had been “fraudulent efforts” to “deviously control” the silver price. No names were mentioned. Recently, he said that “earlier this year, one trader held more than 40 per cent of the silver market.”

The Financial Times reports that the CFTC’s Bank Participation Report indicates that “one or more US banks” held a gross short silver futures position equal to 19.1% of the total number of outstanding contracts in early December (2009) and 32.2% in January (2010). But that report is only for the U.S. exchanges.

It is known that JP Morgan had a very large short position on New York’s Comex exchange, a division of Nymex. Supposedly, these were hedges for the bank’s long positions in physical silver and London’s over-the-counter market.

On December 16, 2010, the CFTC issued proposed position limits for commodity contracts. This has been expected for a long time; nevertheless, it caused a plunge in a number of hot commodities, including gold. The fear is that this will cause the big futures operations to dump large positions. In realty, we believe that there will be many ways to circumvent the regulations by those who want to manipulate the markets.

Also on the regulatory front is a report regarding what effect the new Basel II banking regulations would have had if they had been implemented immediately, instead of with the delay of 5 years and more. The report said that financial institutions would have to raise $797 billion of capital. Furthermore, lenders would have to raise a huge 2.89 TRILLION as protection against a run on deposits.

This gives you an idea of the massive amount of capital banks will have to raise over the next years. We will need a spirited economic recovery to make that possible. This problem will not go away.

Those interested in the full Wellington Letter, can find the subscription terms here.

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TheGreatPonzi's picture

The manipulation is less in the market than in the medias.

Bloomberg is running headlines right now that reach the propaganda level of Da Pravda.

The last one is incredible, and tries to make gold bugs responsible for African injuries and deaths in gold mines.

trav7777's picture

the "blood diamond" thesis?  Amazing, then, that there is no civil war at Argyle.  And, there appear to be no gold civil wars in Oz or Russia or anywhere else either.

And while I'm up, why is Africa constantly an aid recipient and not a provider?  Why don't we ever need food aid?

Rusty Shorts's picture

Wait, sly little fucker,


"why is Africa constantly an aid recipient and not a provider?"




Cause we have Food Stamps bitchez. 

TDoS's picture

Why is it that the privileged beneficiaries of exploitation never care to know anything about this exploitation?


unwashedmass's picture


bloomberg has lost all credibility. note that today they did not run one word about the latest JPM whistleblower. not a peep.

El Hosel's picture

  Bloomerg had  on its banner all day something like ..."50% of Bankers would quite their job if Bonuses dissapoint".

     I double dog dare all of them to quite.

Rahm's picture

The world would be a better place if 50% of Bankers would 'quite' their jobs.

cosmictrainwreck's picture

long as they re-quite all their prior bonuses

putbuyer's picture

1 oz silver sold out. Even they say available, they lie as they try to ship on next influx. I ordered last week for gifts. APMEX said no prob, now the say big prob.. FUCK APMEX. Chick their ads to fuck them liars.

DoChenRollingBearing's picture

Lil ol retail buyer DCRB was able to get a roll of Silver Eagles today, did not have to tell anyone who I was...

NOTE how expensive gold is re jewelry.  No one is buying gold jewelry now (relatively speaking of course).  So, if there are few buyers of gold jewelry, how come the price is up so high?  People like us looking for a place to preserve wealth.

I just came back from Peru.  They are SHOCKED how expensive silver is!  And hardly anyone in Peru buys gold jewelry now, it is even hard to find gold jewelry in the 5th biggest producing country of gold in the world.

FOFOA says that as gold gets more expensive it will get harder to find.  Are we seeing that now?     (please note that I am NOT FOFOA!  I respect him mucho though)

Herd Redirection Committee's picture

FOFOA is a valuable ally, but for some reason he found it necessary to do a hit job on silver. 

I prefer the most natural analogy there is, gold is symbolic of the sun, and silver is symbolic of the moon.  One is more powerful, and prominent, sure, but there is a time, and a place in the sky for both.


Eric The Red's picture

I try to keep my head on straight by telling myself everyday, "Gold is money, Silver is a speculation".  I own a shitload of both, but it pays to keep your eye on the ball.

redrob25's picture

FOFOA's Freegold concept is fractional paper on top of gold, with silver being ignored.

No thanks. We tried that and it didn't work.

zhandax's picture

DCRB, as far as I know I am not one of your relatives, but I have always enjoyed wandering off to where 'no one' has gone before.  Hey, you can always sell it back for the same purchasing power as when you bought it.  Only works against you in nominal terms if the risk of TSHTF goes down.

DoChenRollingBearing's picture

Buy physical gold OTC (ie anonymously) and hide it well.

Terminus C's picture

They want us to buy gold ETFs?  I suppose the deserve some credit for saying that we need to stay away from American etfs... but really... etfs?

As for Ponzi's comment, it sure is a double whamy, media and market manipulation... and we wonder why the sheep don't wake up.

collinar's picture

Yea, they are advising offshore PM ETFs. This ties in with their efforts to move the massive naked short efforts offshore. In other words they want us "morons" to buy offshore ETFs to fund the offshore PM shorts. This is bullshit!

The only solution is buy and hold your own physical silver and gold. For IRA/401k holders, get a "Self Directed IRA" , or Solo 401K and stock it with silver and gold legal tender coins. Perfectly legal way to hold physical PMs in your IRA/401k.

New World Chaos's picture

Try NAFEP for this.  It is a lot of paperwork and almost two months of back-and-forth but it works.

Thomas's picture

Then Doug goes on to claim that gold is the most over owned asset. Huh? BTW-Clyde H. is probably Clyde Harrison.

Bearster's picture

Gold is not an investment.  Gold is cash, in the only currency that insane governments the world over cannot destroy.

In these insane times, one holds cash because once one loses trust in ponzi bond and equity markets, once one realizes real estate is a dead asset for a generation, and once one realizes that all other commodities (excepting maybe silver) are going to see collapsing demand in this Greater Depression, what else is there to hold other than cash???

Rusty Shorts's picture

"what else is there to hold other than cash???"


Sailboats and fishing nets?

Ricky Bobby's picture

+1 I am with you on that one.

oddjob's picture

Decent sails are about as exspensive as gold.

Troy Ounce's picture


"Gold is not an investment"


This is a generalisation, I presume? The gold/silver price still has to recover from 20 years of price suppression. Until such time I would regard gold and silver as the best investment opportunity of the last 40 years.

dryam's picture

Here's Doug Kass's prediction on gold exactly one year ago.....see #4

Babalooee's picture

It would be nice to think he knows what he's talking about, but when he starts mumbling about oil prices being high due to manipulation, I find it easy to check out.

JonNadler's picture

ANybody remember this piece of sheer wisdom? 



Gold Loses Safe-Haven Status For First Time in History

Posted By: John Melloy | Executive Producer, Fast Money | 05 Feb 2010 | 08:55 AM ET


In the book, "The Power of Gold: The History of an Obsession" author Peter Bernstein writes that throughout the history of man, “people believe that gold is a refuge until it is taken seriously; then it becomes a curse.”


For those looking to hide out in the metal during this week's stock market sell-off, it has once again become a curse. Fears of a debt default in Greece have flattened the Euro and sparked a global sell-off in nearly every asset class and sector. And the jobs report today will add to lingering fears about the stability of our own economy here.


The issue once again is that gold is being taken too seriously. Last year net inflows into the SPDR Gold shares topped $13 billion, the most of any of the State Street offerings of ETFs. Gold has become a core holding for investors.


 When the stock market corrects, investors are forced to sell some of their core holdings as well to raise cash,” said Joe Terranova, Chief market Strategist for Virtus Investment Partners and a ‘Fast Money’ trader. The same thing occurred during the collapse of Bear Stearns, notes Terranova. The GLD is down six percent in the last five days.



Gold, long seen as a reliable inflation hedge, doesn’t have that going for it either. “With inflation indicators such as copper and steel selling off aggressively here, deflation is the bigger fear in the markets right now,” said Steve Grasso, Director of Institutional Sales at Stuart Frankel.


So is there nowhere to hide? Municipal bonds, traditional tax and turmoil havens, may be risky here because of the threat of downgrades by rating firms based on the coming tax shortfalls across the nation from Los Angeles to Harrisburg, Penn.


Rating downgrades could trigger forced selling by institutional holders in these bonds, seriously weighing on the prices of these bonds and hurting your returns.


Bonds backed by the full faith and credit of the United States government seem to be doing ok, the iShares Lehman 20-plus Treasury Bond ETF is in the green for this week. And then there’s the dollar. The PowerShares DB US Dollar Index Bullish ETF is up 2 percent over that last five days. We are the best house on a really bad block.





DoChenRollingBearing's picture

JonNadler!  'bout friggin' time you showed up round here.

Bernstein and CNBS sure had it right, no?  Yeah, hiding out in gold was REALLY, REALLY STUPID!  You showed 'em!

Au to $0.02

Ag to $0.01



O/T comment re your ex-employer JPM.  Seems Blythe is REALLY pissed off that you made that overture to our beloved MsCreant...  Were you, like, um, you know, um with pretty Blythe...?

Also O/T, I really enjoy your current avatar.


DoChenRollingBearing's picture

As I get drunker, seeing how our economy sinks & stinks, I really respect PMs, physical in your own physical holdings.  At this point incoherence may follow..

Recomendation: BUY the physical only!


JonNadler's picture

Hey DoChen, I've been here all along, completely irrelevant my posts are of course, but I've been here.

Salud! my amigo

TheGreatPonzi's picture

"Gold has become a core holding for investors." Oh, yeah? I don't know for the USA, but in the French investor community, only 1% holds gold. We didn't hear Bloomberg and CNBC denounce the real estate bubble in 2006. Only after it burst. Credibility = zero

Elmer Fudd's picture

But, but, but it doesn't generate any cash flow and I can't eat it... 

And its only good for wearing around my neck at discos to hopefully impress women with big breasts...

Herd Redirection Committee's picture

Are you kidding, I am planning on setting up a  gold jewellry leasing business to these big breasted women.  Cash flows are hardly the attractive part of this bargain!

I think I need to buy a gun's picture

Don't believe anyone of these assholes Cramer Kass etc.....I believe gold is going to go on a parabolic move soon as the bond market implodes. They will then implode gold with some market event such as bankrupting major banks or fannie and freddie etc. When gold implodes it will fall from 3500-3000 range back to 2300. Everyone will say sell gold. This is bullshit. It will only be the end of the current C wave crashing into a D wave. Don't sell your fucking gold no matter what. After they implode gold and they have it all they will annouce gold to be worth 12000-50000 probably at or about 12/1/2012. So we will have a parabolic move up to 3500 or close then a crash to 2300 then a quasi gold standard. DO NOT TRUST THE GLD that is what will be confiscated only those holding a certain amount are entitled to their gold. They system is set up like a casino and you will lose.

ZEITGEIST's picture

your guess work is point...if major banks go and silver will go even more parabolic...they will do something like a rumor that they are going to confiscate your gold.....

zhandax's picture

Get your own avatar douchebag

Treason Season's picture

Alf Field should sue you for plagarism.

markmotive's picture


According to Saxo Bank's Outrageous predictions for 2011, gold could hit $1800/oz.

BTW, here's Saxo's full report:



I Am The Unknown Comic's picture

I am being an a-hole and doing a double post becuase I want this to be seen.  I posted this on the thread about JPM sending their silver shorts overseas.  So, my apologies to those of you who have seen it twice. 

Tyler, could you please issue a postion statement on owning SLV instead of physical silver.  Some people can do both, and some people can only buy SLV for several reasons (e.g. their local shops are out of silver, or they have their investment money tied in an IRA).  So, if a person can not buy physical, can they still make an impact by buying SLV?  Some posting here and/or elsewhere argue that SLV doesn't really hold physical 1 for 1.  Some argue SLV can theoretically issue millions of new shares and put off taking delivery indefinitely, taking advantage of dips.  Others say SLV may also be shorting to manipulate the stock price.  Others claim there is actually a glut of silver in the refineries.  I think I have heard it all, and the shorts have definitely pulled out the big guns in the MSM, causing longs to pull out their guns too.  So, I don't actually know what is the truth about buying SLV.  Could you please have somebody do a piece on it?  Theoretically, those who have IRA's could go 100% into SLV on any given day or span of 12/29 for example....and I'm sure many ZH readers would like to know if that would have a contributing, counterproductive, or no effect on Max Keiser's campaign to buy physical silver.    

zhandax's picture

I have the IRA crap to deal with in one account as well, and prefer PSLV.  It bought in around 24$/oz and 1000 shares is about the same as 400oz.  I feel a lot more confident that Sprott has unencumbered metal in a vault at the Canadian mint than JPM has unencumbered metal in a vault anywhere.  In fact, overall I am currently long metal, flat PSLV, and own a few SLV puts.

Eric The Red's picture

I have GTU in my Roth IRA.

redrob25's picture

Don't buy SLV. Research and buy miners, whose share price will move up upon the rise in commodity price.

moregoldplease's picture

OK I like my PM's . But thinking about the predicted collapse why are there gold dealers still in business? Why are they working so hard for FRN's? I just boughy some more silver yesterday and the thought hit me  that I expect to be able to continue to buy.

Treason Season's picture

...because that's what dealers do, they deal. How deep is that?

moregoldplease's picture

So does that mean that dealers are some new breed of human that despite dire economic USD losses they can still exist using FRN's when the rest of us cannot?

I'm just wondering how severe this so called calamity is going to be given that PM dealers don't seem worried about it.

Sarcasm not appreciated


JonNadler's picture

because we try to buy low sell high make a profit and then turn the profit into long term PM holdings.



or we create pool accounts with no gold...but that's a different story..

zero intelligence's picture

Dealers make money on the spread.

In a normal market, you can always buy at some price, until perhaps paper money is regarded as totally worthless no matter how many zeros are printed on them.