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GATA Claims To Have Evidence Of "Massive Physical Short Gold And Silver Positions That Can Not Be Covered"

Tyler Durden's picture





 

In a letter to the CFTC's Chairman, Gary Gensler, GATA Chairman William Murphy shares the following bombshell:

"GATA has evidence that there are enormous physical short positions
in the gold and silver markets that cannot be covered.
"

Even as the CFTC is meeting later this month to establish position limits in the gold, silver, and other precious metals' markets, it could be none other than the CFTC's core banks, and Mr. Gensler's former Goldman bosses, that form the very core of the biggest market manipulation collusion syndicate in the history of the commodity markets.

Because of the
decades-long interference with the gold market, we estimate that the
free-market price of gold is multiples of the current price. Growing
stress caused by burgeoning physical bullion demand is threatening to
lead to a price explosion, which will restore to the market the balance
that regulation has failed to maintain. In our view, the Comex paper
market will become dysfunctional, with "force majeure" having to be
declared as the concentrated shorts are unable to deliver on their
obligations."

If GATA is not bluffing and indeed has evidence of massively uncoverable physical positions, and should this evidence be made public, the repercussions for the price of gold will be unprecedented.

Full GATA letter to ex-Goldmanite, and Brooklandville, MD resident, Gary Gensler:

March 8, 2010

Gary Gensler, Chairman
U.S. Commodity Futures Trading Commission
3 Lafayette Centre
1155 21st St. NW
Washington, DC 20581

Dear Chairman Gensler:

The Gold Anti-Trust Action Committee (GATA) was formed in January
1999 to expose and oppose the manipulation and suppression of the price
of gold. What we have learned over the past 11 years is of great
importance in regard to the CFTC’s forthcoming hearings regarding
position limits in the precious metals futures markets. Our efforts to
expose manipulation in the gold market parallel those of Harry
Markopolos to expose the Madoff Ponzi scheme to the Securities and
Exchange Commission.

Initially we thought that the manipulation of the gold market was
undertaken as a coordinated profit scheme by certain bullion banks,
like JPMorgan, Chase Bank, and Goldman Sachs, and that it violated
federal and state anti-trust laws. But we soon discerned that the
bullion banks were working closely with the U.S. Treasury Department
and Federal Reserve in a gold cartel, part of a broad scheme of
manipulation of the currency, precious metals, and bond markets.

As an executive at Goldman Sachs in London, Robert Rubin developed
an idea to borrow gold from central banks at minimal interest rates
(around 1 percent), sell the bullion for cash, and use the cash to fund
Goldman Sachs' operations. Rubin was confident that central banks would
control the gold price with ever-more leasing or outright sales of
their gold reserves and that consequently the borrowed gold could be
bought back without difficulty. This was the beginning of the gold
carry trade.

When Rubin became U.S. treasury secretary, he made it government
policy to surreptitiously operate an identical gold carry trade but on
a much larger scale. This became the principal mechanism of what was
called the "strong-dollar policy." Subsequent treasury secretaries have
repeated a commitment to a "strong dollar," suggesting that they were
continuing to feed official gold into the market more or less
clandestinely to support the dollar and suppress interest rates and
precious metals prices.

Lawrence Summers, who followed Rubin as treasury secretary, was an
expert in gold's influence on financial markets. Previously, as a
professor at Harvard University, Summers co-authored an academic study
titled "Gibson's Paradox and the Gold Standard," (see Footnote 1 below)
which concluded that in a free market gold prices move inversely to
real interest rates, and, conversely, if gold prices are "fixed," then
interest rates can be maintained at lower levels than would be the case
in a free market. This was the economic theory behind the "strong
dollar policy."

Federal Reserve Chairman Alan Greenspan understood Summers' research
when he remarked at a 1993 meeting of the Federal Open Market Committee:

"I was raising the question on the side with Governor Mullins of
what would happen if the Treasury sold a little gold in this market.
There's an interesting question here because if the gold price broke in
that context, the thermometer would not be just a measuring tool. It
would basically affect the underlying psychology." (See Footnote 2
below.)

GATA has collected reams of evidence that Western central bank gold
has long been mobilized and surreptitiously dishoarded to rig the gold
market and influence related markets and that this rigging has drawn
upon the U.S. gold reserves.

President Obama has called for greater transparency in both the
federal government and the financial markets. In pursuit of such
transparency GATA has made Freedom of Information Act requests to the
Federal Reserve and Treasury Department for a candid accounting of
their involvement in the gold market, particularly in regard to gold
swaps. In a reply to GATA's lawyers dated September 17, 2009, Fed
Governor Kevin M. Warsh acknowledged that the Federal Reserve has gold
swap agreements with foreign banks but insisted that such documents
remain secret. (See Footnote 3 below.)

As a result, last December GATA sued the Federal Reserve in U.S.
District Court for the District of Columbia, seeking access to the
Federal Reserve's withheld records of gold swaps.

Understanding that the manipulation of the price of gold is
profoundly important to all markets and the American public, on January
31, 2008, GATA placed a full-page color advertisement in The Wall
Street Journal at a cost of $264,000. (See Footnote 4 below.) GATA's ad
warned, "This manipulation has been a primary cause of the catastrophic
excesses in the markets that now threaten the whole world." What GATA
warned against has come to pass.

GATA has long implicated the New York Commodities Exchange (Comex)
as being a mechanism by which gold and silver price suppression is
implemented. The smoking gun is the excessive concentration of bullion
bank positions in the gold and silver futures markets. This
concentration enables market manipulation -- just as market
concentration was the justification offered by the CFTC in 1980 when it
acted against the Hunt Brothers in the silver market.

The weekly commitment of traders report documents the total net
short position of commercial traders in the commodity markets. The
monthly bank participation reports disclose the holdings of U.S. banks
in various markets. In a letter to GATA dated February 19, 2009, Laura
Gardy, a CFTC legal assistant, wrote, "The commission determined that
where the number of banks in each reporting category is particularly
small, fewer than four banks, there exists the potential to extrapolate
both the identity of individual banks and the banks' positions. As a
result, as of December 2009 the CFTC no longer names the number of
banks when it is less than four."

The CFTC has been investigating possible manipulation of the silver
market for more than a year, so this reporting change is disturbing to
us, as it reduces transparency and the ability to uncover market
manipulation.

The CFTC's own reports of November 2009 show that just two U.S.
banks held 43 percent of the commercial net short position in gold and
68 percent of the commercial net short position in silver. In gold,
these two banks were short 123,331 contracts but long only 523
contracts, and in silver they were short 41,318 contracts and long only
1,426 contracts. How improbable is it that these two banks attract most
of the investors who want only to sell short? (See Footnote 5 below.)

It has been possible to extrapolate that the two banks that hold
these large manipulative short positions on the Comex are JPMorgan
Chase and HSBC because of their huge positions in the OTC derivatives
market, whose regulator, the U.S. Office of the Comptroller of the
Currency, does not provide anonymity when it publishes market data. 6
In the first quarter 2009 OCC derivatives report, JPMorgan Chase and
HSBC held more than 95 percent of the gold and precious metals
derivatives of all U.S. banks, with a combined notional value of $120
billion. This concentration dwarfs the concentration in the gold and
silver futures markets and should raise great concern about the lack of
position limits on the Comex.

It is also disturbing to us that HSBC is the custodian for the major
gold exchange-traded fund, GLD, and that JPMorgan Chase is the
custodian for the major silver exchange-traded fund, SLV. It is a
significant material omission to fail to disclose to GLD and SLV
investors that the custodian banks of the two exchange-traded funds
have an interest in falling prices in the futures and derivatives
markets.

Detailed daily monitoring of gold trading reveals these patterns:

1. In recent years gold price suppression has been apparent from the
near-complete failure of the gold price to rise more than 2 percent per
day on the Comex (what GATA calls the 2 Percent Rule) while there is no
corresponding restriction on days when the gold price is falling.

2. At option expiry gold almost always falls to a point where a
large number of call options have been written, nullifying the value of
the options. Typically, the price rallies immediately after option
expiration.

3. The gold price consistently falls at 3 a.m. New York time when
the gold cartel’s traders report to work in London, and again following
the PM gold price fix, when physical market pricing has concluded for
the day, and in the access market following the Comex close.

No other market trades so repetitively.

GATA has evidence that there are enormous physical short positions
in the gold and silver markets that cannot be covered. Because of the
decades-long interference with the gold market, we estimate that the
free-market price of gold is multiples of the current price. Growing
stress caused by burgeoning physical bullion demand is threatening to
lead to a price explosion, which will restore to the market the balance
that regulation has failed to maintain. In our view, the Comex paper
market will become dysfunctional, with "force majeure" having to be
declared as the concentrated shorts are unable to deliver on their
obligations.

We urge the CFTC to report fully and candidly on these markets and take appropriate action.

Sincerely,

WILLIAM J. MUPRHY III, Chairman
Gold Anti-Trust Action Committee Inc.

... Footnotes:

1. "Gibson's Paradox Revisited: Professor Summers Analyzes Gold Prices" by Reginald H. Howe. http://www.goldensextant.com/

2. http://www.federalreserve.gov/monetarypolicy/files/FOMC19930518meeting.p...

3. http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf

4. http://www.gata.org/node/wallstreetjournal

5. http://www.cftc.gov/dea/bank/deanov09f.htm

6. http://www.gata.org/node/7307

 

h/t Jeff

 


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Mon, 03/08/2010 - 18:14 | Link to Comment Harbourcity
Harbourcity's picture

The question is always: what is going to be done about it?

 

Mon, 03/08/2010 - 18:27 | Link to Comment ReallySparky
ReallySparky's picture

I'm with you Harbourcity, game on, show us the cards, we want the evidence.

Mon, 03/08/2010 - 19:06 | Link to Comment chet
chet's picture

Even if it's true, if we assume that tons of people aren't going to simultaneously want physical delivery, such deception could go on indefinitely.

Mon, 03/08/2010 - 19:19 | Link to Comment Shameful
Shameful's picture

IIRC the Comex rules allows it to settle in shares of GLD.  Then you can try to get physical from GLD, and good luck with that.

I'm not sure how much manipulation may or may not be happening but I know some writers have talked about having a separate physical spot price and paper spot price sometime in the future.

Mon, 03/08/2010 - 22:18 | Link to Comment 35Pete
35Pete's picture

OUCH!!!! 

 

Janet Tavakoli: Washington Must Ban U.S. Credit Derivatives as Traders Demand Gold

 

http://www.marketoracle.co.uk/Article17744.html

Tue, 03/09/2010 - 00:23 | Link to Comment Bob
Bob's picture

Thanks for this link.  As with everything that has come before, once again it appears there are plenty of people "in the know."{

Tue, 03/09/2010 - 09:07 | Link to Comment SWRichmond
SWRichmond's picture

I guess this means gold really IS money after all.  Do the radical dollar bugs have a reply?

Tue, 03/09/2010 - 15:03 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Not a $ bug per se but, he who makes the "gold", makes the rules.

Mon, 03/08/2010 - 23:18 | Link to Comment Anonymous
Tue, 03/09/2010 - 03:19 | Link to Comment swamp
swamp's picture

Physical from the ETF GLD? Yes, good luck with that. Is it tungsten or gold? How many "investors" share the same serial numbered bar? 

Tue, 03/09/2010 - 09:32 | Link to Comment MarketTruth
MarketTruth's picture

GLD is an 'unallocated' type paper gold, as such no one gets and solid declaration to claims on a certain bar SN#.

ASK YOURSELF: do you really trust that these ETFs have the gold they claim and GLD's counterparties that store said gold are not leasing it out or creating/forming/leveraging some other paper gold on top of their paper gold. As an example, GLD can hold NOT GOOD bars for proper delivery to the market and they do not insure their gold holding. Add to that, there are many other serious situations one should consider before choosing GLD or other ETFs.

Read GLD's 10-k filing at www.spdrgoldshares.com/media/GLD/file/10k_Sept08.pdf and pay special attention to pages 54 to 62.

Bottom line, if you want to invest in gold i would do as GLD's largest shareholder did months ago.... they sold their GLD holdings and purchased physical metal and took delivery. In this day and age counterparty risk is to be avoided imho.

Tue, 03/09/2010 - 04:15 | Link to Comment Lux Fiat
Lux Fiat's picture

Can someone please point me to a concrete link that shows that Comex can deliver GLD instead of a good delivery bar?  I have nosed around the CME website and others looking at delivery requirements documents, etc. and can find no mention of this. 

Tue, 03/09/2010 - 06:43 | Link to Comment Riley Wilde
Riley Wilde's picture

I too am looking for a concrete link. I did come across this:

http://jessescrossroadscafe.blogspot.com/2009/12/gold-comex-and-exchange...

where they show "Delivery Cash Settled". But I still have not found whether or not the buyer can require physical settlement or what options the seller has.

Tue, 03/09/2010 - 09:03 | Link to Comment Hansel
Hansel's picture

http://www.cmegroup.com/clearing/trading-practices/efp-ebf-efr-trades.html

Generally acceptable related position instruments EFRPs include, but are not limited to, the following:

Metals Contracts: For metals contracts, the acceptable related position component for an EFP is limited to the specific underlying commodity ( e.g. Gold for Gold Futures); although the related position need not be deliverable grade of the particular commodity, there must be a reasonable level of correlation with the associated futures. The related position in an EFR or EOO may be a swap or OTC swap/option instrument. Exchange Traded Funds ("ETFs") are acceptable provided that the ETF mirrors the relevant Exchange metal product.

Tue, 03/09/2010 - 10:48 | Link to Comment Lux Fiat
Lux Fiat's picture

I am not very knowledgeable about futures, but it appears that these types of trading instruments (ERFPs) are different from the regular futures contracts.  " All these transactions are privately negotiated trades transacted outside of the competitive marketplace but submitted for clearing through the CME Clearing House."  If some folks in negotiating privately with others opt to consider delivery of GLD as a substitute, that is quite different from the exchange giving itself GLD as a delivery option for a regular gold futures contract. 

This doesn't seem like a smoking gun from my perspective, but then again, futures aren't my bailiwick.

I can't see that anyone seeking a longer term investment in gold would agree to delivery of GLD in a private arrangement, as the prospectus clearly states that much of the gold that they hold is not subject to audit - normally a big red flag for someone who wants to invest in a hard asset with some reasonable degree of security. So I am assuming that the ERFP parties are shorter term traders.

Tue, 03/09/2010 - 11:13 | Link to Comment Lux Fiat
Lux Fiat's picture

Interesting article with much of the same material as some of the Rob Kirby articles, but this time with references to the source of the claims.

This part really stood out:

"Such gives the bullion depositor ("Authorized Participant") the ability to make profit at a "Commodity" taxable rate rather than a higher "collectible" tax rate, which was adjudged to be applicable to GLD. The Prospectus specifically acknowledges that the Authorized Participants may be engaged in bullion trade and have trading desks."

I'm not saying there isn't manipulation in the gold market, but these vehicles appear to be a different animal than the regular futures contracts, and it looks like they may be operating more as a legal tax dodge for profits from trading short-term movements in gold prices.

I certainly understand that if a number of countries have unsustainable fiscal policies (OECD front and center), and yet don't do anything to rectify those policies, their currencies most likely will be poor choices as a store of wealth.  But stories such as the one referenced don't seem to support the broad-based claims made.  I just want the facts, and it's amazing how hard they are to find sometimes.

Mon, 03/08/2010 - 19:39 | Link to Comment Anonymous
Tue, 03/09/2010 - 00:11 | Link to Comment Anonymous
Tue, 03/09/2010 - 03:20 | Link to Comment swamp
swamp's picture

And some currencies are only about 40 years old, like the current one we are using in the States.

The Federal Reserve Note is only about 40 years old. It replaced the Silver Certificate.

Tue, 03/09/2010 - 00:13 | Link to Comment Anonymous
Mon, 03/08/2010 - 20:26 | Link to Comment Anonymous
Mon, 03/08/2010 - 21:44 | Link to Comment whacked
whacked's picture

crap

 

i remember when the physical AU could not be delivered and they then changed the rules that USD would suffice. this was a long time ago and GATA tried the same speil.

 

wakey wakey, the markets are made of paper as is the USD .. like for like

 

feel as though history is repeating itself and nothing will change!

 

Tue, 03/09/2010 - 00:16 | Link to Comment Anonymous
Tue, 03/09/2010 - 05:30 | Link to Comment whacked
whacked's picture

Similar situation in 2008 on COMEX on gold.

 

I took a bath.

 

Needless to say once bitten twice shy!

Tue, 03/09/2010 - 09:19 | Link to Comment SWRichmond
SWRichmond's picture

The question is always: what is going to be done about it?

Keep taking delivery.

Mon, 03/08/2010 - 18:22 | Link to Comment The Disappointed
The Disappointed's picture

Yipes!

Mon, 03/08/2010 - 18:22 | Link to Comment mynhair
mynhair's picture

Tungsten is looking better and better.

Mon, 03/08/2010 - 19:42 | Link to Comment GoldmanSux
GoldmanSux's picture

Good call. The demand for Tungsten is about to skyrocket.

Mon, 03/08/2010 - 18:25 | Link to Comment Anonymous
Mon, 03/08/2010 - 19:28 | Link to Comment Anonymous
Mon, 03/08/2010 - 18:26 | Link to Comment BlackBeard
BlackBeard's picture

schnikes!

Mon, 03/08/2010 - 18:27 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Gold Von Mises!!!

Mon, 03/08/2010 - 18:30 | Link to Comment Anonymous
Mon, 03/08/2010 - 18:37 | Link to Comment NRGTDR
NRGTDR's picture

Why complain to one syndicate boss about another when you don't sit at the table? Only solution is have a global coordinated scheme motivating everyone to convert all their paper assets into gold and silver at roughly around the same time period. That will expose and ultimately fix a lot of problems quickly.

Mon, 03/08/2010 - 19:14 | Link to Comment Postal
Postal's picture

No personal experience, but I understand that criticizing syndicate bosses is a most unhealthy activity.

Tue, 03/09/2010 - 09:27 | Link to Comment SWRichmond
SWRichmond's picture

This is a side benefit of my keeping some of my assets in dollars and dollar-denominated crap: it gives me the ability to, in my own miniscule way, contribute to the run on the dollar when it occurs in earnest.  I am also going through the motions of the IRA withdrawal process so that I understand how it works and can make it work for me at the apprpopriate time.

Anytime a bank pisses me off, I take some money out of the banking system.  It's fun!

Wed, 03/10/2010 - 08:39 | Link to Comment MsCreant
MsCreant's picture

Now that's what I call voting.

Mon, 03/08/2010 - 18:37 | Link to Comment Rick64
Rick64's picture

 Because of the decades-long interference with the gold market, we estimate that the free-market price of gold is multiples of the current price.

I have waited so long to hear this. I would think that this is a good time to buy gold. Oh boy this is going to be good. Time to pass some legislation in the interest of National Financial Security. Better get that tungsten out.

Tue, 03/09/2010 - 14:17 | Link to Comment Anonymous
Mon, 03/08/2010 - 18:40 | Link to Comment Anonymous
Mon, 03/08/2010 - 20:54 | Link to Comment cirrus
cirrus's picture

I think along the same lines.  If prices are manipulated lower (and the physical IS available)....then BUY IT!  I happen to believer there is too much smoke here and there is a "gold cartel" attempting to keep PM prices low. 

Why not simply take advantage and accumulate the physical?

Mon, 03/08/2010 - 23:24 | Link to Comment Anonymous
Tue, 03/09/2010 - 15:39 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Bingo. If you truly believe, then this is a gift. There is so much cloak and dagger, that I have trouble figuring out who is trying to sell what to whom.

Tue, 03/09/2010 - 03:16 | Link to Comment nuinut
nuinut's picture

These guys have been 'all in' for years.

Mon, 03/08/2010 - 18:47 | Link to Comment Lionhead
Lionhead's picture

No manipulation scheme can go on forever; none ever has. When this one blows up, the principals in the scheme will be exposed including the FED, the US Treasury, & other central bankers. Treason perhaps after it is all laid out or was it done for the common good?

Mon, 03/08/2010 - 19:27 | Link to Comment gmrpeabody
gmrpeabody's picture

When this one blows up, it will only be AFTER our caring and concerned government has, once again, made holding of gold an illegal act. Once it has the gold collected up, I will guess that we have another  reset in the $ valuation, subsequently an enormous increase in gold valuation. Timing is everything.

Mon, 03/08/2010 - 21:03 | Link to Comment perchprism
perchprism's picture

 

The dollar is no longer backed by gold, so there is really no legal point in outlawing the hoarding of gold.  When we came off the gold standard, then it became lawful once again to hoard gold, because there was no good reason not to allow hoarding.  That there still exists a notional/emotional

tie between the two is to the consternation of bankers, who see a self-interest in keeping the supposed value of fiat paper high.  So it gets manipulated, when in theory there should be no good reason for it.

  

Tue, 03/09/2010 - 00:25 | Link to Comment Anonymous
Tue, 03/09/2010 - 02:41 | Link to Comment Rusty_Shackleford
Rusty_Shackleford's picture

I think his point was that as soon as the US stated openly it actually NEEDED it's citizen's gold, it would instantly be GAME OVER for the dollar.  The whole point of the USD is that it requires (and explicitly has) NO BACKING other than faith in the good old US of A.

The only reason our government would ever need gold would be if it was forced to make payment in it

That would therefore mean that the US dollar would have to already be dead

If the US dollar is dead, the USA is dead.

If the USA is dead, who is going to pay the cops or soldiers to put their lives on the line trying to steal your gold?

Tue, 03/09/2010 - 09:30 | Link to Comment SWRichmond
SWRichmond's picture

I think they call that a "Catch-22".

Tue, 03/09/2010 - 12:24 | Link to Comment Rusty_Shackleford
Rusty_Shackleford's picture

Bingo.

Tue, 03/09/2010 - 15:47 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Meh. Once bitten....The naivete of blindly turning in gold FDR will not be repeated on such a large scale. Logistics make it impossible. You have to prove that I have something that was paid for in cash. Economic shakeouts will more likely be applied (taxes, joblessness, etc.).

Even if they did, there is still silver, which exists in legal tender form. You gonna outlaw dimes, and quarters?

Mon, 03/08/2010 - 18:47 | Link to Comment Anonymous
Mon, 03/08/2010 - 18:48 | Link to Comment Anonymous
Mon, 03/08/2010 - 19:51 | Link to Comment lookma
lookma's picture

If I intentionally ignore evidence, can I pretend it does not exist too?

Mon, 03/08/2010 - 19:54 | Link to Comment Gold...Bitches
Gold...Bitches's picture

+ 1.0 x 10^23

Mon, 03/08/2010 - 19:56 | Link to Comment dumpster
dumpster's picture

the evidence is volumns

the sorry state of those  who prefer to grovel at the feet of pavlovian keynesian gruel is legion

Mon, 03/08/2010 - 20:34 | Link to Comment Meridian
Meridian's picture

The facts always irritate the Keynesian ball-lickers.

Mon, 03/08/2010 - 20:57 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Why does a Keynesian lick his balls?

Because.............

Mon, 03/08/2010 - 21:56 | Link to Comment Anonymous
Mon, 03/08/2010 - 23:03 | Link to Comment 35Pete
35Pete's picture

LAMO!!

+31.105

Mon, 03/08/2010 - 23:59 | Link to Comment Anonymous
Mon, 03/08/2010 - 23:01 | Link to Comment 35Pete
35Pete's picture

What do you need? A letter from Bernacke himself? 

Mon, 03/08/2010 - 18:49 | Link to Comment Cistercian
Cistercian's picture

 I thought the current overabundance of tungsten was enough evidence for serious rocketing of the gold price soon.I also believe gold is worth much more than the current price.I am personally certain the price is held down so people do not realize how worthless the fiat currencies are.

 At a point, one realizes the entire monetary system is a fraud, and a fraud that has intrinsic to it's design the purposes to steal money from the productive and to concentrate power into the hands of a tiny few.

 

 In America, I wonder if a revolution will happen beacause of the growing evidence that TPTB have interests inimical to everyone, indeed even to life itself.

 

 System fail....coming fast.

Mon, 03/08/2010 - 18:56 | Link to Comment gunsmoke011
gunsmoke011's picture

No Revolution Here - the only thing that seems to get people in this country riled up enough to take to the streets is whether gays can be legally married or not. Anyway - who has time to Revolt in a time where we have American idol on three nights a week? Priorities You Know.

Mon, 03/08/2010 - 20:59 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Those already in the Matrix will fight to remain within the Matrix.

Tue, 03/09/2010 - 04:06 | Link to Comment George the baby...
George the baby crusher's picture

The red pill isn't for everybody.

Tue, 03/09/2010 - 07:17 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Then people who have taken the blue pill must come to grips with the idea that the blue pill takers could harm you. This can mean family and friends.

Tue, 03/09/2010 - 10:31 | Link to Comment 35Pete
35Pete's picture

You mean the people that have taken the red pill. 

I agree wholeheartedly with this assessment. This is not a subject that can be digested in sound bites or talking points. So to a blue pill junkie, you sound like a raving lunatic. 

Here's a litmus test to determine if someone is a blue pill popper. When in conversation, listen for two critical buzz phrases that betray their zombiesque idiocy...

Well, they say...

I hear that experts said...

Mon, 03/08/2010 - 21:10 | Link to Comment perchprism
perchprism's picture

 

I think Crystal Bowersox will win it this season. 

Mon, 03/08/2010 - 23:46 | Link to Comment Anonymous
Tue, 03/09/2010 - 09:32 | Link to Comment SWRichmond
SWRichmond's picture

who drinks tap water?

Tue, 03/09/2010 - 10:33 | Link to Comment 35Pete
35Pete's picture

The death camps in Nazi Europe flouridated the hell out their water supplies to keep the jews docile and stupid. The camps did it in much higher doses than we have in the states. Nevertheless, flourine is one of the most toxic elements in nature. 

But hey, it's good for your teeth!!!

Tue, 03/09/2010 - 15:52 | Link to Comment A Nanny Moose
A Nanny Moose's picture

and uranium processing

Tue, 03/09/2010 - 22:35 | Link to Comment SWRichmond
SWRichmond's picture

UF6

Mon, 03/08/2010 - 19:55 | Link to Comment Anonymous
Mon, 03/08/2010 - 22:04 | Link to Comment MsCreant
MsCreant's picture

I'm trying to figure out if "eat me" took on a new meaning with that, or is that in fact an ancient meaning?

Mon, 03/08/2010 - 22:21 | Link to Comment Absinthe Minded
Absinthe Minded's picture

Nice post, gave me my laugh for the night!

Honestly, this is probably our chance to stock up. Things are starting to crumble everywhere. Tax receipts are fractions of what the budgets planned for. I'm in NH and our unemployment is only around 7% but because of the crappy economy people are not spending their money. It's funny, to make the economy run we have to be as f***ed up as the government is and spend our asses off with no common sense. The only people making money are the top 2-3% and they don't give a shit who they crap on to get it. Get long gold and silver, guns and ammo, and Spam, just watch out for the assholes.

Tue, 03/09/2010 - 16:03 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Let's take your average Rockefeller. If they are the only type walking the earth, who the hell is building their houses, fetching their water, farming their food, mining their raw materials? They are totally incapable of such activity.

I could be wrong, but one might think they are smart enough to realize that a few plebes will be necessary to maintain their lavish looting class lifestyle. Till the plebes start breeding.

Just some wildly OT tin. Hopefully though provoking tin.

Mon, 03/08/2010 - 18:53 | Link to Comment Anonymous
Mon, 03/08/2010 - 19:39 | Link to Comment Harbourcity
Harbourcity's picture

There's less silver than gold and it's far harder to store.  I agree that we'll never go back to solely a gold standard but there is something to be said about a basket currency including gold where gold contributes to stability (after this gold manipulation is resolved mind you).

 

Mon, 03/08/2010 - 18:59 | Link to Comment Anonymous
Tue, 03/09/2010 - 03:33 | Link to Comment swamp
swamp's picture

Bill Murphy, et. al., are loaded up on physical gold and silver and on gold and silver mining shares. They have been buying for more than a decade. 

GATA realizes many reasons for exposing  the cartel, financial being one of them. 

Mon, 03/08/2010 - 19:00 | Link to Comment Hansel
Hansel's picture

I appreciate the large short-selling banks for subsidizing my purchases.  If gold was any higher, a peon like me wouldn't be able to buy much.  ~$1000/oz is not much problem though.  Reading through the fiscal report of the U.S. for 2009 that came out today, I feel good holding real money instead of fiat.

Mon, 03/08/2010 - 19:06 | Link to Comment 35Pete
35Pete's picture

So do I. And when demand hits the roof, I plan on showing my appreciation by slamming by serf $#@# up their backsides a la short squeeze. 

My holding metal keeps it off the market. Pay up bitches. 

Mon, 03/08/2010 - 20:37 | Link to Comment Shameful
Shameful's picture

I have to agree with you, I like being able to buy gold so if they are fighting to keep it down then I for one say "Redouble your efforts!  Some of us young guys are trying to buy some golden insurance!"

Mon, 03/08/2010 - 19:02 | Link to Comment 35Pete
35Pete's picture

This is one of my long-term legs of my investment strategy. Specifically, long-term is:

Water 

Agriculture

Precious Metals. 

I'm planning on the purchase of another 1,000 ounces of silver next month. On top of that, I'm allocating more capital to be spread across the mining majors, with a minor play in dollar juniors. Basically anything that has the words "silver" or "gold" in it's name. 

It's a minor play (a few grand) and basically a bet. The bet is that in the next few years, the COMEX busts, PMs skyrocket, and the sheeple pile in. The have no idea what Freeport McMoran does, but they'll sure as hell know what Sabina Silver  is about. 

Mon, 03/08/2010 - 19:17 | Link to Comment Postal
Postal's picture

Agreed. Unfortunately, I have only limited exposure to the last. :( Still working on the first two.

Tue, 03/09/2010 - 07:35 | Link to Comment 35Pete
35Pete's picture

I'm pretty doom and gloom. Also have some exposure to other commodities, specifically lead, antimony, nitrocellulose, and brass. If this were to ever get Argentina-like, I'm staying put and guarding what I have against the zombies. 

Tue, 03/09/2010 - 16:07 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Go long brains?

Mon, 03/08/2010 - 21:07 | Link to Comment Argos
Argos's picture

I ordered 500 oz of AG.  It took 5 weeks for delivery!  Gold is usually there in house.

Mon, 03/08/2010 - 23:14 | Link to Comment delacroix
delacroix's picture

mine took 8 weeks

Mon, 03/08/2010 - 23:44 | Link to Comment 35Pete
35Pete's picture

Last time I bought Argentum was last fall. Argentum Eagles. $1.79 over spot. Now the same joint (APMEX) is charging $2.79 over spot last I checked. Long wait too. 

Mon, 03/08/2010 - 23:57 | Link to Comment dleddy14
dleddy14's picture

I buy Ag rounds from Jason Hommel.  He mails UPS the day he gets your wire and he has size. 

Tue, 03/09/2010 - 03:41 | Link to Comment nuinut
nuinut's picture

Direct from First Majestic is very fast and cheap, straight from the website; the Aztecs are the most attractive rounds out there IMO.

Personally, I want to get rid of my silver, in exchange for more gold.

Gold will never be used as currency again. It is a wealth asset, and as explained by GATA, among many others, it is currently available miles below its real value.

Physical gold has NO COUNTERPARTY RISK.

Load up, while the gettings good. 

Mon, 03/08/2010 - 22:00 | Link to Comment harveywalbinger
harveywalbinger's picture

I like your strategy.  The only way to truly break free of the bloodsuckers is to own tangible stuff.

The part I'm not so sure about is the plan to buy into mining stocks.  In fairness I've done the same thing (also in mining stocks) to attempt to hedge long-term for currency hyper-inflation or collapse.  But this strategy does not provide me a feeling of security.  Claiming ownership to an electronic IOU which is a claim on a share of mining stock (or any stock) is a fallacy.  Consider that every day there are a number of companies that have a greater number of their shares in short positions than actually have been issued.  A few days ago, one of the ZH stories provided a good example, showing that Revlon company had a 115% short interest (15% more shares than have been issued, let alone are available to short...).  Hell I don't even own the stock I 'own' (Cede & Co is the beneficial owner).  

I'll go out on a very short limb & declare that most reasonable people can agree this is a rigged game...  But what the hell else can a minnow do in a sea of sharks (and especially if you have a day job), besides trying to build a common sense hedge that will accomodate several possible scenarios...  

I'm not sure who said it, but the statement "Fundamentals are meaningless" is a profound one today.  if mining stocks look like the only safe bet, just watch the short interest rise & the price will subsequently be suppressed (or held at bay)...  Investing in this stock market in any capacity puts one at the mercy of those who thrive on the theft of the value of your assets.  But again, what the hell else can you do... 

It is not my assertion that fundamentals are invalid.  Once it all comes crashing down, true fundamental valuations will be revealed.  But with our absolutely corrupt, complicit, firing on all cylinders, wealth redistribution to the wealthy machine "governing" the markets, it might take a few years yet...  Will these companies survive through continuing attacks to see the inevitable system reset?  

Hate the TBTF, but also beware of your brokerage!  

Tue, 03/09/2010 - 03:37 | Link to Comment swamp
swamp's picture

Exactly, that is why you need a paper certificate for starters, and a royalty company off shore would be a good idea, and one that has non recourse loans, and a hedge against the dollar. Mining or royalty, there are a handful of good ones.

Tue, 03/09/2010 - 03:49 | Link to Comment nuinut
nuinut's picture

Like I said above, physical gold has NO COUNTERPARTY RISK. TPTB are not going to be able to redistribute it, because you actually have it. IT IS REAL.

Anything paper will be found wanting as this imaginary world economy unravels.

Mon, 03/08/2010 - 19:11 | Link to Comment Miyagi_san
Miyagi_san's picture

It was Barclays that called a short at $1049, either their book is glowing red or it was bait for the bears. 

Mon, 03/08/2010 - 19:08 | Link to Comment Anonymous
Mon, 03/08/2010 - 19:41 | Link to Comment Harbourcity
Harbourcity's picture

It's hard to say, when investors flock to the US $ you see gold and silver dip for a short time giving a buying opportunity but when investors are flocking to the US $ it usually means that shit is hitting the fan elsewhere.

 

Tue, 03/09/2010 - 10:11 | Link to Comment Anonymous
Mon, 03/08/2010 - 19:22 | Link to Comment Anonymous
Mon, 03/08/2010 - 19:42 | Link to Comment doublethink
doublethink's picture

 

Our efforts to expose manipulation in the gold market parallel those of Harry Markopolos to expose the Madoff Ponzi scheme to the Securities and Exchange Commission.

 

GATA's letter to the CFTC, no doubt as sincere as Markopolos', poses the same problem that resulted in Harry's years-long frustration: the regulators simply don't give a shit what they say or think. In order for these "whistle-blowers" to have any impact--whether on the regulatory environment or on markets--the alleged "proof" must be made public and be broadly deseminated. Failing such, this "news" is only so much blather.

 

Tyler, get the "proof."

 

Mon, 03/08/2010 - 19:52 | Link to Comment Gold...Bitches
Gold...Bitches's picture

I'm trying to figure out what you mean.  If you mean a 'smoking gun' with someones signature on a letter explicitly laying out the process... then no - there is no proof.  What they do have is hundreds of circumstantial pieces of evidence.  While no one piece is indicative of a fraud going on, the volume of info is large.  Consider a court proceeding.  Do you realize how many convictions are based on circumstantial evidence for murder, etc...?

Circumstantial Evidence Definition: In law, evidence that is drawn not from direct observation of a fact at issue but from events or circumstances that surround it. If a witness arrives at a crime scene seconds after hearing a gunshot to find someone standing over a corpse and holding a smoking pistol, the evidence is circumstantial, since the person may merely be a bystander who picked up the weapon after the killer dropped it. The popular notion that one cannot be convicted on circumstantial evidence is false. Most criminal convictions are based, at least in part, on circumstantial evidence that sufficiently links criminal and crime.

Mon, 03/08/2010 - 20:19 | Link to Comment 35Pete
35Pete's picture

Or a smoking gun letter...

Dear Jamie:

We need to short another 6 trillion ounces of gold next week to boost the dollar. Please make it happen. Don't worry about losses. We got ya' covered. 

P.S. Keep this tight-lipped. I don't want congress knowing about this. 

Ohh, enclosed in the envelope is the money to buy 600 million S&P e-mini contracts. If caught and anyone asks, just tell them that you found it next to the curb. 

 

Luv, Benjamin. 

Mon, 03/08/2010 - 20:41 | Link to Comment Anonymous
Mon, 03/08/2010 - 23:16 | Link to Comment Anonymous
Tue, 03/09/2010 - 07:38 | Link to Comment 35Pete
35Pete's picture

True. I stand corrected. But HSBC is supposedly the gold shorter, not GS. 

Tue, 03/09/2010 - 09:43 | Link to Comment SWRichmond
SWRichmond's picture

Dear Jamie,

Short the crap out of gold, and use the proceeds to buy SPYs.  If "delivery" becomes an issue, HSBC's got your back, close them out with paper shares of GLD via EFPs, and if any tools actually demand physical we still have a few bars lying around somewhere.  We'll harass and delay them just for fun.

P.S. How do you like our announcements of how "strong" our "tightening policy" is going to be?  Do you think they're buying it?

Love,

Ben, Larry, and Lloyd

Mon, 03/08/2010 - 20:22 | Link to Comment doublethink
doublethink's picture

 

GATA has evidence that there are enormous physical short positions in the gold and silver markets that cannot be covered.

 

So...show me.

 

Mon, 03/08/2010 - 20:41 | Link to Comment dumpster
dumpster's picture

you just hatch out of egg lol

read all the volumns of information by adrian douglas and ron kirby,, scripture and verse,

is your range mad magizene ,, and cnbc

Mon, 03/08/2010 - 21:05 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"is your range mad magazine ,, and cnbc"

LOL

That describes about as much range as the post holes I dug over the weekend. Narrow but plenty deep.

Mon, 03/08/2010 - 22:23 | Link to Comment Gold...Bitches
Gold...Bitches's picture

So...show me.

uh, how about doing some reading of info from the site: Gata.org

I have a feeling that unless you see something with a signature and whole plan laid out with someone rubbing their hands together maniacally as they tell the secret to their minion and it is recorded by the FBI, that you will never believe it.

However, go here: http://www.gata.org/node/7997

its a good starter with links from there to various central banks and documents.  Its not all, but its a good starter and overview.


Mon, 03/08/2010 - 22:55 | Link to Comment doublethink
doublethink's picture

 

Thanks for the link. GATA is like good ol' Harry Markopolos and has been at it longer.

 

What we have learned over the past 11 years is of great importance in regard to the CFTC’s forthcoming hearings regarding position limits in the precious metals futures markets.

 

So...has anything changed after all these years?

 

Mon, 03/08/2010 - 23:22 | Link to Comment 35Pete
35Pete's picture

Well the price of gold for one, and JP Morgan's determination to short a cubic mile of silver if needed. 

Mon, 03/08/2010 - 23:47 | Link to Comment Gold...Bitches
Gold...Bitches's picture

So...has anything changed after all these years?

yes... and no.

more people are aware of it the longer it goes on.  also, there are people in congress that are obviously aware of their ideas (Grayson/Paul) and ask q's of the fed regarding the info.  used to be just Paul and everyone would think he was nuts.  not quite so much now...

sometimes the truth takes a long time to get its story out.

Tue, 03/09/2010 - 00:01 | Link to Comment dleddy14
dleddy14's picture

They also have very clear motive.

Mon, 03/08/2010 - 21:22 | Link to Comment Rick64
Rick64's picture

You do have a point in GATA being basically impotent, but I think this time might be different not necessarily because of GATA. Soros usually doesn't make bad investments and then compound them by buying more of the same investment. He has loaded up on gold (doubled his investment in GLD SPDR)and invested in gold companies. He just bought 75M of NOVA GOLD today as well as Paulson (100M).

Mon, 03/08/2010 - 20:24 | Link to Comment CB
CB's picture

good work GATA. uphill battle for sure.  like all the other illegal criminal shit in the markets, the masses don't & probably won't get it until things get worse. 

Mon, 03/08/2010 - 20:35 | Link to Comment dumpster
dumpster's picture

the masses sit in the shit  ,, as evidenced by those who want some one to prove it is shit ..

Mon, 03/08/2010 - 23:24 | Link to Comment 35Pete
35Pete's picture

Fuck em'. Ant and the grasshopper my friend. Ant and the grasshopper. 

Mon, 03/08/2010 - 23:55 | Link to Comment CB
CB's picture

true.

Mon, 03/08/2010 - 20:24 | Link to Comment Anonymous
Tue, 03/09/2010 - 00:03 | Link to Comment dleddy14
dleddy14's picture

Vox Clamantis in Deserto

Mon, 03/08/2010 - 20:32 | Link to Comment dumpster
dumpster's picture

show me the workings of the fed ..

show me the inner workings if the giant banks

show me the front running

show me the criminal activityz in wars

show me that we have a managed economy

show me that their was inside activity on AIG

show me ,, a pig walks like a pig, grovel likes a pig, yet wears lipstick to prove it is a duck

 

Mon, 03/08/2010 - 21:38 | Link to Comment feeb
feeb's picture

ducks wear lipstick?

Mon, 03/08/2010 - 23:26 | Link to Comment 35Pete
35Pete's picture

Ohh dear sweet Jesus. You didn't think that their beaks were really yellow, did you? 

Mon, 03/08/2010 - 20:33 | Link to Comment Anonymous
Mon, 03/08/2010 - 23:28 | Link to Comment 35Pete
35Pete's picture

THAT's a ballsy move. I prefer to harvest Federal Reserve Notes and trade them to people that will pay me gold for them. 

I always wondered how it was possible for the natives to have sold Manhattan for a handful of trinkets. Now I realize it was true. 

Mon, 03/08/2010 - 23:38 | Link to Comment Hephasteus
Hephasteus's picture

Ya hard to make fun of indians when white people are making a 20 billion times gianter mistake. LOL

Mon, 03/08/2010 - 20:33 | Link to Comment Anonymous
Mon, 03/08/2010 - 21:39 | Link to Comment perchprism
perchprism's picture

I've made more than one deposit in the People's Bank of Gaia.

 

 

Mon, 03/08/2010 - 23:39 | Link to Comment 35Pete
35Pete's picture

Ahh. Good man. Best savings plan there is. Put it back to whence it came! 

Tue, 03/09/2010 - 07:40 | Link to Comment Riley Wilde
Riley Wilde's picture

These trading patterns should be fairly easy to debunk. Especially #1: COMEX Gold never rises more than 2% in one trading session, but experiences unlimited downside.

GATA's claim was:

1. In recent years gold price suppression has been apparent from the near-complete failure of the gold price to rise more than 2 percent per day on the Comex (what GATA calls the 2 Percent Rule) while there is no corresponding restriction on days when the gold price is falling.

I downloaded the LBMA gold fixings (so this is not COMEX data but probably not far off) from 2-Jan-1991 to 8-Mar-2010 (4,849 days). The number of days where the AM (PM) fixing has increased more than 2% over the previous day's AM (PM) fixing is 125 (125). For changes less than -2% it is 148 (120).

So the number of big up days and big down days appears to be about the same.

In particular, some of the biggest moves up (from previous PM fix to PM fix) were as follows (showing many biggest moves upwards have in fact occurred in the last few years):

23-Oct-08    3.3%
31-Oct-08    3.3%
09-Sep-08    3.3%
08-Dec-04    3.4%
13-Mar-03    3.4%
12-Nov-07    3.4%
06-Oct-03    3.4%
20-Mar-08    3.5%
25-May-01    3.5%
11-Sep-06    3.7%
22-Oct-08    3.7%
23-Jul-08    3.7%
05-Aug-93    3.8%
13-Jun-06    3.8%
06-Apr-09    3.9%
15-Aug-08    3.9%
18-Apr-08    4.0%
07-Dec-09    4.1%
12-Aug-08    4.2%
01-Jun-06    4.4%
26-Feb-09    4.4%
24-Jul-06    4.6%
01-Dec-08    4.6%
11-Sep-08    4.6%
19-Mar-08    4.9%
01-Apr-08    5.0%
15-May-06    5.3%
16-Oct-08    5.4%
08-Feb-00    5.4%
17-Jan-91    6.1%
19-May-06    6.2%
13-Oct-08    8.0%

Tue, 03/09/2010 - 07:41 | Link to Comment 35Pete
35Pete's picture

This is London price fixing, not COMEX spot. I've seen big differences between them before and shook my head. Anyone care to comment? 

Tue, 03/09/2010 - 08:58 | Link to Comment Riley Wilde
Riley Wilde's picture

Yes, I only have the LBMA fixing data and not the COMEX data. But... what I was trying to highlight was that the number and magnitudes of +/- 2% moves in the fixings were about the same.  I would be very surprised if the results were much different using COMEX data. Maybe someone with a Bloomberg terminal could easily spit out the data/results.

Tue, 03/09/2010 - 09:02 | Link to Comment Anonymous
Tue, 03/09/2010 - 12:16 | Link to Comment Not For Reuse
Not For Reuse's picture

How is % change from PM fix to PM fix (a 24hr period) at all relevant to % change from COMEX open to COMEX close (a ~5hr subperiod)? This is like leaving a solar panel out for 24 hours and then arguing that the sun must shine at night because electricity has been produced.

Tue, 03/09/2010 - 13:45 | Link to Comment Riley Wilde
Riley Wilde's picture

Your statement is absurd. GATA made a claim, did not back it up with any data or empirical results, and I am simply trying to add a bit of information and backgound to their claim.  If you want to discuss the data then I am open to doing so. If you want to make non-sense analogies, avoid the data, and keep your head in the sand then I will abandon this discussion.  Now, did you have any sort of factual contribution to add to this discussion?

I will, however, comment on the time span issue you raise.  I repeat the GATA claim again here:

1. In recent years gold price suppression has been apparent from the near-complete failure of the gold price to rise more than 2 percent per day on the Comex (what GATA calls the 2 Percent Rule) while there is no corresponding restriction on days when the gold price is falling.

I suppose the statement "per day on the Comex" is open to some interpretation. Are we discussing the open to close price? Or are we discussing a daily price? Was the open to close assumption particularly clear to you?

For interests sake, I will look at the change in gold price from the AM fix to the PM fix -- this would approximately have a similar period length but, of course, LBMA fixings are at 10.30am and 3pm UK Time or 5.30am to 10am ET, while COMEX trades from 8.20 to 13.30 ET).

From the 1991-date LBMA fixing data I observe that the number of 2+% increases from the AM to the PM fixings over the sample is 22 and 2+% decreases is 25. To get a better feel for the distribution, the number of 1+% increases is 153 while 1+% decreases is 183. For 3+% increases/decreases it is 9 and 7.

I do agree that this is LBMA fixings and not COMEX data and the time periods are different. Unfortunately, this is the only data I have available. I am not saying I disagree with GATA's ultimate premise, but if they are going to make claims then it is only fair that they back it up with facts.  However, the data I have does not suggest to me much support for GATA's claim.

Tue, 03/09/2010 - 14:56 | Link to Comment Not For Reuse
Not For Reuse's picture

Your statement is absurd.

How is my statement absurd in any way?

GATA made a claim, did not back it up with any data or empirical results, and I am simply trying to add a bit of information and backgound to their claim.

That's fine, and I'm simply pointing out that the information and background you're adding is irrelevant to whether GATA's claim is true or not. Don't take it personally.

If you want to discuss the data then I am open to doing so. If you want to make non-sense analogies, avoid the data, and keep your head in the sand then I will abandon this discussion.

How is pointing out your data's lack of relevance "avoid[ing] the data"?

Now, did you have any sort of factual contribution to add to this discussion?

Charles Darwin: "To kill an error is as good a service as, and sometimes even better than, the establishing of a new truth or fact."

I suppose the statement "per day on the Comex" is open to some interpretation. Are we discussing the open to close price? Or are we discussing a daily price? Was the open to close assumption particularly clear to you?

I disagree that the statement is open to any "interpretation" whatsoever. They're writing specifically about manipulation on the COMEX; how could anyone possibly interpret this to also include trading OFF the COMEX?

For interests sake, I will look at the change in gold price from the AM fix to the PM fix -- this would approximately have a similar period length but, of course, LBMA fixings are at 10.30am and 3pm UK Time or 5.30am to 10am ET, while COMEX trades from 8.20 to 13.30 ET).

Great, so instead of conflating a 24hr period with one of its subperiods, now you're conflating two different subperiods. Now the "non-sense" analogy is that you're leaving the solar panel out from 6pm to midnight, and saying it proves the sun was shining at some point between 10pm and 4am.

I do agree that this is LBMA fixings and not COMEX data and the time periods are different. Unfortunately, this is the only data I have available. I am not saying I disagree with GATA's ultimate premise, but if they are going to make claims then it is only fair that they back it up with facts.

I completely agree with you that it's naive to take any of GATA's claims at face value without analyzing the data.

However, the data I have does not suggest to me much support for GATA's claim.

My point is that the data you have (or at least the data you've posted here) don't suggest ANYTHING about GATA's claim, support or otherwise.

Tue, 03/09/2010 - 17:06 | Link to Comment Riley Wilde
Riley Wilde's picture

> I disagree that the statement is open to any "interpretation" whatsoever.

The "interpretation" I was referring to is whether the "2 percent per day" defined a "day" as a 24-hour period or the open-close period.  Again, GATA's claim is so vague I do not think the definition is clear. Why do you think it is so obviously a New York market open-close period?

I have been clear that I don't have COMEX data but have assumed LBMA fixings as a proxy -- this may or may not be an appropriate assumption.  I have pointed out that there is obviously no "2 Percent Rule" when looking at the LBMA fixings.  This is under my original asumption that a "day" is 24-hours and under you assumption a "day" is the AM to PM fix.  I would suspect that given the results using LBMA fixings we would unlikely find the "2 Percent Rule" to hold with the COMEX data.  But, anyone with a Bloomberg terminal could easily upload the data for us to see.

>data's lack of relevance

>To kill an error is as good a service as...

So, given GATA's claim, I have the choice of trying to take a peak into the facts using either the LBMA gold fixing data I have available or do nothing... Are you suggesting my data is so irrelevant that I should have done nothing?

Tue, 03/09/2010 - 20:25 | Link to Comment Not For Reuse
Not For Reuse's picture

> Why do you think it is so obviously a New York market open-close period?

Because it would be implausibly stupid of GATA to make this claim about any full 24hr period. There were AT LEAST 2 days in November alone where COMEX last to close was over 2%. 11/3 and 11/25 for sure, probably others.

> So, given GATA's claim, I have the choice of trying to take a peak into the facts using either the LBMA gold fixing data I have available or do nothing... Are you suggesting my data is so irrelevant that I should have done nothing?

Your data is so irrelevant to the claim you cite as to be borderline disingenuous, that's the only reason I pointed it out. I'm sure your data will prove quite useful in other contexts.

Wed, 03/10/2010 - 10:28 | Link to Comment Riley Wilde
Riley Wilde's picture

Ok... so basically you take issue with me using LBMA fixing data as a proxy from the Comex price.

I hacked together some code so that I could download historical data from by broker.  I downloaded the daily open/high/low/close/volume for the GC contract. I requested the three months data prior to the contract's first notice date. A few points to note: (1) There is some overlap of data. For instance, for the MAR2010 contract I requested data for the months of December, January and February. For the FEB2010 contract the months November, December and January. Hence, one-two months of overlapping data in each series. (2) The reason for the overlap is that some contracts are more liquid than others and I have not taken the time to weed out the main contract. I believe it is the quarterly contracts starting from April that are usually the main contracts.  I'll look into this issue more on next pass but this is to serve only as a basic first approximation and I'll mark the overlapping dates. (3) To deal with the issue of using liquid data only I only use data for dates where the volume was at least 1,000.

Over the last year I counted 16 dates (13 when excluding the overlapping contracts) where the change from the open to close was >2% and 10 days where it was less than -2%.
The +2% dates are:

In the GC FEB09 contract
20090129 3.3%
20090123 2.2%
20090106 2.1%
20081226 2.5%
20081216 2.6%
20081121 3.6%
20081113 2.2%

In the GC APR09 contract
20090317 4.8%
20090305 2.3%
20090129 3.2% (overlap)
20090123 2.2% (overlap)

In the GC JUN09 contract
20090318 4.8%
20090305 2.3%

In the GC DEC09 contract
20091103 2.6%

In the GC FEB2010 contract
20091127 2.0%
20091103 2.6% (overlap)

In the LBMA data, over roughly the same time period there were 9 increases of more than 2% and 18 decreases of less than -2%.  The 9 increases occurred on
20081106    2.1%
20081114    2.4%
20081119    3.2%
20081121    2.1%
20081125    2.2%
20081210    2.1%
20090120    2.2%
20090225    2.3%
20090319    2.0%

All-in-all I would say that this quick-n-dirty analysis says to me (1) the LBMA data was not too bad of a proxy for the Comex data, (2) in the Comex data that I do have available the skew is actually to the positive more than the negative, and (3) I don't find evidence of a "2 Percent Rule".

Wed, 03/10/2010 - 11:43 | Link to Comment Riley Wilde
Riley Wilde's picture

> Because it would be implausibly stupid of GATA to make this claim about any full 24hr period.

Savvy analysts have long noted that as the price of gold might trend upward during daily trading, it has almost never increased by more than 2 percent from the previous day’s COMEX close. Once the price of gold might increase by 2 percent, that event would almost automatically trigger a round of sell orders to either cap the rise or even cause the price to retreat.

and

A few months ago, commodity researcher Adrian Douglas (whom I cited in last week’s column) reported on his long-term study of the COMEX gold closes. He tracked the percentage change from one trading day to the next. Over the course of the study, the price of gold declined from one day to the next by more than 2 percent over 100 times. It increased by more than 2 percent only six times – and this in a market where the price rose by a huge percentage over time. Only once, as best I recall, did the price of gold increase by more than 2 percent one day and by more than 1 percent the next day. Yet there were numerous instances of consecutive daily price declines of 2 percent or more.

http://numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=9741

Tue, 03/09/2010 - 15:21 | Link to Comment Not For Reuse
Not For Reuse's picture

Also, please understand that I don't disagree with your main point: I'd love to see GATA present some actual data to support their claims, instead of just blowing out more of the same old stale smoke every few months.

Mon, 03/08/2010 - 20:46 | Link to Comment Anonymous
Mon, 03/08/2010 - 21:05 | Link to Comment Anonymous
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