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GATA Sues Fed, Demands Disclosure Of Gold Market Intervention Records

Tyler Durden's picture





 

Our friends at GATA have had enough of the Fed's, and other Central Banks' alleged (and with so much circumstantial evidence presented both at Zero Hedge and elsewhere, that in this case "alleged" is just a term only a lawyer could love) manipulation of gold prices, and have taken Bernanke's monetization, manipulation and money making unlimited liability company to task ("M4 ULLC"). We are overjoyed that yet another entity has followed in the footsteps of our dear late friend Mark Pittman in taking on the one organization that represents all that is irreconcilably broken with the current economic and financial system. We wish GATA much success, and hope that ever more wronged counterparties will seek remedies from the Fed's consistent and blatant wealth transfer from America's Middle Class to the uber-wealthy, Wall Street-originating oligarchy.

GATA notes:

GATA today brought suit against the U.S. Federal Reserve Board,
seeking a court order for disclosure of the central bank's records of
its surreptitious market intervention to suppress the monetary metal's
price.

The suit was filed in U.S. District Court for the District of
Columbia and targets Fed records involving gold swaps, exchanges of
gold with foreign financial institutions. In a letter dated September
17 this year to GATA's law firm, William J. Olson P.C. of Vienna,
Virginia, (http://www.lawandfreedom.com)
Fed Board of Governors member Kevin M. Warsh acknowledged that the Fed
has gold swap agreements with foreign banks but insisted that such
documents remain secret:

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

The lawsuit follows two years of GATA's efforts to obtain from the
Federal Reserve and the U.S. Treasury Department a candid accounting of
the U.S. government's involvement in the gold market. These efforts
parallel those of U.S. Rep. Ron Paul, R-Texas, who long has been
proposing legislation to audit the Fed. The Fed has wrapped in secrecy
much of its massive intervention in the markets over the last year, and
Paul's legislation recently was approved by the U.S. House of
Representatives.

The Fed claims that its gold swap records involve "trade secrets"
exempt from disclosure under the U.S. Freedom of Information Act.

While GATA has produced many U.S. government records showing both
open and surreptitious intervention in the gold market in recent
decades (see http://www.gata.org/node/8052), Fed Governor Warsh's letter is confirmation that the government is surreptitiously operating in the gold market in the present as well.
That intervention constitutes a huge deception of financial markets as
well as expropriation of precious metals miners and investors
particularly. This deception and expropriation are what GATA was
established in 1999 to expose and oppose.

Of course GATA's lawsuit against the Fed will take months if not
years to resolve. We think we have a good chance of winning it in
court. But we can win it outside court, and much sooner,
if the suit can gain enough publicity from the financial news media and
market analysts and prompt enough inquiry from them and from the
public, the mining industry, and members of Congress.

So GATA urges its friends to publicize the suit and to urge
journalists, market analysts, mining companies, and members of Congress
to join us in seeking disclosure of the Fed's gold market intervention
records. If enough clamor is directed at the Fed about these records,
the gold price suppression scheme will lose its surreptitiousness and
fail.

Zero Hedge has published enough declassified documents highlighting the Fed's desire to maintain unlimited control over the Gold market (and also here), that we are certain GATA has sufficient cause and in a just court of law system will see a ruling in its favor, especially since all GATA demands is openness and transparency- a key mission of none other than President Barack Obama, who not that long ago issued the following directive:

The Freedom of Information Act should be administered with a clear presumption: In the face of doubt, openness prevails..... [i]n responding to requests under the FOIA, executive branch agencies ... should act promptly and in a spirit of cooperation, recognizing that such agencies are servants of the public. All agencies should adopt a presumption in favor of disclosure, in order to renew their commitment to the principles embodied in FOIA, and to usher in a new era of open Government. The presumption of disclosure should be applied to all decisions involving FOIA.

Then again, with Obama himself beholden to both the Operating and Holding company of the Federal Reserve (we use metaphors sparingly but wisely), we are fairly certain that one simple phone call could abort the fair and equitable judicial process early on: after all even, gasp, Goldman bonuses could be at stake here. Which is why we urge readers to contact their Congressmen and Senators and demand that the same kind of transparency which is applicable to all, should most certainly pertain to the one private institution whose daily actions doom America to a fate far worse than mere sovereign default.

Full GATA lawsuit:

 

 


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Wed, 12/30/2009 - 20:26 | Link to Comment Anonymous
Wed, 12/30/2009 - 20:29 | Link to Comment Anonymous
Wed, 12/30/2009 - 20:31 | Link to Comment Anonymous
Wed, 12/30/2009 - 20:39 | Link to Comment Anonymous
Wed, 12/30/2009 - 20:42 | Link to Comment Anonymous
Wed, 12/30/2009 - 20:43 | Link to Comment Rich Furry Flavor
Rich Furry Flavor's picture

No doubt, GATA has a solid case. It will never see the light of day. At the moment it was posted on ZH, this story achieved its highest degree of notoriety. Throw it in the dust bin with Bloomberg's lawsuit. Ben and the FRB are above the law, untouchable. 

Wed, 12/30/2009 - 21:20 | Link to Comment merehuman
merehuman's picture

Rich furry,  way too early to give up, in fact we wont give up! To give up is to allow them to rape us without complaint or fight and that just wont do.

Thu, 12/31/2009 - 01:19 | Link to Comment Anonymous
Thu, 12/31/2009 - 12:14 | Link to Comment chumbawamba
chumbawamba's picture

Thanks for bringing it home.  Of course, you realize no one will listen to you?

I am Chumbawamba.

Wed, 12/30/2009 - 21:30 | Link to Comment carbonmutant
carbonmutant's picture

It all depends on the Judge.

Get it On!

Thu, 12/31/2009 - 09:55 | Link to Comment Psquared
Psquared's picture

Yes it does, and "judge-shopping" is a political tool. This case will be assigned (by the Chief District Judge of DC) to the most friendly to the government Judge they can find. Given this is DC most are probably friendly ... very friendly.

This ought to brighten your day.

http://www.dcd.uscourts.gov/lamberth-bio.html

Here's a link to all the DC Judges and Magistrates.

http://www.dcd.uscourts.gov/judge-info.html

Not one has any experience with economics as far as I can tell. I.E., they will let the government lawyers run all over them.

Thu, 12/31/2009 - 15:15 | Link to Comment pidge
pidge's picture

perhaps a bribe for some justice is in order?  Duh!

come on people, get with the program!

 

Fri, 01/01/2010 - 11:34 | Link to Comment Anonymous
Thu, 12/31/2009 - 01:02 | Link to Comment Anonymous
Wed, 12/30/2009 - 20:46 | Link to Comment tom a taxpayer
tom a taxpayer's picture

 

Bravo GATA! 

Suing the Fed is brilliant. There are many ways for GATA and taxpayers to get justice.

First, this puts the Fed and Ben on notice that GATA and others are not going to take it anymore.

Second, it sets in motion the sweat glands around the white collars of Ben and the Fed so that they get nervous, begin to second guess what they do, and start making mistakes like deleting e-mails, shredding documents, soliciting secret pacts to hide the true record, etc.

Thirdly, it sets in motion the sweat glands around the white collars of Timmy G and all the other perps at the Treasury, 85 Broad Street, 399 Park Avenue, and other dens of thieves. These slime-balls know how one thing leads to another...civil lawsuits can expose crimes that lead to criminal prosecution. These perps also get nervous, begin to second guess what they do, and start making mistakes like deleting e-mails, shredding documents, soliciting secret pacts to hide the true record, etc.

Fourthly, one or more of the white-collar softies will crumble like feta cheese...in anticipation of the GATA suit or worse, a criminal prosecution...and will fall into the lap of state or federal prosecutors.

Fifthly, it only takes one prosecutor to see the Racketeer Influenced and Corrupt Organizations Act (RICO) case and begin the prosecutions that bring down the entire criminal enterprise responsible for committing the greatest financial crimes in U.S. history.  This is a target rich environment, and the criminal activities (fraud, Ponzi schemes, extortion, looting of treasury, cover-ups, etc.) are continuing today. So the investigation and prosecution can begin anywhere and follow the trail, with Countrywide, the mortgage industry and the appraisers or Freddie and Fannie or Citi and the big banksters or with Goldman Sachs and other Wall Street investment banks and brokerages or the rating agencies or AIG or with the federal co-conspirators at U.S. Treasury, SEC, OTS, and the Federal Reserve or with Hank "the mole" Paulson, Ben "the bag man" Bernanke, Tim "the patsy" Geithner, or the members of Congress who took money to facilitate the criminal enterprise.

Bravo GATA!

 

Wed, 12/30/2009 - 21:19 | Link to Comment whacked
whacked's picture

Well ... when has GATA succeeded in any prior legal battles with the Fed?

 

None .. and the posting here may be the maximum exposure this case will receive.

Wed, 12/30/2009 - 22:56 | Link to Comment VegasBD
VegasBD's picture

Well then I would call this progress. Why such a negative tone. Do something to help this, anything.

Speaking of, what can I do to help GATA? Sick of calling congressmen...

Thu, 12/31/2009 - 22:37 | Link to Comment whacked
whacked's picture

"what can I do to help GATA?"

 

 

Go make a donation.

Wed, 12/30/2009 - 21:22 | Link to Comment merehuman
merehuman's picture

Tom, you made my day! Thanks a bunch

Wed, 12/30/2009 - 21:27 | Link to Comment TheGoodDoctor
TheGoodDoctor's picture

Follow the money!

Wed, 12/30/2009 - 21:52 | Link to Comment Bubby BankenStein
Bubby BankenStein's picture

Tom,

I agree, the more attempts to pierce the veil of secrecy, the better.

Eventually the truth behind these issues will come out in it's putrid glory.

The perpetrators feel the heat and are shitting Old Chicago Bricks.

The more they obfuscate and evade, the weaker they become.  Their demise is all but a certainty.  We have pictures of them fucking the dog.

Thu, 12/31/2009 - 00:37 | Link to Comment JohnKing
JohnKing's picture

Yep, even when unsuccessful, these attempts are in their own way successful as they point to the secrecy that the Fed maintains and protects, it's just one more cut in the thousands that should come.

Thu, 12/31/2009 - 01:16 | Link to Comment ACP5gTG
ACP5gTG's picture

Yeah . . . and it keeps Mr. Holder busy putting out fires, thus limiting the amount of mischief he could otherwise cause.

 

Thu, 12/31/2009 - 07:09 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Ahh, come on Bubby. What's your problem? Will you just drop it! One little dog and you're labeled for life! 

Thu, 12/31/2009 - 01:07 | Link to Comment chumbawamba
chumbawamba's picture

Tom,

I'm sorry but I find that rather naive.  Let me tell you how this is going to play out.

Everyone will push this, calling their reps and giving them an earful, demonstrating, making fiery speeches and online protests, a lot of noise will be made, and just when it looks like something's going to break, a backroom deal will be struck and this thing will somehow quietly go away.  It always does.  This is how things are in America.  There are no more good guys.  The people with the power at Justice will quash any investigation.  We've already seen this.

Either way, in the end, it'll be resolved by these three words: "executive branch agencies", of which the Fed is not.  Check Obama's words again, that tricky bastard.  He is speaking very intentionally.

I am Chumbawamba.

Wed, 12/30/2009 - 20:50 | Link to Comment brandy night rocks
brandy night rocks's picture

In related news, citizens of New Jersey petitioned Paulie Walnuts to investigate and intercede to stop Christopher Moltisanti's "noncompetitive activity" and alleged "price-fixing" in local solid waste disposal and enterprise security markets.  Surprisingly, no action was taken.

Wed, 12/30/2009 - 20:53 | Link to Comment drbill
drbill's picture

Call me cynical, but if the Fed hadn't been keeping gold artificially low I, and many others, wouldn't have been able to buy gold for the past several years.

So, I say let them continue to push gold down because they will eventually lose this game. The perverse benefit is that they will enable others to buy that very thing that the Fed hates above all others.

I think I'm getting myself dizzy again...

Wed, 12/30/2009 - 21:25 | Link to Comment Anonymous
Wed, 12/30/2009 - 22:36 | Link to Comment Anonymous
Wed, 12/30/2009 - 22:46 | Link to Comment Anonymous
Wed, 12/30/2009 - 23:19 | Link to Comment VegasBD
VegasBD's picture

Yea right. As much as we/I hate the Fed, ya gotta say thanx for keeping prices so low before SHTF so I can afford to keep buying more with my dollars from my job. If they werent constantly attacking the gold price, I'd have to face the fact that I dont really make that much money (priced in gold). But till then Im a keep up the six figure american dream lifestyle.   ?

-bd

Thu, 12/31/2009 - 01:10 | Link to Comment chumbawamba
chumbawamba's picture

Gold doesn't grow on trees, man.  Ya gotta dig it out of the mountain.  That costs money.  If producers can't get a fair market price for their product then they aren't going to produce.  Now granted, many mines are profitable under current prices, but some (thanks to general stupidity, and I'm talking at YOU Barrick) are not.  If the price of gold were left up to the market, there would be much more production and hence much more supply.

Let the open market speak.

I am Chumbawamba.

Wed, 12/30/2009 - 21:33 | Link to Comment Anonymous
Thu, 12/31/2009 - 18:23 | Link to Comment Anonymous
Wed, 12/30/2009 - 22:14 | Link to Comment tip e. canoe
tip e. canoe's picture

where's Stuart Smith?

"No one knows whatever happened to Stuart Smith. After his offices were raided he took "administrative leave" from the NYMEX and he has never been heard from since."

Wed, 12/30/2009 - 23:44 | Link to Comment Anonymous
Thu, 12/31/2009 - 06:27 | Link to Comment Anonymous
Wed, 12/30/2009 - 21:10 | Link to Comment Rainman
Rainman's picture

When the Supreme Court ( Ginsburg ) declined to hear the Chrysler bondholder appeal in May '09, I pretty much threw in the towel on basic contractual justice coming from the federal judiciary.

Even if the Fed loses at the district and appeals levels, they'll win at the Supreme Court level. The Fed is entrenched in ALL asset manipulatons, ultimately setting up the fucking of every taxpayer or investor in their path. At ZH we go on and on about it.

So what makes GATA so special ??

The only prize in this is the opening of a few windows to their machinations ...... all of which the MSM will promptly ignore.

Thu, 12/31/2009 - 17:37 | Link to Comment WaterWings
WaterWings's picture

Yeah, I hear ya. This isn't 'our' playground - we don't make the rules - nothing but bully's: on the swings, slides, and even damn tetherball. Bastards have just about taken over everything.

Anything other than the official Fed version is just conspiracy theory to the public. Maybe GATA's just a front to sell t-shirts. What a business model!

Wed, 12/30/2009 - 21:15 | Link to Comment waterdog
waterdog's picture

And to quote the ever present, lying, insider trading diva, Martha Stewart, this is a good thing.

 

 

Wed, 12/30/2009 - 21:18 | Link to Comment Anonymous
Wed, 12/30/2009 - 21:20 | Link to Comment Anonymous
Wed, 12/30/2009 - 21:35 | Link to Comment carbonmutant
carbonmutant's picture

A couple of green shoots later and you could have a real fantasy about the outcome of all this.

Wed, 12/30/2009 - 21:53 | Link to Comment lynnybee
lynnybee's picture

yup, R I C O ...........get 'em under R.I.C.O.

Wed, 12/30/2009 - 21:56 | Link to Comment Implosion Therapy
Implosion Therapy's picture

Per The Fed.."(insert evil laugh here) Your puny mortal laws to not pertain to us !"..for precedent see Mere mortals v Masters of the Universe

Wed, 12/30/2009 - 22:00 | Link to Comment masterinchancery
masterinchancery's picture

duh!

Wed, 12/30/2009 - 22:00 | Link to Comment masterinchancery
masterinchancery's picture

GATA should have a good hideout if this case isn't dismissed--the Fed is a vindictive enemy.

Thu, 12/31/2009 - 17:43 | Link to Comment WaterWings
WaterWings's picture

Don't worry. Just click your heels and it's back to Kansas:

http://farm4.static.flickr.com/3108/3088817182_8882c7c86b.jpg?v=0

Wed, 12/30/2009 - 22:02 | Link to Comment Anonymous
Thu, 12/31/2009 - 14:55 | Link to Comment dogbreath
dogbreath's picture

Hi Karl

Wed, 12/30/2009 - 22:06 | Link to Comment Anonymous
Wed, 12/30/2009 - 22:09 | Link to Comment Mingy
Mingy's picture

Something I find very fascinating is how board of governors member Kevin Warsh, admits the fed has gold swap agreements, however on 11/18/2008, Ron Paul asks Ben Bernanke, if the subject of gold ever comes up in his conversations, and Bernanke responds, “only in terms of sales the central banks are planning.”

 

This very well could have massive ramifications for the USD.

 

Exactly 5m 5s in the question is asked to Bernake.

 

http://www.youtube.com/watch?v=xmn2klhQgFc

Wed, 12/30/2009 - 22:11 | Link to Comment Anonymous
Wed, 12/30/2009 - 22:21 | Link to Comment Anonymous
Wed, 12/30/2009 - 22:24 | Link to Comment Anonymous
Wed, 12/30/2009 - 22:34 | Link to Comment RobotTrader
RobotTrader's picture

The reality is that the gold market is doing just fine.

The charts show no evidence whatsoever of any manipulation.

The reason there are so many deep price setbacks is because the GATA speculators and Jim Sinclair's CIGA's are the greediest of all, always overmargined in their positions.

Goldman Sachs sees these outsized levered positions and gang rapes these guys over and over again, and for some reason, the gold bugs never learn.

They listen to the commercial signal failure fantasies, go way out on margin, then are promptly cleaned out over and over again.

In fact, the gold market is full of Carnival Barkers talking up their book.

Jim Sinclair is famous for this.

Note how many questions are unanswered, no matter how high his gold price forecasts are:

From Wall Street Bear Chat:

.........................

Perhaps we should fire off an e-mail to Big Jim.

Dear Jim:

Why is it that when the debt ceiling gets raised, FNM and FRE are promised unlimited loans, gold gets creamed?

Why is it that the gold stock fund managers always manage to sell
at the top tick, and you berate the CIGA's and GATA's for trying to
pick tops?

Why is it that upon any news of a conflagration, dislocation, or
disruption in the credit markets, the dollar rallies and gold crashes?

Why is it that bird flu, Iraq, Afghanistan, N. Korea have had no impact on gold price whatsoever?

Why is it that high end retailers like JWN, COH and REIT's like SPG, JLL have vastly outperformed gold stocks this year?

Why is it that copper, palladium, lead, zinc, etc. have
outperformed gold and silver by 300% during the biggest, fastest,
expansion credit in world history?

Why is it that within days of "This Is It" or "$1,650 and on to
Alf's numbers" results in an immediate crash in gold prices and an 18%
correction in the XAU?

Why is it that bankrupt auto companies such as Ford are up 500%
this year and Tan Range is down the last 5 years with gold at $1,000+??


Why is it that during cyclical boom times, steel, coal, fertilizer stocks without exception outperform gold stocks by such a wide margin?  And during "deleveraging" periods, gold stocks are hammered 3 times worse than any other sector?

Why is it that hedge funds speculating with leverage in virtually all other sectors (semiconductors, REITS, consumer discretionary, auto rentals, etc.) make vast fortunes by buying and holding during huge runs, while the gold bugs only make paltry gains, almost always wiped out in the next correction?

Just asking Jim, because I'm trying to wrap my little brain around the inflation/deflation debate these days...


Watching all my Wall St. hedge fund buddies getting rich while I'm still diving for groceries in the dumpsters.

Your pal,


Rasputin

....................................

The gold market is one to be aggressively traded.  You actually make more money by being out of the gold market than being in it.  Load up when the gold bugs are screaming and filing lawsuits, ride the run, then cash out.  Better money can be made in other sectors which are less prone to constant margin calls.  But the big run in gold won't happen until each and every gold bug gets their accounts totally cleaned out by Goldman.  By that time, Goldman will have loaded up, and they will score big as usual when the real "once in a lifetime" run starts.

But you won't get any help on when to get in and when to get out from Murphy, Sinclair, etc.

 

 

 

Wed, 12/30/2009 - 23:48 | Link to Comment Oso
Oso's picture

haha, loved this rant.

Thu, 12/31/2009 - 00:55 | Link to Comment Anonymous
Thu, 12/31/2009 - 01:25 | Link to Comment El Hosel
El Hosel's picture

Yeah, damn that Gold anyway, $300 to $1200 this decade. Get in and stay in until further notice.

 

Thu, 12/31/2009 - 01:21 | Link to Comment chumbawamba
chumbawamba's picture

Ignorant.

Traders are not trading gold but rather "gold", that is, paper.  And the market is flooded with it.  GLD is not gold.  Not even the Comex futures can be trusted.  There is ample evidence that the paper certificates are inflated.

What Jim Sinclair has always stated is that you hold physical bullion in your personal possession as insurance for what is to come.  Notwithstanding his wrong timing, which can be put up against everyone else's wrong timing, what he counsels is that gold is going to be what keeps you solvent during what he expects will be a hyperinflationary depression coming within the next few years.  Something like that.  This is something that you either agree with (I am) or not.

So if you are trading "gold", fine, whatever.  Get creamed by GS.  Who cares.  But the point is to get physical gold in your safe, buy it wisely, at regular intervals and on the dips, and just hunker down.  And if we're wrong, oh well.  Gold is still in a bull market and we'll profit nicely anyway.  And inflation will eat away our old debts while gold does its job of maintaining the wealth we put into it when we got it.

I hope this makes sense.  Nobody should be confused about this anymore.  It should be obvious by now that gold is not a fluke, or a bubble, or whatever.  Gold is a wealth preserver.

I am Chumbawamba.

Thu, 12/31/2009 - 02:26 | Link to Comment dnarby
dnarby's picture

Unfortunately, it seem to me that absent a systemic crash or some other precipitating event (e.g. China forcing a gold audit), it seems like they could keep the paper game going as long as they're allowed to.

That said, it's been doing pretty well despite all the shenanigans.  But you still have to time/trade it your physical purchases, and that means trading it vs. the currency you buy it in.  You also have to have an exit strategy for your physical, otherwise (other than insurance) what good is it?

You may have noticed that we haven't seen any "GOLD, bitches!" proclamations here lately...  IMO that is because they were over emotional (like a bear shorting into the hole) and timed it poorly.

Thu, 12/31/2009 - 12:50 | Link to Comment chumbawamba
chumbawamba's picture

We haven't been seeing many "GOLD BITCHES!!!" lately because there's nothing to "GOLD BITCHES!!!" about.  We're in an expected correction from a way too swift rise.  Repeatedly proclaiming "GOLD BITCHES!!!" even in this present trend would be inappropriate and take away its power.  "GOLD BITCHES!!!" is only to be used during the run-ups, never the pull-backs.  Abusing the power of "GOLD BITCHES!!!" is not advised.

I am Chumbawamba.

Thu, 12/31/2009 - 02:42 | Link to Comment laughing_swordfish
laughing_swordfish's picture

Chumba:

"Middle of Target with a 90 Track"

I'll spell it out for you guys, one more time - GOLD is to HOLD.

As in physical - in your possession, people.

I bought in big time @$840 - but I've been accumulating bits and pieces since I was FIFTEEN - mostly as a good luck talisman, and as a "break glass in case of emergency" item.

You may not need it now, or even a year or two from now.

But I ga-ron-tee, when TSHTF big time, as it will before too much longer, you'll be glad you got it.

As for me, when they get U-96, and overrun my shore base, I can just toss it in the backpack and git .... and start over somewhere else.

With Au and Ag, you can do that - anywhere.

After all, what else is stored wealth - foregone consumption - good for, except to be used in just this set of circumstances?

And nothing "stores wealth" better than Au.

 

KptLt. laughing swordfish

9er Unterseeeboote Flotille

Thu, 12/31/2009 - 11:10 | Link to Comment Anonymous
Thu, 12/31/2009 - 01:27 | Link to Comment Mr. Mandelbrot
Mr. Mandelbrot's picture

For some, the dream of a free, unfettered gold market is less about capital appreciation than it is about keeping that goddamn cold and slimy invisible hand from reaching into our trousers and expropriating our purchasing power whenever and to whatever extent it likes . . .

Taxation is at least upfront and honest, but unfortunately not very politically palatable . . .

 

 

Thu, 12/31/2009 - 02:08 | Link to Comment jimmyjames
jimmyjames's picture

Why is it that copper, palladium, lead, zinc, etc. have outperformed gold and silver by 300% during the biggest, fastest, expansion credit in world history?

Why would anyone want to have gold in a credit expansion--

Look at the price of gold from 1981-2001 didn't do anything--

You need hyper-inflation or deflation or political instability for gold to shine--

2001-07--hyper-inflation of credit money supply--

Gold seen the same thing the long bond seen--

Greenspans conundrum ??

Why is it that during cyclical boom times, steel, coal, fertilizer stocks without exception outperform gold stocks by such a wide margin?  And during "deleveraging" periods, gold stocks are hammered 3 times worse than any other sector?

They usually get sold off "initially"by people--who don't understand what gold is--

Then they rebound--like this--

http://2.bp.blogspot.com/_nSTO-vZpSgc/RbmMtplgCjI/AAAAAAAAAPk/NtN5JDlwHi...

If you think gold cant trade with and compete with the dollar--explain all of 2005 and in the later stages of the last downleg--

btw--i agree with you about Sinclair--

 

sinclair wrote (dunno when): Giving you gold price objectives has not proved in the past to be in your best interest as we are read by both sides of the gold market spectrum.
However, one time ONLY, here they are:
- $1000. Three tries and success. This is the third try.
- $1024
- $1089
- $1156
- $1225
- $1296
- $1369
- $1444
- $1521
- $1600
- $1681
Then on to Alf’s numbers.
Alf refuses to give his levels as he is too concerned that those who know them will attempt to trade them, resulting in their being out of position as an upward explosion takes place.
  this is the mystery of his numerical order => take each second addend and add "2" - $1024 +65 = 1089
- $1089 +67 = 1156
- $1156 +69 = 1225
- $1225 +71 = 1296
- $1296 +73 = 1369
- $1369 +75 = 1444
- $1444 +77 = 1521
- $1521 +79 = 1600
- $1600 +81 = 1681
- $1681 +83 = 1764

 

 

Thu, 12/31/2009 - 12:45 | Link to Comment Crime of the Century
Crime of the Century's picture

It's Fibabulous!  Really people, was this retracement that unexpected or traumatic? Answer: no - the metal just shined it on...

Thu, 12/31/2009 - 02:15 | Link to Comment Burnbright
Burnbright's picture

Robo I am a bit confused by your post for many reasons.

 

For starters you use Rasputin's (rant?) to justify why gold is a poor investment as it has been out performed by many other metals and commodities yet if something was performing poorly for a long period of time that would be an indication that the price was either being suppressed or undervalued (or the third option could be it has no intrinsic value). Not to mention many of the question he posses are idiotic because the situations have no bearing on the prices of most other assets as well.

Secondly I am not really sure how it is Goldman Sachs can rape gold bugs when gold bugs buy physical not GLD or SLV. I may not have much gold and silver myself but I don't suffer any loss when the price dips. I still have the same amount I purchased to begin with. Certianly I can understand that your point of view is that of someone who makes a living trading, I don't, I certianly wouldn't want to suffer a loss on my purchases

"Gold Bugs" are not day traders. Honestly I buy gold because it is the most stable asset (and by stable I mean always has value), always has been, always will be. I also have really strong convictions about it being underbought, especially silver. So if you wanted to argue about how the prices of the metals will perform in the future based on events that may or may not happen I would be happy to have that kind of debate. But I really would like some clarification as to your assertions mostly becuase I don't understand the jargon of day traders so I don't understand the context. I always appreciate your posts because it is obvious to me you know the market from the perspective of the day trader. I myself come to zero hedge to better understand the markets and its financial products so I actually understand what is being said rather than relying on some dumb ass reporters views of what it all means reading of a teloprompter.

So any help would be great! :)

 

Thu, 12/31/2009 - 15:44 | Link to Comment dogbreath
dogbreath's picture

I was dumb and inexperienced when I tried to trade futures to raise a nest egg to buy physical with.  I got creamed twice and been out ever since.  But I knew gold was on a run in late 2001 early 2002.  After I got creamed the second time my brokers told me that "everyone" got wiped out. I was also informed that at these reversal points that the pits recieve multiple 5000 contract sell orders swamping the buyers.  then the stops get run initiating the computer trades. margin calls and market sell orders follow 

For anyone still tradeing I would reccomend that they instruct their brokers to SELL whenever the margins are jacked up.  The hidden hand has all the physical they need to sell into the market to drive it down. 

Whats needed is for China to become a buyer if the pressure about the derivitives thing gets nasty.  I wonder how much of a mexican standoff it is.

Thu, 12/31/2009 - 11:46 | Link to Comment Anubis
Anubis's picture

Hi RobotTrader!

 

I enjoy reading most of your posts and also appreciate your viewpoints on this subject. I would however like to point out that it has been documented that just the same as central banks sometimes interact in the currency markets, they have been doing the same in the gold markets (or precious metals markets if you may) due to the monetary influx of the metal.

 

Alan Greenspan himself referred to the federal government's power to manipulate the price of gold at hearings before the House Banking Committee and the Senate Agricultural Committee in July, 1998: "Nor can private counterparts restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise." The link can be found here: http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm

Ron Paul comments on this here: http://www.house.gov/paul/congrec/congrec2002/cr021402.htm

 

Official documents also clearly prove that the FED is involved and interferes in the gold market. Please consider amongst others the following from FED Governer Wayne Angell.

1.) "...The price of gold is pretty well determined by us. ... long-term interest rates can have a significant impact."

Angell draws a connection between long-term interest rates and the price of gold.

2.) "But the major impact upon the price of gold is the opportunity cost of holding the U.S. dollar. No other currency has a reserve base that causes someone to be able to say: 'Well, I don't like holding my own currency'. If you don't like holding your own currency, you always have the option of holding dollars instead."

Gold and the dollar are competing with each other. But the competitor for other currencies is primarily the dollar.

3.) "... We've had a 20 percent increase in price of gold since last February's Humphrey-Hawkins meeting. Now, [yearly] world production of gold only runs 2.3 percent of world stocks."

The amount of gold in storage is many times the annual production.

4.) "... the value of the world's stock of gold is a measly $1.4 trillion. Now, a lot of that is held by central banks. But we were at one time in a restraining mode, making it unprofitable for central banks to hold gold."

Then he focuses on the gold owned by central banks.

5.) " ... this year those who have held gold have said they've got the best deal going as the [value of the] world's gold stock has appreciated $234 billion since our February meeting. We can hold the price of gold very easily;"

What a sentence! - Gold was a good investment at the time. But Angell is not happy about that, he thinks of "holding the price".

6.) "all we have to do is to cause the opportunity cost in terms of interest rates and U.S. Treasury bills to make it unprofitable to own gold."

He recommends to use the interest rate as a means for suppressing the gold price.

 

You can check this link: http://www.gold-eagle.com/editorials_03/speck020303.html

It was available at the FED before at this link - but has been moved: http://www.federalreserve.gov/FOMC/transcripts/1993/930706Meeting.PDF


 

Further, you may want to check out some references to various flaws with the official data on the gold market, as observed by some comentators: 

http://goldnews.bullionvault.com/gold_central_banks_control_price_100120062

 

Further to the above, an article appeared on ZH earlier addressing market movements that to the author did not appear like normal market behaviour: 

http://www.theundergroundinvestor.com/2008/10/four-parallel-markets-for-gold-in-the-same-world-asia-futures-ny-futures-physical-bullion-physical-coins/

 

Objective criticism of these facts and statements are welcome.

 

All the best for an interesting and prosperous new year! :)

 

Anubis

Thu, 12/31/2009 - 11:03 | Link to Comment Anonymous
Thu, 12/31/2009 - 12:35 | Link to Comment Crime of the Century
Crime of the Century's picture

Why is it that hedge funds speculating with leverage in virtually all other sectors (semiconductors, REITS, consumer discretionary, auto rentals, etc.) make vast fortunes by buying and holding during huge runs, while the gold bugs only make paltry gains, almost always wiped out in the next correction?

Yeah, that Einhorn - what a loser. Seeing the bullshit in GLD and moving his massive position into physical. That dipstick couldn't trade a baseball card. Shall we fart in his general direction? A lot of gold traders are losers, but they certainly don't have a corner on that market.

Thu, 12/31/2009 - 15:10 | Link to Comment dogbreath
dogbreath's picture

Thank you Robot,

 

I have read Jim Sinclair for many years and learned much.  The most important thing I learned is he won't quit calling gold higher.  I was margin called/gang raped as you discribe.  I have come to suspect he is a gatekeeper.  He sold his mining company to ABX.  ABX should have closed their hedge book much sooner than they did but  thy couldn't because they are supposed to be the smartest guys in the room.  They are.  They forstalled making any move that would support the gold bugs position. This maintained some uncertainty about the long term direction of gold.   Besides the gold they sell at 400 is delivered to the other smart guys in the room.  We aren't allowed near that building.

I still read jsmineset but I have my bull$#!? filter set on max.  I noticed Dan Norcini isn't around as much anymore either. 

Not IF but WHEN. 

Sat, 01/02/2010 - 02:43 | Link to Comment mchawe
mchawe's picture

Rasputin, if you can't see manipulation in the gold market, you are wearing blinkers !

Jim Sinclair has never to my knowledge advocated trading on margin.

The way to make money in gold is simple. You buy weakness and sell strength. I do not use margin and volatility is my friend. Beyond that I have to give you too much detail as to why I never make a single losing trade.

Stocks. If you just look at ABX and GG and make a generalisation about poor performance, that is up to you.

Here are some gold and silver stocks that beat the stocks you mention over the past 12 months. Amex SLW, NG, RBY, SA, CGR. How about Canadian, AQI, CRK, CSI, EDR, FR, FVI, GPR, LMA, NDM, OGC, ORA, ORV. There are loads more, but I have run out of patience ! The low in the gold sector was in October 2008. The percentage is far greater if you go back then. But these are all stocks that we are taking an arbitrary starting point of 1st January 2009. By the way they are all stocks I own !

 

 

Wed, 12/30/2009 - 22:58 | Link to Comment Stoploss
Stoploss's picture

He, he, he;  " why is it? "  Classic.. Why stop there robo, you could fill this entire thread with " why is it? "..

Wed, 12/30/2009 - 23:28 | Link to Comment Anonymous
Wed, 12/30/2009 - 23:17 | Link to Comment Anonymous
Wed, 12/30/2009 - 23:19 | Link to Comment Anonymous
Wed, 12/30/2009 - 23:23 | Link to Comment Anonymous
Wed, 12/30/2009 - 23:31 | Link to Comment jbar
jbar's picture

Why is it that I've never seen a FED whistleblower? Never any leaks from the FED, nothing!

Wed, 12/30/2009 - 23:50 | Link to Comment Oso
Oso's picture

excellent question, actually.  if all the dirtiness in the world goes down at the Fed, why on earth has not one person brought anything forward....?  Why hasnt Volker spilled the beans on discussions that happened when he was there?

excellent thinking, Jbar - one can get caught up in the anti-Fed rhetoric quite easily without asking important questions.

Thu, 12/31/2009 - 12:48 | Link to Comment Crime of the Century
Crime of the Century's picture

A better question - why did Obama lasso Volcker into the inner circle only to marginalize him? What would a muzzle from the pinnacle of power look like? Just askin...

Thu, 12/31/2009 - 00:01 | Link to Comment Argos
Argos's picture

Because they're like the mafia, once you're in, you're in!

Thu, 12/31/2009 - 00:29 | Link to Comment Anonymous
Thu, 12/31/2009 - 00:45 | Link to Comment JohnKing
JohnKing's picture

I wouldn't call an organization clean due to lack of whistleblowing, there is simply no upside/motivation for the whistleblower. Rat the Fed out? hehe, who would listen and who would care and just how long would you be viable?

They lie to our face and get away with it everyday.

Thu, 12/31/2009 - 15:21 | Link to Comment dogbreath
dogbreath's picture

"They lie to our face and get away with it everyday"

Being a good liar is a valued ability in certain circles.  Look at the climategate scientists. Liars.  There is so much cheating going on at universities that I have come to think that its encouraged to be good at it.  Liars everywhere with their snouts in the trough.

Thu, 12/31/2009 - 06:00 | Link to Comment Anonymous
Thu, 12/31/2009 - 07:44 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Why the need for a whistleblower to come up with the "message from the mount", revealing all? Check out the purchasing power of the FRN ( it's not a dollar, it's a debt instrument)) since 1913. What more do you need, a road map?

Thu, 12/31/2009 - 07:48 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Why the need for a whistleblower to come up with the "message from the mount", revealing all? You want a leak? Then check the leak from your savings account. Check out the lost purchasing power of the FRN ( it's not a dollar, it's a debt instrument) since 1913. What more do you need, a road map?

Thu, 12/31/2009 - 10:29 | Link to Comment vanderrook
vanderrook's picture

+1

The best syndicate of all is the one in plain view that nobody sees, yet everyone suspects is there.

 

"There is no Mafia!" -T Soprano

Wed, 12/30/2009 - 23:39 | Link to Comment Anonymous
Wed, 12/30/2009 - 23:40 | Link to Comment Anonymous
Thu, 12/31/2009 - 00:30 | Link to Comment waterdog
waterdog's picture

Robo, take it back, you don't mean it. Don't go away Robo. Gotta keep your sense of humor about all of this. Robo, switch to Vodoka now, it is a long weekend.

Cheeky, talk some sense into this guy.

 

 

Thu, 12/31/2009 - 00:33 | Link to Comment Trifecta Man
Trifecta Man's picture

"The Federal Reserve sets the nation’s monetary policy to promote the objectives of maximum employment, stable prices, and moderate long-term interest rates."

Maximum employment???  about 20% unemployed now.

Stable Prices??? How come my deductibles on health insurance keep getting bigger?  How come the cable TV bill keeps getting larger?  Why do my garbage pickup rates keep rising?  Why are my electricity costs going up 13% this year?  How come the dollar is worth 98% less now compared to when the Fed came into existence?  A newspaper cost a nickel when I was a kid.  Now they want fifty cents or more.

Moderate long term interest rates?  21% in 1980s.  3.8% now.  Oh and 0.0% short term rates are so damn modest, they did not even work for Japan.

GATA, get these shysters!

Thu, 12/31/2009 - 10:07 | Link to Comment MarketTruth
MarketTruth's picture

You are of course 100% correct. Sadly, many Americans do not realize they are being LITERALLY ROBBED by the Federal Reserve due to devaluation (some call it inflation). Any American who saves their earning using the constantly devaluating (long term) Federal Reserve Debt Note (dollar) are fools.

Got gold?

Thu, 12/31/2009 - 01:01 | Link to Comment Anonymous
Thu, 12/31/2009 - 01:31 | Link to Comment Anonymous
Thu, 12/31/2009 - 11:59 | Link to Comment Smokey
Smokey's picture

Oh Hell Yeah!!!!!!!!!!1

 

http://www.clayloomis.com/Sounds/beth2a.wav

Thu, 12/31/2009 - 13:11 | Link to Comment Anonymous
Thu, 12/31/2009 - 02:36 | Link to Comment Anonymous
Thu, 12/31/2009 - 13:53 | Link to Comment merehuman
merehuman's picture

Robot trader is simply true to his name. Us non robots recognice the value of gold and see evidence of its suppression regularly.

 

Thu, 12/31/2009 - 08:52 | Link to Comment Anonymous
Thu, 12/31/2009 - 08:58 | Link to Comment Anonymous
Thu, 12/31/2009 - 10:49 | Link to Comment Youri Carma
Youri Carma's picture

Bet your bottom dollar that it's all a scandary with the gold book keeping cause they sell gold but keep it on their books for gold suppression reasons. Counting gold double has been done for years. A Central banker will always lie about two things , interest rates and gold. The gold has been derived through multiple gold lease contracts as such creating phantom gold.

If you can make arrangements under the table with your gold creditors for cash settlements the gold market is undermined and pushed down from it's actual value. It isn't a gold market anymore. Gold should be at $1,500 already. One simply can’t push Gold back into the Lease wonder-lamp forever it has to come out eventually to grant you golden honest wishes. Happy New Year Folks!

Thu, 12/31/2009 - 10:58 | Link to Comment CharlesBronson
CharlesBronson's picture

Would all the goldbugs please hold their breath as this one works its way through?

Pump Gold, Dump Gold, Buy Dollar

Thu, 12/31/2009 - 11:08 | Link to Comment Anonymous
Thu, 12/31/2009 - 12:05 | Link to Comment trav777
trav777's picture

Quality?  The notes of a bankrupt State are not quality.

The US is insolvent, dude.  We can't have deflation.  FDR was confronted with the same thing and chose devaluation in order to preserve the government.

INFLATION helps the rich...that is why we always get inflation!

Thu, 12/31/2009 - 11:15 | Link to Comment malvotron
malvotron's picture

Now perhaps I'm completely foolish, but would someone please explain to my the motivation the Fed might have to go to such trouble to suppress the price of gold.  So what if gold rose to $2000, $5000 why is this in any way significant, how the hell does this undermine the power of the government.

Please Clarify.

Thu, 12/31/2009 - 12:22 | Link to Comment Anonymous
Thu, 12/31/2009 - 13:03 | Link to Comment Crime of the Century
Crime of the Century's picture

Confidence bellwether, coalmine canary, etc. Besides the DX and various Fed indices, gold is an indicator of currency health that sounds a silent alarm. This is a way that J6P votes with his wallet (not to mention other nation's CBs). A high price that still commands buying is a vote of "no confidence" and the Fed knows that it can be self reinforcing. One can only imagine what the price would be if demand hadn't been shunted into the ETFs where they can rig the game.

Thu, 12/31/2009 - 18:04 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Watch the video "Money as Debt" by Paul Grignon. You'll find it on you tube or at The Automatic Earth blog under their "Primers" list.

Thu, 12/31/2009 - 12:40 | Link to Comment Ripped Chunk
Ripped Chunk's picture

Pissing into the wind

Thu, 12/31/2009 - 16:55 | Link to Comment Anonymous
Thu, 12/31/2009 - 13:46 | Link to Comment Youri Carma
Youri Carma's picture

Essential Info about the COMEX: Gold, the Comex and Exchange For Physical 1 December 2009, (Jesse's Café Américain) http://jessescrossroadscafe.blogspot.com/2009/12/gold-comex-and-exchange...

"How much imaginary gold has been sold?" by Adrian Douglas for Gata.org (Life After the Oil Crash) http://www.lifeaftertheoilcrash.net/Archives2009/AdrianDouglasGold.html

Gold Hit With a Bear Raid Yesterday - Memories of Citi's Eurobond Price Manipulation 18 December 2009, (Jesse's Café Américain) http://jessescrossroadscafe.blogspot.com/2009/12/gold-hit-with-bear-raid...

Thu, 12/31/2009 - 17:05 | Link to Comment TriOx
TriOx's picture

Regarding the JS gold price list posted a ways up.  Some price levels that JS publishes have been removed to make the simplistic analysis work.  Your fibbing! ;)

Fri, 01/01/2010 - 16:34 | Link to Comment Anonymous
Fri, 01/01/2010 - 19:45 | Link to Comment Anonymous
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