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Guest Post: Bullion Bank Trading – A Closely Guarded Secret

Tyler Durden's picture




 

Submitted by Adrian Douglas of Market Force Analysis

Bullion Bank Trading – A Closely Guarded Secret!

I have written extensively in the past about how the bullion banking members of the London Bullion Market Association (LBMA) trade unbelievable amounts of unallocated gold and silver on a daily basis. See for example “LBMA OTC Market – Alchemists Turn Paper into Gold”. I also managed to introduce spoken testimony on the subject at the CFTC March 25th, 2010 hearing on the Metals Markets “LBMA OTC gold market cited as a Ponzi Scheme in CFTC hearing.”

The latest LBMA clearing statistics (Feb 2011) reveal that the LBMA bullion bank members traded a total average net daily gold volume of 18.1 million ounces with a value of $24.8 billion. Some analysts have in the past estimated that the gross volume is likely to be 3-4 times the net volume giving potentially over 70 million ounces of gross gold trading worth 100 billion dollars. This would be equivalent to trading all the gold that is mined in world each year each and every day! Clearly the majority of this trading is unbacked by physical gold. The bullion banks only make a ledger entry for gold sold or bought and as long as the client never asks for delivery the bank never has to have the gold. I have through my studies indicated that probably 45 ounces of gold have been sold for each one that exists.

The bullion banking business is very opaque but it struck me that if the members of the LBMA are collectively trading a net value of $6.2 trillion annually this should be laid out and explained in the bullion banks annual reports. There are over 60 bullion banks who are members of the LBMA. Based on an 80/20 rule we can estimate that 20% of the banks conduct 80% of the business; that is to say that about 12 banks should collectively trade an annual amount of $5 trillion or $400 billion annually each. If gross volumes were to be reported (which they should be by accounting practices) then each bank would be reporting revenue based on $1.2 trillion of gross annual trading.

I turned to analyzing the bullion banks annual reports. I limited the review to the four of the five hundred pound gorillas on the block namely JPMorgan Chase, HSBC, Deutsch Bank, and Scotia Mocatta. The latter three banks are all the only members of the London Silver Fix and three of the five members of the London Gold Fix.

In analyzing the Annual reports of the major bullion banks I made some astonishing discoveries. For most of these banks their bullion banking business is entirely hidden from the accounting. In the text there is almost no mention of gold, silver, bullion, or precious metals. In fact it is impossible to know that these banks are even in the bullion banking business let alone know anything about their trades, assets and liabilities. The only exception is Scotia Mocatta (see below). The bullion banking business is completely obscured from view in the annual reports. We know from our discussion that there should be revenues of $1.2 trillion annually be reported which would make the activity the largest activity in any of the banks, yet instead it is entirely missing! How could such trading and references to it be almost entirely absent from these reports?

I analyzed JPM 2008 annual report. It is 240 pages long.
http://files.shareholder.com/downloads/ONE/974362468x0x283416/66cc70ba-5410-43c4-b20b-181974bc6be6/2008_AR_Complete_AR.pdf

I searched it for the word “silver”. There are only two mentions of the word “silver”

There is no silver bullet: We believe that all of these actions, if implemented properly and executed – in a timely way and in conjunction with the U.S. fiscal stimulus program – could have an enormous positive impact.

Clearly nothing to do with bullion and

Scott A. Silverstein President and COO The Topps Company, Inc.

You would not believe that this is a bullion bank when there is no reference to silver bullion! There is also no reference whatsoever to its custodial activities of the i-shares ETF SLV!

For the word “gold” most of the references are for “Goldman Sachs” the only reference to the commodity is

The Firm uses forward contracts to manage the overall price risk associated with the gold inventory in its commodities portfolio. As a result of gold price fluctuations, the fair value of the gold inventory changes. Gains or losses on the derivative instruments that are linked to gold inventory are expected to substantially offset this unrealized appreciation or depreciation. Forward contracts used for the Firm’s gold inventory risk management activities are arrangements to deliver gold in the future.

So they talk very briefly about “gold inventory” and hedging it but they don’t mention any silver inventory at all. This is very suspicious because we know from the Treasury department OCC derivatives report that they had over $9 billion in silver derivatives in that year. Why aren’t these mentioned? Does this mean they have a very small silver inventory if only a gold inventory is mentioned? If they don’t have any silver worth mentioning then what are they hedging with $9 billion of silver derivatives? How can they be a member of the LBMA and peddling unallocated accounts a member of the London Fix and not mention any silver bullion? Also the gold that is mentioned is part of a “commodity portfolio” and not anything to do with bullion banking. Is their entire bullion banking business “off balance sheet”? If so, why? The term “Precious Metals” appears nowhere in the report. The word “bullion” does not appear anywhere in the report. Very strange for a “Bullion Bank”! This is highly irregular for the Annual Report of the biggest bullion bank!

HSBC 2008 ANNUAL REPORT
http://www.hsbc.com/1/content/assets/investor_relations/hsbc2008ara0.pdf

The word “silver only appears twice

Awarded the Silver Bauhinia Star by the Hong Kong Government in 2008

which is unrelated to silver as a metal.

The term “precious metals” only occurs twice. One occurrence is in a list of the broad products offered by the bank and the other in the following

Revenues from emerging markets trading and precious metals trading also rose as a result of ongoing market volatility and increased transaction volumes as prices of gold and platinum rose during 2008.

The word “gold” occurs in references to “Goldman Sachs” but only once referring to the metal which is the same quote as above.

The word “bullion” occurs only once where it is under the assets of the bank as

Bullion .............................................................................................................................................. 6,095M$ (2008)  9,244 M$ (2007)

The liabilities of the bank are not broken down into the same level of detail, so it is impossible to know what the net liabilities for bullion are. It is interesting to note that if they are trading approximately $400 billion of net trades annually with 6 $billion of assets then the ratio of net traded gold to actually in vault gold is 50:1.

Reading the HSBC report it would not be possible to determine that they are a major bullion market player. The keywords of gold, silver, bullion and precious metals are hardly mentioned in 472 pages! You would also not know that they are members of both the London Gold Fix and the London Silver Fix. There is also no way to know they are custodians of the i-shares GLD ETF, the biggest gold ETF in the world!

DEUTSCHE BANK 2009
http://annualreport.deutsche-bank.com/2009/ar/servicepages/downloads/files/dbfy2009_entire.pdf

The 2008 DB report is no longer on line so I analyzed 2009.

The report is 436 pages. The word “Bullion” does not occur anywhere, again very strange for a bullion bank and a member of the “London Fixes”. The word “silver” does not occur anywhere. The word “gold” occurs twice in references to “Goldman Sachs” yet it does not occur in reference to the metal. “Precious metal” occurs in a glossary description of “futures” and under OTC derivative contracts held. It shows 101.376 Billion euros of precious metal derivatives which would be equivalent in value to twice the annual global production of gold!

Nowhere in the report could one discern that Deutsche Bank is a bullion banker. Nowhere does it mention any business related to the buying and selling of actual physical metal yet it reports holding a massive precious metals derivatives position.

SCOTIA BANK 2008
http://scotiabank.com/images/en/filesaboutscotia/19578.pdf

In the Scotia Bank 2008 Annual report there is an asset table which is shown in Figure 1 and a Liabilities shown in Figure2. In 2008 the report shows Scotia Mocatta had liabilities for gold and silver certificates of $5.619 billion and Precious Metal assets of $2.436 billion...in other words Scotia Mocatta was naked short $3.18 billion of precious metals by their own accounting! The price of precious metals would be very different if this $3.2 billion of customer money paid to them for buying precious metals had actually gone to making real purchases of physical metal. Note they were $1.94 billion net short precious metals in 2007 also. Imagine what the losses could have been if the precious metals had not been suppressed and hammered down by JPMorgan and HSBC in 2008 as alleged by at least twenty five class action lawsuits and supported by statements by Bart Chilton, a CFTC Commisioner.


fig.1

fig.2

SCOTIA BANK 2009
http://scotiabank.com/images/en/filesaboutscotia/22068.pdf

By the end of 2009 Scotia Mocatta was net long $1.7 billion in precious metals. Now that is interesting. How convenient that prices had been heavily suppressed in 2008 when they were net short and they managed to cover their short position and accumulate a net long position. Note, however, that the “assets” do not use the same language as in the liabilities. The liabilities line item is “gold and silver certificates and bullion” while the asset line item is “precious metals”. We don’t know what those assets are because it does not specify “bullion” as is the case for the liabilities. These could be forward contracts or call options or OTC derivatives or some other paper promise for future delivery which is being booked as a precious metal asset. So although they could be net long based on valuation of paper assets there is still the possibility Scotia Bank is net short in terms of bullion. But they were definitely net short of bullion in 2007 and 2008.

There have been many people who have challenged or dismissed out of hand the existence of an organized scheme to suppress precious metals as long and expounded and documented for over a decade by the Gold Anti-Trust Action Committee (GATA). There is without a question of doubt something highly irregular and criminal occurring when a multi-trillion dollar business is not reported in Annual reports of the major bullion banks conducting the business. Further more there is not even any disclosure that these banks are even in the bullion trading banking business, let alone the principle operators of it by being members of the London Fix and being custodians of the world’s largest bullion funds!

If investors think they own large amounts of bullion in “unallocated” accounts they should take a very close look at what has been presented here and try to work out where exactly the underlying assets that back their investment might be hidden. The inescapable conclusion is that the unallocated accounts are unbacked or backed with no more than 2% of the bullion required. The gigantic revenues that the precious metals market generates for the banks seems to be been omitted from the Annual reports entirely.

Anyone with an unallocated bullion position would be well advised to take delivery, or you can hope that there is a very reasonable explanation for all of this.

Adrian Douglas
Editor of Market Force Analysis
Board Member of GATA

 

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Thu, 04/07/2011 - 14:35 | 1146224 Circlehook
Circlehook's picture

Rat Bastards!  Bitchezzzzz!

Thu, 04/07/2011 - 15:17 | 1146483 nope-1004
nope-1004's picture

Fractional reserve speculation has no boundaries.  The only saving grace to my stash is that the white-collar criminals can't print physical.  They can distort ledgers, manipulate spread sheets, and lever paper promises - which they will continue to do until people demand honest accounting.

One day this jig will be up.

Thu, 04/07/2011 - 15:52 | 1146616 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

Don't forget the stories about a yr or two ago where tungsten filled gold bars were popping up. This form of "forgery" will continue as physical demand heats up. But I too feel that the jig is up (for a number of reasons).

Thu, 04/07/2011 - 15:58 | 1146649 Ratscam
Ratscam's picture

A classic Rat Scam!

Thu, 04/07/2011 - 14:35 | 1146225 sheeple
sheeple's picture

Good stuff Adrian! thanks

Thu, 04/07/2011 - 15:29 | 1146527 Shell Game
Shell Game's picture

Agree, excellent investigation. Thank you!

Thu, 04/07/2011 - 15:43 | 1146582 Sudden Debt
Sudden Debt's picture

Good stuff indeed!

This could push gold to 60.000$ per ounce and silver to 4.000$ ounce

NOT TO MENTION THE HIGHER SHORTAGE IN SILVER!!

I think I'm going to let my silver tone just a bit longuer :)

 

 

Thu, 04/07/2011 - 14:36 | 1146229 Horatio Beanblower
Horatio Beanblower's picture

For the Empire, dear boy, for the Empire...

 

"Five men talk on their phones for 10 minutes or so and then lower tiny Union Jacks sitting on their desks. And that's it. The London gold fixings is complete. It takes place at 10:30 a.m. and 3 p.m., like clockwork. The same ceremony has been performed the same way, in the same place, and with mostly the same firms participating since the first gold fixing was enacted at Rothschild in St. Swithin's Lane on Friday Sept. 12, 1919."

 

http://www.kitco.com/london.fix.article.html 

Thu, 04/07/2011 - 14:40 | 1146257 ReallySparky
ReallySparky's picture

What are tiny Union Jacks?

Thu, 04/07/2011 - 14:42 | 1146287 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Little British flags.

Thu, 04/07/2011 - 14:44 | 1146302 Horatio Beanblower
Horatio Beanblower's picture

Small British flags.  For the pedants out there, the article should say Union Flags as opposed to Union Jacks.  The British flag is only called a Union Jack when it's flown on a ship.  

Thu, 04/07/2011 - 23:40 | 1148407 Milestones
Milestones's picture

Hmmm. Didn't know about the "Jack" is for ships only. Thanks.      Milestones

Thu, 04/07/2011 - 14:46 | 1146306 knukles
knukles's picture

Flags. 
Teenie, tiny, little, itty, bittie, flags of the UK.
Decorative shit on a stick that some folks, quaint folks, like to keep on their desks or trading turrets. But that's beside the point, isn't it? 
Jesus God help.  With everything else going on in this world you're asking what a fucking Union Jack is? 
Some, not all, but some of this shit does not require a Da Vinci De-Coder Ring. 

Thu, 04/07/2011 - 14:48 | 1146322 Horatio Beanblower
Horatio Beanblower's picture

Vexillphobe?

Thu, 04/07/2011 - 14:55 | 1146356 knukles
knukles's picture

Now that is quality, Horatio!
But I do now have to ask, who the fuck in their right mind would be afraid of flags?
But then again, I may have answered my own question.
And even the other one as to who would even ask that question in a public forum.

Thu, 04/07/2011 - 15:04 | 1146406 Horatio Beanblower
Horatio Beanblower's picture

Thank you, Sir.

 

Northern Ireland, where I grew up, is a hotbed of vexillphobia - http://cain.ulst.ac.uk/images/symbols/bryan0510.pdf

 

It's a funny old world.  As an aside, the Catholics in NI fly Palestinian flags and the Protestants fly Israeli flags - http://www.informaworld.com/smpp/content~db=all~content=a790416192

 

 

 

Thu, 04/07/2011 - 15:12 | 1146461 knukles
knukles's picture

Ahhah!
Indeed, spent my informative years a Yank ex-pat in the UK.  So having played Bait the Yank for so long, I've great empathy with your perspective. 

My first thought had been to memorialize St. Swithin's Lane with a retrospective upon tea (which I still favor) civility, a "Jolly good show, eh what?" and a breif Rotogravure triptick of those odd, white tiled, most unusual underground public loos that used to populate the City.  But then again, first things first.

Thu, 04/07/2011 - 15:37 | 1146568 Pladizow
Pladizow's picture

The Union Jack is where the term "Double Crossed" comes from, as the British flag is one cross layed upon a second cross.

Plays well into the gold fix conspiracy!

Thu, 04/07/2011 - 15:53 | 1146633 hardmedicine
hardmedicine's picture

newsflash: they are NOT attractive.  at least put up some that don't sag and have cow nipples.

Thu, 04/07/2011 - 16:31 | 1146796 Pladizow
Pladizow's picture

Sorry, I forget that you Americans prefer silicone.

Thu, 04/07/2011 - 14:50 | 1146335 knukles
knukles's picture

And then there's Google, too.

When in doubt,
Find it out,
Don't look the fool,
Use the tool!

Thu, 04/07/2011 - 14:56 | 1146359 Horatio Beanblower
Horatio Beanblower's picture

Good shout,

There is no doubt.

Thu, 04/07/2011 - 15:00 | 1146396 knukles
knukles's picture

When in doubt,
Just spout it out,
When mentally distressed,
Screaming's best

Thu, 04/07/2011 - 15:00 | 1146385 knukles
knukles's picture

Jesus God, there are some really uneducated people out there!
And they still get to vote, drive cars, log on to computers, and hold positions of authority and responsibility like TSA gropers.  What is going on?
The whole fucking world is coming unglued and somebody's asking about tiny Union Jacks.

Then again, I'm responding!
Time for the morning Thorazine, Ativan and Xanax enema.

Thu, 04/07/2011 - 15:33 | 1146548 Antarctico
Antarctico's picture

Time for the morning Thorazine, Ativan and Xanax enema.

Graphic and disgusting -- +1

Thu, 04/07/2011 - 15:35 | 1146553 RockyRacoon
RockyRacoon's picture

I'll admit, I was rather struck by

1. The lack of knowledge

2. The inability (laziness?) to find out

3. The confession in a public forum

Sheesh.

Fri, 04/08/2011 - 07:34 | 1149198 tomster0126
tomster0126's picture

Churchill's quote about democracy and its proven stupidity when you talk to the average voter comes to mind so quickly here.  Union Jacks, lol.  Google...plz...

Do you ever take Adderall?  I use it in combination with Emergen-C and BCAA powder in the morning, might be a little more inspiring than your downer enema bro :)

 

www.forecastfortomorrow.com

Thu, 04/07/2011 - 14:37 | 1146235 MaxVernon
MaxVernon's picture

Visit the Silver Liberation Army, and spread the word!

 

http://j.mp/f2lkxu

 

or http://silverliberationarmy.wordpress.com

Thu, 04/07/2011 - 14:45 | 1146297 erumisato
erumisato's picture

You have my axe!

Thu, 04/07/2011 - 15:04 | 1146415 mt paul
mt paul's picture

just lashed a 100 oz JPM bar to a stout stick ...

my battle hammer... 

 join the silver liberation army...

freedom .... 

Thu, 04/07/2011 - 15:18 | 1146476 SilverRhino
SilverRhino's picture

Generic Silver Rounds make good scale armor.

Thu, 04/07/2011 - 15:41 | 1146574 Occams Aftershave
Occams Aftershave's picture

We are legion.

Expect us.

(but don't expect us to come up with an original motto.)

Thu, 04/07/2011 - 14:38 | 1146241 ReallySparky
ReallySparky's picture

And when will the oil producers figure this out and demand delivery?

Thu, 04/07/2011 - 14:46 | 1146305 I think I need ...
I think I need to buy a gun's picture

They already know but do the sheeple know its going to $9.00 dollars a gallon or more in gold. gas jackings coming soon.......

Thu, 04/07/2011 - 15:36 | 1146550 Hacked Economy
Hacked Economy's picture

Too late.  Gas is already $4.25+ here in SoCal, and the natives are getting more bold.  My neighbor down the street recently had his gas tank jacked in the dead of night.  He was pretty upset the next morning, as he had just filled his tank.

I installed an anti-siphon ring in own truck so as to protect my supply of go-go juice in my tank.

And I live in a nice neighborhood....

Thu, 04/07/2011 - 16:04 | 1146671 Bastiat
Bastiat's picture

Diesels at my house.  Will suck to be them if the load up the gasser with diesel.

Thu, 04/07/2011 - 14:48 | 1146315 InconvenientCou...
InconvenientCounterParty's picture

...you have new record highs on a near daily basis.

Thu, 04/07/2011 - 15:49 | 1146609 uranian
uranian's picture

i wonder if when silver starts making new (nominal) all time highs (which looks like not more than a few weeks away, the way things are going), there will be some MSM coverage...outside of the financial press, there are almost zero stories about gold's continuing new record highs. perhaps J6P will wake up a bit when silver hits 50$? i'll not hold my breath on that, but it could mark the beginning of the mania phase.

Thu, 04/07/2011 - 14:37 | 1146249 linrom
linrom's picture

Gold backed fiat--the bankers own all the gold. The joke is on you!

Thu, 04/07/2011 - 14:53 | 1146354 InconvenientCou...
InconvenientCounterParty's picture

snarf..gurgle. Ouch. diet coke burns the sinus.

Thu, 04/07/2011 - 14:39 | 1146250 NOTW777
NOTW777's picture

obama content to burn it to the ground

Thu, 04/07/2011 - 15:43 | 1146577 RockyRacoon
RockyRacoon's picture

Hey, you.   Yeah, you.  Back there in the back of the crowd with your hand up.  

You simply say, "obama content to burn it to the ground".   No proper punctuation used.

You got our attention and that's all you gotta say?  Put your hand down and be quiet.

Thu, 04/07/2011 - 14:39 | 1146269 espirit
espirit's picture

Tax them bitchezzz! 

Thu, 04/07/2011 - 14:41 | 1146270 suckerfishzilla
suckerfishzilla's picture

Even if PSLV is on the up and up I never understood the mindset of investors who did not want to hold their own inventory.  "Would you hold this for me Uncle David?"  It is difficult to come to loathe the paradigm.  After all if you indeed have been taking physical possession of Gold and Silver this all plays right into your greedy little hands. 

Thu, 04/07/2011 - 14:43 | 1146281 DoChenRollingBearing
DoChenRollingBearing's picture

This will not end well.

Thu, 04/07/2011 - 14:51 | 1146343 Ruffcut
Ruffcut's picture

Guess what, the bullshit just never ends.

Thu, 04/07/2011 - 14:57 | 1146368 InconvenientCou...
InconvenientCounterParty's picture

life is a journey, not a destination.

Thu, 04/07/2011 - 14:42 | 1146289 Josh Randall
Josh Randall's picture

Tungsten is the Word, as opposed to Bird

Thu, 04/07/2011 - 15:59 | 1146644 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

Yep. It also appears that Unallocated = Unsecured (or rather Precious Vapor-Metal)

Thu, 04/07/2011 - 16:23 | 1146759 Long-John-Silver
Long-John-Silver's picture

The Ferengi (Star Trek) raided Ft Knox in the Year 2525 and discovered it will filled with Gold Plated Tungsten. They immediately assumed it was the most precious material in the Universe due to the extreme measures taken to protect it. They could find no reference at to it's purpose and so it's sole purpose must be a store of wealth. They called it Gold pressed latimum. Little did they know it was simply counterfeit fiat Gold.

Thu, 04/07/2011 - 14:50 | 1146337 lieutenantjohnchard
lieutenantjohnchard's picture

the central bank of lieutenant john chard took delivery today of more silver eagles to add to the collection. also, the most recent article by jeff clark of casey research puts the silver (yet again) story in perfect context.

Thu, 04/07/2011 - 15:15 | 1146473 DoChenRollingBearing
DoChenRollingBearing's picture

The central bank of DoChenRollingBearing took delivery of some gold today as well.

...

DCRB's CB is also working to get some $ wired south to buy some other hard goods, made of 52100 steel!

Thu, 04/07/2011 - 15:43 | 1146580 lieutenantjohnchard
lieutenantjohnchard's picture

good job. you got the money of kings. while not claiming to be a gentleman i got the money of gentlemen. lol.

Thu, 04/07/2011 - 16:06 | 1146676 living on the edge
living on the edge's picture

DCRB,

I can't resist to comment on the (52100 steel) mentioned in your post. I love that grade amongst others as we have discussed. In your case it could very well be a great investment. Shortage is the word.

Thu, 04/07/2011 - 18:38 | 1147342 DoChenRollingBearing
DoChenRollingBearing's picture

Japan's largest mfr. of bearings (NSK) is the only one of the bearing companies that seems fairly exposed to fallout from Fukushima, as they have at least two plants NOT in southern Japan, where most of my little 52100 widgets are produced.

NSK declined to sell to us a few years ago...  OK, we buy from Korea instead!  The $ on the way south are for more Korean bearings.

A rather good day for the Bearing and his central bank!

Thu, 04/07/2011 - 14:55 | 1146355 Muir
Muir's picture

Ok, I do not trade gold contracts or even mini gold contracts.

So what is this man saying, implying or accusing?

(genuinely ignorant)

Thu, 04/07/2011 - 15:00 | 1146383 InconvenientCou...
InconvenientCounterParty's picture

GLD and SLV are worthless because they are based on the promise that you will never ask for physical.

Racketeering, I think it used to be called.

Thu, 04/07/2011 - 15:31 | 1146536 Shell Game
Shell Game's picture

Oh, but I'm sure they report for tax purposes...  f'king criminals.

Thu, 04/07/2011 - 15:40 | 1146573 spooz
spooz's picture

Nice and liquid, though.  Derivatives for the little guy.  So everybody gets to participate in the casino.  Not so worthless when you can trade them in your Schwab account. 

Thu, 04/07/2011 - 14:56 | 1146374 Ruffcut
Ruffcut's picture

But but but, shares of priceline represent what?

500 bucks a share for what. An internet server network?

The whole fucking capital markets are a ponzi clusterfucking bullshit times a bazillion.

Thu, 04/07/2011 - 15:01 | 1146401 InconvenientCou...
InconvenientCounterParty's picture

"But but but, shares of priceline represent what?"

Ans: The probability of future profit from human enterprise. Now don't get me wrong; I wouldn't buy that stock with your money.

Thu, 04/07/2011 - 15:02 | 1146413 John Wilmot
John Wilmot's picture

I'm becoming more and more convinced that all the talk from the IMF et al about a gold-backed world currency to replace the dollar is real. Of course, it won't be a true gold standard, it'll be something along the lines of what Friedman suggested, with plenty of 'flexibility' for monetary inflation - in other words, no gold standard at all. But the implications for the gold market are interesting. The accepted paradigm about the PTB resisting gold's rise and trying to maintain the dollar may be shifting.   

Thu, 04/07/2011 - 15:45 | 1146599 RockyRacoon
RockyRacoon's picture

Bingo.   When/if gold gets used to back a currency the big boyz will have all the "gold".   Isn't that the game?   You can rest assured those "assets" will move to a prominent position on those balance sheets then.   We'll all be shocked at just how much "gold" there is in the world.  They will be richer, and we shall be poorer.   It will be the last gasp at maintaining the Ponzi.  I'm gonna go look into adding some more pitchforks to my portfolio.

Thu, 04/07/2011 - 16:09 | 1146696 Bastiat
Bastiat's picture

When/if gold gets used to back a currency the big boyz will have all the "gold".  

Sinclair has said the same, from time to time, over the years.

 

Fri, 04/08/2011 - 00:53 | 1148674 StychoKiller
StychoKiller's picture

I could say I have a 13" cock and fifteen hot women on the side -- would you believe it?

Fri, 04/08/2011 - 11:55 | 1150132 RockyRacoon
RockyRacoon's picture

Nope.  But we don't believe that they have actual metal either.  Your point (no pun intended) is well made.

Thu, 04/07/2011 - 15:05 | 1146422 tradewithdave
tradewithdave's picture

Here's a bit of background on the daily gold fix and how it relates to the rest of the world:  http://tradewithdave.com/?p=4261

 

Thu, 04/07/2011 - 17:43 | 1147143 newbee
newbee's picture

Thanks Dave - a 1000X better than the blow hards spouting off how smart they are with zero actual information displayed.

Thu, 04/07/2011 - 15:11 | 1146456 mogul rider
mogul rider's picture

Back up the trailers Bitchez

Thu, 04/07/2011 - 15:15 | 1146467 ivars
ivars's picture

So is it possible that FED or ECB or whoever bails them out if something goes wrong ( people start to demand physical deliveries?)

Thu, 04/07/2011 - 15:16 | 1146477 Stuck on Zero
Stuck on Zero's picture

One bullion trader to another: "Eat my shorts."

Thu, 04/07/2011 - 15:20 | 1146487 ragedmaximus
ragedmaximus's picture

 thats how they make the money   TOP TO BOTTOM,BOTTOM TO TOP RINSE REPEAT AGAIN AND AGAIN and if that doesnt do the trick we will make derivitives and naked shorts

Thu, 04/07/2011 - 15:50 | 1146606 RockyRacoon
RockyRacoon's picture

No doubt the Bureau of Engraving and Printing is working on etching some nice new plates to print gold certificates.   When the dollar tanks the presses will run in overdrive to spew out more fiat -- based on nonexistent gold.

Thu, 04/07/2011 - 18:07 | 1147208 knukles
knukles's picture

Which fiat will then be taken off of said "gold standard" (non-existent) thereby diluting the value of such again... over and over.... history of money.

"He who posesses the standard of measure against which all illusions are held, wins."
                                     -Knukles  

How else can such be made more readily understandable?

Thu, 04/07/2011 - 21:23 | 1147921 honestann
honestann's picture

Consider the inherent insanity of a "gold certificate"!!!

You can put gold coins in your pocket.

You can put supposed "gold certificates" in your pocket.

So what's the difference?  The only practical difference is... one is real, and the other is fraud.  This has been proven endless times throughout history, so anyone who believes he can turn in his "gold certificate" for physical gold is the dumbest sucker in the history of history.

Thu, 04/07/2011 - 15:22 | 1146501 Bansters-in-my-...
Bansters-in-my- feces's picture

So "Democracy don't exist in the U.S.A or what...???

When you's all gona speak up....???

Betta spread some of dat dare democrazy around your own country while you's are dishing it up elsewhere.

Thu, 04/07/2011 - 15:33 | 1146538 Occams Aftershave
Occams Aftershave's picture

For every contract, someone is long, someone is short.  The broker nets these and is supposed to have capital to handle the net long or net short position.    They could have 5 gazillion trades, and if the long and short balanced, would be ok.

It's like a bookie taking bets on a horse race.   The bookie doesn't have to own the horse.

Thu, 04/07/2011 - 15:50 | 1146610 RockyRacoon
RockyRacoon's picture

...and we get to clean up the stalls.

Hand me my pitchfork... and that torch while you're at it.

Thu, 04/07/2011 - 15:58 | 1146607 AC_Doctor
AC_Doctor's picture

COMEX busts on silver deliveries next month. 

SLV and GLD have only paper IOU's.

Customers run making sure that all their precious is really in the vaults to find nothing but IOU's instead.

LBMA defaults.

Paper metals markets default.

SLV and GLD go to ZERO.

Derivitives default.

Banks default.

Complete collapse of the current paper fiat monetary syste.

Precious metals price discovery is made on the streets, sending them 500%-1000% higher. 

Blythe Masters is cleaning my mansion...

AC

 

 

Thu, 04/07/2011 - 16:13 | 1146710 Bastiat
Bastiat's picture

Blythe Masters is cleaning my mansion...

 

Jeez, I don't know, Doc -- she didn't do much of a job cleaning up the JPM short position. 

Thu, 04/07/2011 - 16:14 | 1146721 newworldorder
newworldorder's picture

All of your comments appear plausible except for the last line. You have reiterated the exact reasons why they will not be allowed to happen. You can still buy lots of gold and silver though.

Thu, 04/07/2011 - 15:56 | 1146621 GoinFawr
GoinFawr's picture

POG today tracked yesterday's plots, sticky.

Thu, 04/07/2011 - 15:53 | 1146622 GoinFawr
GoinFawr's picture

No reason.

Thu, 04/07/2011 - 16:04 | 1146670 Bansters-in-my-...
Bansters-in-my- feces's picture

hey my

Thu, 04/07/2011 - 16:11 | 1146715 BennyBoy
BennyBoy's picture

Force Majeure!

Force Majeure!

Force Majeure!

Thu, 04/07/2011 - 16:31 | 1146791 GFORCE
GFORCE's picture

If you look at the COT futures--on the NYMEX alone--open interest on crude is 1.5bn barrels daily, against a global daily usage of 83m barrels.

Nothing but a casino.

Thu, 04/07/2011 - 16:41 | 1146844 alexanderstollznow
alexanderstollznow's picture

OH MY GOD! I HAVE JUST DISCOVERED THE MOST HUGESTEST BANKSTER SCAM OF THE MILLENIUM!

apparently, the face value of CBT 10yr note futures traded today is 1,260,000.  EACH ONE of them is worth $100,000.  that means that trading totalled $126,000,000,000, today alone.  I HAVE DISCOVERED THAT THE BANKSTER DECEPTIVE RIPOFF MERCHANT BROKER ARMS DONT HOLD ANY 10YR NOTES AT ALL. and nor does the clearing house. 

Thu, 04/07/2011 - 21:17 | 1147904 honestann
honestann's picture

Please explain more slowly and in more detail.

Fri, 04/08/2011 - 00:58 | 1148684 GoinFawr
GoinFawr's picture

Go on, pull the other one.

Thu, 04/07/2011 - 18:06 | 1147211 anonnn
anonnn's picture

as for criminal...there are national-security exceptions for corporate accounting statements that enable lies and omitted data to be immune from prosecution.

In a word...privilege!

Thu, 04/07/2011 - 18:08 | 1147224 anonnn
anonnn's picture

Awesome post, Arian Douglas

Thu, 04/07/2011 - 19:59 | 1147663 Wrighteous Wrath
Wrighteous Wrath's picture

LET’S RUN THE GOLD SCAM!

Now the pieces are falling into place for me. Sorry if I am slow on the Gold gig. 

Governments, Federal Reserve and its member banks as well as PM Funds own the vast majority of Physical AU. (Please correct me if I got it wrong.)

All of them sell "shares" in the form of either AU fund shares or future contracts. We all know that there is no limit to naked shorting so a derivative supply of paper gold can be created out of thin air simply by controlling the amount of short sales they make to cover the buying. But, since there is no accounting for contracts to ACTUAL AU they can totally scam the market. Selling high and buying low while actually NEVER Moving the metal. They will do anything they can to kill a run on delivery. Because THEY CANNOT ALLOW A RUN FOR PHYSICAL! A run FOR ACTUAL DELIVERY AU would show the "derivative nature" of the PM trading pits. This would in turn bring Physical Gold to its actual FIAT ADJUSTED VALUE OF $60,000 oz.

(I saw this estimate above from one of you.)

So, if the true value of physical AU is $60,000 oz then any price is worth it IF you take delivery. Right?

How could I test this?

What is the stated total universe of AU supply and how does that match up against daily trading? (I have tried to tie this out but can’t find the right data.)

The only way this (A RUN) could work is if we had a FLASH party on gold delivery? Say, what if 1,000,000 100 oz contracts were bought and actually took delivery? Game over right? Soros or someone is probably going to do this soon. Don’t you think?

Thoughts very much encouraged.

 

Thu, 04/07/2011 - 22:14 | 1147714 honestann
honestann's picture

Yup, you are late to the party, but welcome.

I wish I could help further, but already 99% to 100% of my assets have been in physical gold and silver for the past few years.  However, very few others have caught on to what you're saying, so a massive run on physical has been appropriate for years, and is still appropriate now.

That more people are demanding physical silver is the main reason silver has started to move in earnest the past few months.

Buy physical and TAKE DELIVERY.  Do NOT have anyone else hold your metal, because virtually all of the players are part of the "corrupt fiat debt money" game.

Buy gold.
Buy silver.
Take delivery.
Sink the fiat, fake, fraud, fiction, fantasy pusher predators.

Fri, 04/08/2011 - 16:28 | 1151280 Wrighteous Wrath
Wrighteous Wrath's picture

Thank you.

I just did not know that they could oversell a hard asset like that. Now that I know this, I now understand what Stansberry is talking about.

Fri, 04/08/2011 - 16:37 | 1151320 Wrighteous Wrath
Wrighteous Wrath's picture

also, what is your price target??

Do you buy into $5,000 oz or $60,000 an oz?

Sat, 04/09/2011 - 01:01 | 1152817 honestann
honestann's picture

To me, that kind of conversation is almost meaningless.

If they destroy the dollar, as they seem intent on doing, then gold (and silver) will rise to millions or billions or trillions of dollars per gram.  This renders the price of gold or silver in dollars just about totally meaningless.

My reason to hold gold and silver is to keep the value of my wealth, and maybe increase value slightly (10%, 20%, 30%).  Everyone with fiat dollars is in the process of being creamed.  I want no part of that.

Thu, 04/07/2011 - 21:23 | 1147930 Bron Suchecki
Bron Suchecki's picture

For Scotia's figures since 2004 see http://goldchat.blogspot.com/2010/04/king-world-news-scotia-certificates.html

"Scotia Mocatta was naked short" - I don't think Adrian can make that claim based on the vagueness of the Scotia annual report. Scotia has futures positions in their annual report, but it doesn't indicate a breakdown by metal. Just as Adrian assumes the 2009 long position may be composed of futures, so could one assume that the short position Adrian refers to may well be covered by Scotia with futures.

I would have like to see some reference to the banks overall trading/revenue numbers relative to Adrian's estimated metal trading numbers. Precious metals may not be broken down because they are not material relative to all the other funny money transactions the banks are doing.

If he demonstrated how large the banks balance sheets are relative to the gold market that would actually support the case for manipulation as it would show how financially capable they are of absorbing losses from PM activities.

Thu, 04/07/2011 - 22:16 | 1148071 Silver Alert
Silver Alert's picture

How much income tax would they owe on $6.2 trillion if it was reported?

 

None silly - they're bankers.

Fri, 04/08/2011 - 07:40 | 1149207 tomster0126
tomster0126's picture

Bernanke walks around with a little pouch of gold coins in his trousers...just sayin.'  These bastards want all the gold for themselves, let's take it from them!

 

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