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Jeffrey Christian Has A Second Chance To Disprove The Gold Ponzi Scheme, Fails

Tyler Durden's picture


Today, Jim Puplava of the Financial Sense Newshour interviewed Jeffrey Christian, recently made notorious for his disclosure of what GATA has been claiming for years, namely that the paper to physical gold market is about 100-to-1, during questioning at the recent CFTC testimony. Christian, who clarifies his stance on position limits and commercial position limits (he is concerned about PM markets moving away from exchanges to OTC) discusses concentration risk in financial institutions, swap dealers (OTC-futures hedging of presold gold while still in transit to end markets and not yet in Good Delivery form), but most notably the 100-1x leverage which is what everyone would like to hear Christian elaborate on. His version: "I was actually pretty clear but there are these troglodytes in the market that like to distort what whatever anybody says and they distorted what I said. What I said was that if you look at the turnover in the major futures and options markets, and the clearing volume in the London dealer market in gold and silver, you would see that there are 100x times as many ounces trading in those derivatives markets as is produced by mines and refineries every year and used and purchased by fabricators and investors. So that's a 100 to 1 ratio of derivatives to underlying physical new supply. It's not a 100 to 1 ratio of the turnover of the physical market relative to the futures or derivatives market because the physical metal will turnover 5, 6 maybe 8 times in any given year. But you do have a much larger derivatives market in gold and silver than you have a physical market, and that ratio is about 100 to 1."

Jeffrey then proceeds to once again ignore the underlying issue, and highlights other massively diluted ponzi construct markets in which there is a discrepancy between physical and derivatives. "If you look at fishes and loaves of bread, the ratio of derivatives transactions to physical underlying it's 5 to 1; if you look at aluminum or copper it is about 15 to 1." And for the prize: "if you look at currencies or treasury bills or notes, you find that the ratio of derivatives trading to underlying physical is about 100 to 1." Congratulations gold holders - the derivatives market has applied fractional reserve psychology to your holdings, and thrown in a pinch of Exter's pyramid, and made your claims about as valid as those of fiat pieces of paper printed every single day! Of course, just like in corporate CDS (where applying Christian's approach, the ratio of total notional CDS to outstanding debt is about 10 to 1, or a joke compared to the gold market's underlying to outstanding derivative gross notional), when Lehman blew up and a zero recovery on the Lehman bonds was virtually guaranteed (the Lehman CDS auction closed just over 8%), the gross instantaneously became net, and the scramble to cover derivative hedges seemed like it would end the world as the netting merely accelerated the bank run. In other words, Christian once again completely misses the point that should there be a run, and every contract shifts to a net notional position once the credibility of the derivative market is refuted (via counterparty risk or otherwise), you still would have at best a 1% collateral backing of your claim. In other words, the forced conversion of the futures market into physical precipitated by a bank run would result in a 99% loss of what investors had previously considered bookable assets. Christian's conclusion is that this is all fine and good - "the market is much larger than the underlying market, and there shouldn't be anything unusual about that because quite frankly that's how most markets work." Actually, that's how most derivative markets work. And when the asset being "derived" is that which is located at the bottom of Exter's pyramid, the whole premise of its value collapses, as gold only has worth due to the fact that unlike the aforementioned "currencies and treasury securities" it can not be diluted into oblivion by mad Federal Reserve economists, be it by printing presses, nor by speculative derivatives traders.

As for tonight's Jack Handy moment of insight from Jeffrey Christian, he says this brilliant pearl of wisdom: "I've worked at major banks banks and these guys are incredibly conservative, risk averse people. [no, don't fine tune your eyes, you read that right] Banks make their money at the margin. They borrow from so and so [we'll help you Jeffrey, that so and so is called the Federal Reserve] at 75 bps and they lend it out at 85 bps. They've made a tenth of a percent and they are very happy." [for an immediate refutation of this unbelievably naive claim from a so-called expert, see the following speech by the Fed's Brian Sack]. And that's why JPMorgan, would never, never, risk by a naked short in the COMEX, even though with their massive inventory, they are the COMEX. Also, quite amusingly, of the very "conservative, risk averse" big banks that Christian has worked with, his bio lists only Goldman Sachs: truly a paragon of prudent money management and not betting the farm on a taxpayer bailout! It continues: "the banks that have these large positions on the COMEX are not naked short! Those banks' management, their credit departments, the banks that they borrow money from [the Federal Reserve, which as we all know lent out against collateral that was considered "bottom of the barrel"] would never allow them do that. So they are not naked short." And it continues. As a reminder this drivel comes from a person who is self-described as "one of the world’s premier authorities
on commodities derivatives, both for hedging and investment purposes."

Pay attention to the example presented by Christian at 43 minutes in, of the example of Warren Buffett and the Phillip Brothers cornering the silver market via an advance demand of 129 million ounces of silver for physical delivery in 1998. "This was congestion because there wasn't 129 million ounces of silver readily available for delivery to his account in London in the first 3/4 months of 1998... but by June it was there." We ask Mr. Christian, of the total Silver derivatives and physical market in 1998, what fraction of the market was 129 million pounds? And what was the physical to derivative leverage in 1998, and compared to today? And what would happen if just one percent of the total notional in gold derivatives were to demand physical delivery today? Christian's defense then "it was just a matter of the logistics of coming up with the metal." What would the logistics be of all the physical gold available in the world to derivatives having to be delivered. We can't wait for that particular explanation.

Lastly, Christian totally shoots himself in the foot by discussing how banks, because they are regulated by the OCC, will only leverage one's unallocated gold deposits by 12x (in other words will lend out your gold 12 times), as opposed to AIG, which is unregulated, and will leverage 40x. Good thing over the past month nobody has uncovered how both Lehman and all the regulated banks were using every scheme imaginable to leverage well into the 20s, and before Bear, into the 30s. Somehow AIG was the loophole in the regulatory system. You see, there is always just one cockroach... nevermind that Goldman Sachs itself was bankrupt absent taxpayer bailouts.

Seriously, where did world expert come from? Oh yes. Goldman Sachs. Move along.

At least some piece of truth from Christian: "You do see people come in and especially in the New York premarket before Comex opens, they'll come in with a large order if they want to move the price in their favor. And that does happen. It was much more prevalent in the 1990's. We used to always talk about this with our clients. And we used to tell our gold producing clients - Look, these guys come in, and when you look at the gold price you can see if there is a large order that comes in before Comex opens up, you know that a guy is trying to move the price, and it's not a matter of working a hedge."

And despite this, Christian claims "there's no grand conspiracy to move prices up or down on a sustained basis."

For anyone who wishes to lose 10 IQ points permanently and listen to Christian, his section begins at 26 minutes into the show.

h/t James and Hans


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Sat, 04/10/2010 - 23:19 | 295137 hedgeless_horseman
hedgeless_horseman's picture

Where there are firemen with a truck and a hose, there is usually a fire.

Sun, 04/11/2010 - 00:24 | 295190 MarketTruth
MarketTruth's picture

Apologies for hijacking to top spot here.


You can DL the file at

No need to 'live stream' it. For those NOT using the MaxIpad, right click above link and choose Save Target As...

Sat, 04/10/2010 - 23:26 | 295143 Womb Service
Womb Service's picture

I wonder if he'll have an "accident" before he gets a chance to open his mouth again?

Sun, 04/11/2010 - 16:32 | 295659 akak
akak's picture

Rumor has it that he was booked on the Polish delegation Aeroflop flight into Minsk, but had to cancel at the last minute.

Sat, 04/10/2010 - 23:44 | 295155 Cognitive Dissonance
Cognitive Dissonance's picture

"Those banks' management, their credit departments, the banks that they borrow money from would never allow them do that."

I feel better already, knowing that these guys would never be allowed to do that. Of course, if I were to apply any logic, common sense or even critical thinking to this quote, I might need to question this little pearl of wisdom. But since mine is not to question why, mine is just to buy buy buy, I can sleep tight tonight.

Good night Daddy.

PS......"For anyone who wishes to lose 10 IQ points permanently...."

Consider it done Tyler, consider it done.

Sat, 04/10/2010 - 23:59 | 295172 truont
truont's picture

Ironically, gold bug (AKA troglodyte) history will come to regard Jeffrey Christian as the most influential whistleblower on 100:1 paper to metal leverage in our financial markets.

Sun, 04/11/2010 - 16:23 | 295622 akak
akak's picture

I propose that we encourage some (private) mint to produce a commemerative gold coin with the face of Jeffrey Christian on one side and Jon Nadler on the other (and with little Bernake faces scattered throughout), and with a legend on the edge of the coin stating: "Heroes to the Gold Cause!"

Sun, 04/11/2010 - 16:03 | 295636 Al Gorerhythm
Al Gorerhythm's picture

Bedroom scene: Mother and child, 1 minute past midnight, during a raging, Force 10 storm.

"Sleep little one, sleep. It's only you dreaming. Mommy will make it better".

(She raises her hand and sprinkles imaginary pixie dust over the sleepy child's head. That has been their game and it has always placated him.)

"Thanks mommy." the sleepy child mumbles, reassured.

(As windows implode and the roof blows off, the child closes his eyes and sleeps on, trusting that all is well).

Sun, 04/11/2010 - 00:05 | 295174 been there done that
been there done that's picture

I've been listening to Puplava's show for few years now. I heard this earlier today and took some of the same excepions to it. Tyler points out far more than I noticed but I was really scratching my head on this one. Puplava is an inflation guy. He beats you over the head w/ a lot of the same viewpoints over and over (if you care to listen). He has convinced me that oil IS going to be a problem.

Sun, 04/11/2010 - 06:31 | 295292 RatherBFlying
RatherBFlying's picture

Ever since Puplava came back from vacation in August 2009, he's moved from a Prudent Bear to a Total Pump Monkey. He completely missed the run up from the March lows to August, then jumped back in and has been touting the market ever since then. The show peaked in 2009 when they did the Inflation/Deflation debate, but it seems to me the only one who didn't listen to what was said in the debate was Puplava himself.


That said, I'll keep listening to the show because of John Loeffler. If you didn't hear his mock interview with the combination Sheep Herder/Investment Broker last week, you missed a chance to laugh your ass off.

Sun, 04/11/2010 - 15:04 | 295591 SWCroaker
SWCroaker's picture

Puplava makes a point of inviting both types of guests: those that he agrees and disagrees with. He's also stated (and shown) that he is not in the habit of cutting his guests down (ala CNBC shoutfests) and leaves his listeners to think for themselves.  He does, I do, and I find it refreshing.  JP is also a proponent of managed storage over personal possession, and there I take liberty to think my own way as well.  Nobody's perfect, and even if I was listening to *me* hosting the show, I'd probably find bones to pick.


When I first listened to this interview, it dropped my own personal star rating on both the guest and his firm by several stars.

Mon, 04/12/2010 - 00:05 | 295918 akak
akak's picture

Puplava would not have been "cutting down" his guest Jeffrey Christian in any way to merely ask him some obvious and pointed questions as follow-up to some of Christian's more disingenuous and opaque statements.  I think Puplava really dropped the ball on this one, and I was almost dumbfounded listening to the interview to hear some of the outrageous bankster machinations that Christian tried to defend, and the misinformation that he attempted to peddle, with no meaningful response from Puplava whatsoever.

Next time, Jim, throw some hardballs, and stop striking out on every easy pitch that comes your way!

Sun, 04/11/2010 - 00:05 | 295175 Vendetta
Vendetta's picture

When they start calling people names like "troglodytes" we know we are getting on their nerves.  They don't like to explain themselves because they can't with reasonable explanations so they inevitably start sounding like Charlie Brown's teacher.

Sun, 04/11/2010 - 03:32 | 295255 Problem Is
Problem Is's picture

Hilarious Vendetta...

"...sounding like Charlie Brown's teacher."

You mean: "Wah-wah-wah-WAH-wah?"

"When they start calling people names like 'troglodytes'"

The Fallacy of the Ad Hominem  Attack

Notice Jeffery "Peckerhead" Christian (whoops I did it...) did not retort or counter the facts of the dissenter. The dissenter would be the "troglodyte".

"Conspiracy Theory" is the ever popular method of discrediting the dissenter by... not refuting his facts but by the fallacy of the Ad Hominem attack... calling him names to discredit the position or argument the dissenter brings forward. Classic sloganeering by idiot mouthpieces (whoops... did it again) of the oligarchy.

The problem with Myth Narratives like what Cristain is espoucing... is they are logically invalid arguments. So when confronted with facts, counter examples, bitch (damn... did it again) has no facts to stand on or no place to go but..."troglodyte."

Sun, 04/11/2010 - 06:22 | 295290 Hansel
Hansel's picture

Me caveman.  Me like shiny rock.

Sun, 04/11/2010 - 00:09 | 295176 The Person Fami...
The Person Familiar With The Matter's picture

Should have bought after seeing the Friday CNBC viewer poll. But after hearing an "expert" explain it, will be buying GLD and SLV first thing Monday morning.


Sun, 04/11/2010 - 00:16 | 295182 perchprism
perchprism's picture


Dood, before you do that, go to and buy a few oz of gold for personal possession.  Buy a couple hundred Mercury dimes, and Standing Liberty quarters.  Maybe a roll of Silver Eagles.  You can order online tomorrow and pick it up at the Post Office by Friday.



Sun, 04/11/2010 - 00:38 | 295198 truont
Sun, 04/11/2010 - 02:42 | 295246 chumbawamba
chumbawamba's picture

Wait, what!?  The whole idea here is that you cannot trust any counterparties.  And you just have not been doing your reading.  GLD and SLV are not gold and silver: they are paper investment vehicles, nothing more.  You will no more extract any gold or silver from each respective fund that you would blood from a turnip, or the truth from a Goldman Sachs banker.

Physical gold and silver, in your possession.  Hurry.

I am Chumbawamba.

Sun, 04/11/2010 - 13:36 | 295490 Attila
Attila's picture


We were in Kitco the other day and the gal there broke into fits of laughter when she found we were looking for Silver Maples. She said they had some in early March which lasted less than one day.


The Canadian Mint advised they MIGHT have some Maples in July.


Guess there's a surplus of Ag...



Sun, 04/11/2010 - 15:42 | 295614 Real Wealth
Real Wealth's picture
by Attila

"We were in Kitco the other day and the gal there broke into fits of laughter when she found we were looking for Silver Maples. She said they had some in early March which lasted less than one day."

Currently silver is in good supply locally.  However, my last visit there was an 50ish black gentleman buying like $850 worth in cash.  Previously, I'd only encountered other white males hoarding PM.  I was tempted to ask if he was buying with cash (no markup for using credit or check for silver) in fear of the government tracking his purchases for confiscation.

Sun, 04/11/2010 - 16:15 | 295649 cossack55
cossack55's picture

When this cat left did he perhaps get into a large black Chevy Suburban with tinted windows?

Sun, 04/11/2010 - 20:19 | 295783 Carl Marks
Carl Marks's picture

Most likely a Cadillac.

Sun, 04/11/2010 - 00:13 | 295178 cswjr
cswjr's picture

Could this guy possibly be talking about the velocity of gold derivatives (i.e., # of times 1 Toz. worth of gold futures is traded around) vs. the transactions velocity (# of times 1 Toz. changes hands) of physical gold?  Is that ratio anywhere remotely near 100:1?  The guy's idiocy just boggles my mind and I'm searching for a seed of rationality in there somewhere.  Of course, even if this is his meaning he's still WAY off with the 100:1 ratio for currencies and Treasuries.

Sun, 04/11/2010 - 00:19 | 295183 LeBalance
LeBalance's picture

I have figured out Jeff Christian, he is a member of the Yes Men.  As you will recall the Yes Men are an activist group who perform "identity correction" on their corporate target by masquerading as spokespersons for said body.  In the past the Yes Men have spoken on BBC as DOW and apologized for the Bhopal Incident (

Bravo "Mr. Christian!"

Sun, 04/11/2010 - 00:20 | 295185 Bolweevil
Bolweevil's picture

shh! if you listen real close you can almost hear the music.

Sun, 04/11/2010 - 08:43 | 295325 SWRichmond
SWRichmond's picture

I heard the music.

Mr. Christian confirmed that gold in unallocated accounts is lent out in a fractional reserve system.  Unallocated accounts are often called pool accounts.  If you buy gold in a pool account you are actually contributing to phony gold supply and price suppression.  I think from the analysis elsewhere of GLD anyone could find ample reason to be suspicious of their actual physical holdings.  Under these circumstances, the only acceptable way to own gold is to buy physical gold and take possession of it.  Mr. Christian alluded to this in his interview, but the example he used was FRN cash.  He said that cash in a safe deposit box was not counted as an asset of the bank and could not be lent against.  Did everyone else miss this? 

Sun, 04/11/2010 - 21:59 | 295832 akak
akak's picture

"Mr. Christian confirmed that gold in unallocated accounts is lent out in a fractional reserve system.  Unallocated accounts are often called pool accounts.  If you buy gold in a pool account you are actually contributing to phony gold supply and price suppression."


And curiously, it is the very man who is perhaps the most publicly vocal in his anti-gold rantings (and most quoted by the "mainstream" media on gold), Jon Nadler, who was the architect of the precious metals pool accounts peddled both by the Royal Canadian Mint and Kitco, his employer.  No, no possible connection whatsover between that and his rabid and hysterical denunciations of, and innumerable attacks on, the "Radical Goldbug Extremists" (his words) who demand to hold physical gold instead of paper promises.

(roll eyes here)

Sun, 04/11/2010 - 00:20 | 295186 Kina
Kina's picture

Should GLD price drop by a factor of one hundred?

And the price of purchased physical gold price rise?

Or will the investor be scared off gold altogether?

If there is subsquent crash in the gold price is it an opportunity to buy more?


Sun, 04/11/2010 - 00:21 | 295188 Bolweevil
Bolweevil's picture





Sun, 04/11/2010 - 06:13 | 295289 Gordon_Gekko
Gordon_Gekko's picture

If there is subsquent crash in the gold price is it an opportunity to buy more?

A crash in the paper Gold price doesn't necessarily mean physical will be available at that price. Paper Gold and the physical metal are two ENTIRELY different products.

Sun, 04/11/2010 - 07:20 | 295297 ciscokid
ciscokid's picture


Sun, 04/11/2010 - 08:03 | 295309 SWRichmond
SWRichmond's picture

Watching for backwardation.

Sun, 04/11/2010 - 09:49 | 295339 AUD
AUD's picture

Indeed. The gold 'deposit' will trade at a discount to the physical asset. Just as bank deposits have before and will again trade at a discount to physical bank notes.

Fancy that, you pay to store your gold, while the 'depository' lends it at interest. That's good margin!

Sun, 04/11/2010 - 18:34 | 295736 john_connor
john_connor's picture

Exactly.  I think the market wants to call the moral hazard bailout train down to the river right now.  Let's see how congress feels when long bonds jump 500 bps in the next 2 months and physical gold is 2K per ounce.

Sun, 04/11/2010 - 18:44 | 295742 Shameful
Shameful's picture

Whoa there partner!  I'm with you on a meltdown and either a spike in bond yields or the Fed being the only buyer, but 2 months?  Why two months?  I mean more and more fraud is getting pushed out there but most people still have their head in the sand.  It's not like the herd is fully spooked yet.  A jump that dramatic would trigger the end game and I have to think they will do their damnedest to slow it down.

Sun, 04/11/2010 - 22:20 | 295851 Hephasteus
Hephasteus's picture

Last time they paper crashed it. The premiums on coins went up to compensate. LOL That was only a 74 billion dollar paper crash.

Sun, 04/11/2010 - 00:21 | 295189 Stormdancer
Stormdancer's picture

Christian says position limits on commercials will "skew" the pricing of futures...but of course he never explains the process. So, unregulated, naked positions of unlimited size DON'T "skew" pricing? Can't have your cake and eat it too Jeffery.

Of course no mention of COMEX paper hedging LME paper (but it's physical paper!)

No wonder Nadler quotes him.

Sun, 04/11/2010 - 00:40 | 295200 truont
truont's picture

Oh, it's physical paper!  Here I got all worked up over nothing about the 100:1 leverage in metals exchanges...  

Sun, 04/11/2010 - 00:41 | 295201 The Person Fami...
The Person Familiar With The Matter's picture


Sarcasm button was hit like caps lock. I use, they are always 24 over spot on 1oz gold bars. This is 9 to 11 less than, didn't pull up.

Sun, 04/11/2010 - 13:37 | 295491 perchprism
perchprism's picture

I get and mixed up.  Have bought from both.  Haven't tried

I wondered if you were being sarcastic. 

Sun, 04/11/2010 - 01:09 | 295211 carbonmutant
carbonmutant's picture

Trilobytes, Trilobytes? These guys sound like a bunch of dinosaurs

Apple Basil Martinis are really good...

Sun, 04/11/2010 - 03:07 | 295212 chindit13
chindit13's picture

I really understand this fellow and can help explain his methodology, even though Goldman was not one of the firms I worked for in my youth (otherwise, of course I would willingly submit to sterilization so as to eliminate the threat of my seed from the human gene pool).

You see, he informs as well as educates when he says that those "conservative" banks---you know, the ones who brought about the destruction of $40 trillion of asset values worldwide---borrow at 75 pips and loan at 85 pips, for the magical ten point spread that covers SGA, loss reserves and most important:  bonuses. 

Now Jeffrey, in point of fact they borrow at 10 pips and loan out at 2999 pips, for a gang-raping 2989 pip spread, but I am willing to accept that is simply a rounding error as you define such things, kind of like the size and value of the "hedge" your former employer had on its exposure to AIG. 

In any event, that is a valuable window into the manner in which Fletcher's, er....Mr. Christian's mind operates.

Regarding gold derivative trading, he makes a point about the value of traded contracts relative to the actual supply of the underlying physical material, hoping to inform the troglodyte-community-at-large as to how a Once-a-Goldman-Always-a-Goldman mind works. 

Now some of us trogs are foolishly caught up in this "time is linear" thing and believe that open and closed contracts on an underlying asset are totally different from just plain open contracts.  Silly us.  For example, Gordon Gekko and I might have 100 troys of gold between us (I won't tell the truth, GG, your secret stash is safe with me).  I sell it to GG, he sells it to me (pardon the blasphemy!), I sell it to him...maybe fifty times in a day.  At the end of the day a single contract of 100 troys is open, though we have traded 5000 troys worth of real money.  All well and good.  No fractional reserving here, nor velocity.

Mr. Christian reminds us that it is intent that is critical, and that the difference between volume and open interest is really just a nuisance not worth bothering about.  Thus, at the close of a typical Mr. Christian day in Wonderland, while positions representing 1 million contracts might be open, and physical supply might only equal ten thousand contracts, if the intent of one of the contract sides is to close the position and not worry about physical delivery---or even sell a million more contracts so as to run troglodyte stops---then the difference is merely a combination of rounding error and a way in which the Einsteinian Time-Space Continuum is more fully exploited for fun and profit.

If all of that is just too complicated for a troglodyte mind infused with too many deep Earth gases from all the mining activity, just take comfort in this:  it's technical.

Sun, 04/11/2010 - 05:27 | 295277 Sig
Sig's picture


Sun, 04/11/2010 - 06:54 | 295295 JmBob
JmBob's picture



A small, but vital, point;  the banks didn't destroy $40Trn of asset value, they just returned the value of those assets to something more nearly approaching their 'true' value - having previously allowed their apparent value to increase exponentialy in the first place.


This is a 'good thing'.

Sun, 04/11/2010 - 15:44 | 295625 truont
truont's picture

Yes, that is why I just don't get the 100:1 paper to metal leverage. 

It is just too technical for my trog brain to grasp.

Good thing we have these Goldman savants to help guide the less fortunate masses like we--the useless eaters that we are!

Sun, 04/11/2010 - 18:32 | 295733 Oracle of Kypseli
Oracle of Kypseli's picture

The collective total IQ is constant. it's just that the population is growing.


Sun, 04/11/2010 - 01:28 | 295214 hamurobby
hamurobby's picture

If I were GS, I would probably pick a more smooth talking guy to be in this guys shoes. What he is saying is true and fine about the 100 to 1 ratio of longs and shorts, to actual deliveries, but let there suddenly be a large increase in contracts for delivery. I read somewhere that there has been a substantial draw down of gold and silver available for delivery. Now, that does not mean the world is out of gold and silver, it just means it will take some time to get deliverable metal. If there is a real panic, such as a CONfidence failure in fiat, be glad you own gold in your hands on that day. Let them keep holding price down, I keep adding to what I have. One day very soon, we wont mind cause it wont matter.

Sun, 04/11/2010 - 01:24 | 295222 three chord sloth
three chord sloth's picture

I've got a question...

Do any of these derivatives have an actual claim to physical gold? Or is this like a very high risk financial version of fantasy football, where a hundred leagues can offer a hundred Peyton Mannings on a hundred draft days, but none of those leagues have any claim to the real Peyton Manning?

To put it another way, does it matter if there is a hundred bets per ounce of gold if those bets have no legal standing to take possession of the original ounce?

Sun, 04/11/2010 - 10:23 | 295354 MsCreant
MsCreant's picture

Looks to me the answer is no, technically they do not have an actual claim to physical. It seems to me the bet is not gold and that is what is at issue. It is acting like it is existing gold on the price. A seeming unit of supply, when it is not a unit, but a bet. They trade it as if the bet is gold in existence.

It matters. BIG TIME. When I want gold, I don't want to be given a $ instead. If I want oil, I don't want a $ instead. If I were in an ETF, I'd only be there, understanding I was trying to out ponzi a ponzi scam. Move in, make my profit, get out. I don't have the time or stomach for it. I'll keep my physical, thanks.

Sun, 04/11/2010 - 20:45 | 295797 Absinthe Minded
Absinthe Minded's picture

Ah yes, the wonderful clink of physical, paper crinkling just doesn't have the same affect.

Sun, 04/11/2010 - 02:16 | 295237 MrPalladium
MrPalladium's picture

"because the physical metal will turnover 5, 6 maybe 8 times in any given year."


Is he talking about physical "turning over" due to sale of depository reciepts or paper claims??

Is he suggesting that us physical buyers buy and sell our gold, shipping it to another owner 5, 6 or maybe 8 times a year??

The question is how often physical gold moves from one location to another. If that is what Jeffery Christian is referring to then he is a lying sack of shit.

The real number is more like once in every 5, 6 or maybe 8 years!!

Sun, 04/11/2010 - 02:29 | 295240 Gold...Bitches
Gold...Bitches's picture

The real number is more like once in every 5, 6 or maybe 8 years!!

its likely to just all be ledger entry changes without the physical actually moving.

Sun, 04/11/2010 - 02:41 | 295245 MrPalladium
MrPalladium's picture

Yes, and it seems that Mr. Christian relies upon new mine supply to rescue the exchanges from unusually heavy delivery demands, taking perhaps 6 or 8 months to accumulate supply on the assumption that price will not rise in the interim. But if jewelery demand and fabrication demand for retail bullion buyers claims the lions' share of annual new mine supply (as it typically does), then the exchanges could easily go bankrupt.

Once gold is around a womans neck or in her husband's vault as bullion, it is extremely sticky.

Sun, 04/11/2010 - 12:02 | 295361 MsCreant
MsCreant's picture

Hey Doll,

The her gold could be around his ankle, attached to a golden chain leash, or in her vault. Just sayin.'

Sun, 04/11/2010 - 16:24 | 295653 Al Gorerhythm
Al Gorerhythm's picture

Oh, for fuck sake! Just sayin'.

Sun, 04/11/2010 - 18:24 | 295727 MsCreant
MsCreant's picture

Absolutely for fuck's sake! 

Sun, 04/11/2010 - 13:01 | 295459 Guy Fawkes
Guy Fawkes's picture

Actually Christian admits in the interview that gold is not available for delivery when someone wants to close a futures contract. He goes on to say something like "its not available in refined form". Which to me says they are selling gold in the ground like it actually exists, and ready for delivery!

This is naked BS gold. If you dont have it available for delivery because it hasn't been refined yet ... you are naked! There are cost associated to getting product to the market and derivative fractional reserve Au does not take this into account.

When asked about swaps he never mentioned Central Bank Swaps which has been one of the crux of GATA lawsuits.

Mon, 04/12/2010 - 16:21 | 296955 Strider52
Strider52's picture

OK, let's say I own 50 ounces of physical gold. Does that mean I can leverage it 100:1 and say that I own enough phiz to start my own ETF? Hey, I've got 5000 ounces of the real shit, that should be leverage 100:1 again and now I've got 1/2 million ounces....Just believe me, as audits are strictly verboten. Besides, my custodians and his subcustodians take care of that - it's in the prospectus. Did you *read* the prospectus???Everything is clearly stated, for God's sake, now buy my ETF and shut the F up.

Sun, 04/11/2010 - 05:27 | 295276 Sig
Sig's picture

Wrong spot

Sun, 04/11/2010 - 06:11 | 295288 Gordon_Gekko
Gordon_Gekko's picture

OMFG, some of these MORON bankster minions (ala Mr. Christian) actually ARE clueless! Loving it! Can't wait for the day when it all falls apart...

Sun, 04/11/2010 - 22:23 | 295852 Hephasteus
Hephasteus's picture

Mister Chrisitian!!!! There will be no mutiny on this bounty. LOL

Sun, 04/11/2010 - 07:00 | 295296 Popo
Popo's picture

Just to play devil's advocate.   If everyone took delivery... at some point (very early on in this exercise) there would be no gold for delivery.

The conventional (and probably accurate belief) is that the street price would skyrocket.

But what else could happen?

You could merely be informed that there was a "delay" and that you would not be able to take delivery "at this time".  During this period, paper gold contracts would continue to be bought and sold -- irrespective of the reality that there was little available gold to sell.   (This in fact, is not dissimilar to the current situation)

My question is:  As obvious and flawed as the gold ponzi is -- is it possible to play this game in perpetuity?

There is a constant new supply of gold (albeit limited by mining production), and there are seemingly an infinite number of new gold buyers willing to take paper.  Isn't that a recipe for a continuation of the status quo in gold prices?

Correct me if I'm wrong, but what is necessary for the ponzi to collapse is not *just* the demand for delivery -- but a collapse in demand for paper gold derivatives (the demand for which permits ponzi like ratios to be maintained).   Or am I missing something here.






Sun, 04/11/2010 - 10:33 | 295363 Sabremesh
Sabremesh's picture

I am fairly sure that the excuse of "delivery delays" would soon be revealed for what it is - a euphemism for default. Smarter investors will decide it is in their best interest to cash in their GLD shares before everyone else does and drives the price down. This will trigger off panic selling and the end of GLD.

As has been mentioned already, however, the forces of darkness will most likely push the price of GLD up to a premium over spot when this price collapse looks inevitable, in order to wipe out an army of shorts who think they can't lose. Then the collapse will happen.

Edit: There was some shill on another thread yesterday who was pumping GLD like crazy and taunting (or do I mean begging) people who disagreed to buy puts. I wonder why?

Sun, 04/11/2010 - 10:40 | 295374 MsCreant
MsCreant's picture

I am just thinking out loud. Please correct me where I am wrong.

If you are right, there should be big dips and stabilizations in the price of gold (where the paper still influences the physical price) before the moon shot. There would be a period of disorganization and confusion where the paper price goes down, panics the weak hands who divest of their physical, driving the price down more, then some of the short sum bitches will start buying it to cover what they can't deliver, then deliveries get made, things calm down, wash rinse repeat for a while? Volatility?

Is there something I don't see?

Sun, 04/11/2010 - 13:24 | 295483 Pure Evil
Pure Evil's picture

"the forces of darkness will most likely push the price of GLD up to a premium over spot when this price collapse looks inevitable"

It makes you wonder if that assumption has not already happened.

The "GLD shill" you spoke of mentioned yesterday that Soros and the BoC have increased their holdings of GLD. With Soros increasing his holdings by 157%. This was confirmed for me today when I was perusing MISH' website.

Sun, 04/11/2010 - 12:09 | 295419 Gold...Bitches
Gold...Bitches's picture

Not correct.  Were the physical not to be delivered and the paper continuing to trade a black market would arise.  You can always buy it, just not always at the price of the paper traded product.

Sun, 04/11/2010 - 07:22 | 295298 h4rdware
h4rdware's picture

I heard this guy a few times on FSN and wondered if he knew what he was talking about. Didn't strike me as particularly threatening, other than not seeming to have all that much of a clue about market drivers. Lacks a grain of cynicism which is a red flag for me. CPM never quite managed to make sensible gold price predictions either. They were always considerably short of the mark.

Worse, I think they may be influencing some of the larger miners, who themselves can make Jeff here look like a gold expert.


Sun, 04/11/2010 - 08:38 | 295324 lewy14
lewy14's picture

OK, ge(l)danken experiment:

One fine month a futures contract opens up, and every single summbitch who goes long intends to take delivery. And tells nobody.

Now the JPMs of the world who maintain concentrated short positions roll into them as usual.

So you have big concentrated shorts (indending to roll - that is intending to purchace offsetting longs near expiry and rolling their shorts into the next month) - and every single long offsetting those shorts actually intends to take delivery.

So what happens as expiry approaches?

The shorts try to offset and find there are no offers. None.

And they will panic, and there will be a short squeeze, and the (paper futures derivitave) price will go up up up - think VW short squeeze on the DAX last year. The collateral post that the exchages require will be insane.

Then what happens? Not sure, but I have a feeling the tail will start to wag the dog - the physical spot may converge on the futures instead of the other way round. If the price goes to 2-3-5K, maybe central banks will step in and buy out the short positions, figuring things will "calm down" and that selling gold at say 5K is an awesome deal.

Or something else will happen.

But I submit any realisting doomsday trade will have to game out the "limit scenario" where everyone wants delivery; it's not at all clear how/why/where exactly things would break.

At least I haven't read one here; just alot of conflation of options leverage with "fractional reserve banking" and "ponzi" which really seem like different beasts.

Sun, 04/11/2010 - 10:18 | 295349 fasTTcar
fasTTcar's picture

I truly believe some watered down version of what you detail will happen..

The outcome will be much less than satisfying though, as we will probably re-live a rule change ala Hunt Brothers.

And it also has a better chance of happening in the silver market than gold.



Sun, 04/11/2010 - 16:53 | 295675 LeBalance
LeBalance's picture

the response to that was outlined by J. Christian in CFTC hearings previously. He indicated that such a shortfall was not an issue as it would be taken care of with payment in cash.

Sun, 04/11/2010 - 20:39 | 295794 lewy14
lewy14's picture

Thanks - and I do recall JC (heh) saying that.

I think the cash would be on offer. Where in the contracts does it say that cash _must_ be accepted in lieu of delivery? Financial types whose end product is monthly statements mailed to clients would accept the cash, but what if everyone fought for delivery? Perhaps it would be futile.

And what effect would this have on the physical price?

I speculated above that it would rise to meet the futures... but if everyone _knew_ that the longs could simply be crammed down with cash, then maybe there would be little reaction at all.

It would be worth some amount of hassle for JPM et al to close out and roll the shorts; the (futures) price would go up _some_... but if they knew they could cram folks who seek delivery, maybe the futures price wouldn't spike at all.

And if the spot gold market knew there was no real delivery crunch - again, because everyone _knew_ the long futures would only get cash - then maybe that market wouldn't react either.

So you'd have the weird phenomenon of a futures market decoupling from the underlier without diverging in price - a fire without (much) smoke.

Is this already happening?

Again, I don't put this up because I think I know something, but precisely because I don't; I just think it's instructive to step through the scenarios carefully and without bias.

A decoupled Comex would be the worst of both worlds; no real possibility of taking other than token physical delivery, and no guaranteed convergence at any real spot market.

A "cash settled only" exchange can work OK (like SPX or ICE - where you're on your own for the arbitrage, but are guaranteed the expiry price will reflect the spot of the underlier).

Last year NYMEX WTI broke in the opposite direction from the scenario I outlined above - no credible ability to accept storage; no coupling with actual spot price, and (therefore) a downward spike when the "whale" (structural long position from USO) tried to roll every month. Maybe that's the model (in reverse).

Sun, 04/11/2010 - 09:47 | 295338 Madcow
Madcow's picture

But i thought gold was NOT money - ?

Do the principles of fractional reserve banking apply or do they not apply ??


Would anyone buy a 'derivative' ownership position in my Topps Nolan Ryan rookie card?

Sun, 04/11/2010 - 13:27 | 295487 Pure Evil
Pure Evil's picture

I'm pretty sure that if you approached Goldman Scrotum Sachs with that little ponzi scheme of yours you might actually be able to make it fly.

Sun, 04/11/2010 - 09:57 | 295343 TooBearish
TooBearish's picture

Who is Jeffery Christian and why should anyone care?

Sun, 04/11/2010 - 10:12 | 295348 Johnny Dangereaux
Johnny Dangereaux's picture

"This means for every 100 ounces of paper gold that trade, there could be as little as 1 ounce of physical gold in the vaults backing it."
  It not really how much trades......

For example, last Friday the volume in CBOT Soybeans was
194,633 contracts(all months). A contract is for 5,000 Bushels.
That's  973,165,000 Bu. in one day.
The Soy crop is 3 Billion bushels- A YEAR!
I would say most markets are manipulated in one way shape or form....
The problem is not how much trades in relation to the's how much physical is PLEDGED.....the best place to start would be Fort Knox, don't you think? Let's get our hoop-shootin' prez to take us for a tour of our Nation's Gold....Why doesn't ZH start a "Show me the Money" campaign to get a tour of the place?

For now get your buddies together, buy a Comex contract and
STAND FOR DELIVERY.   My friend  tried to poo-poo the idea of taking delivery of a 1000 oz silver contract.   He complained about assay cost etc. when you take it out of the vault.   I said 'screw it' --if this thing blows, assay cost will be a pittance....

Now that would make a good story!! 

Sun, 04/11/2010 - 10:38 | 295371 Sudden Debt
Sudden Debt's picture

Once the derivatives blow, the real stuff will also become worthless.

The only way to defuse this timebomb is by cutting the right wires. Needless to say there are billions of wires and they all have the same colour.

Feeling lucky anyone? :)

Sun, 04/11/2010 - 10:43 | 295376 MsCreant
MsCreant's picture

Once the derivatives blow, the real stuff will also become worthless.

I sort of agree (see above) but also see it as a "phase" of things. Why do you say worthless, period?

Sun, 04/11/2010 - 11:28 | 295399 MrPalladium
MrPalladium's picture

Hey babe! It all depends upon what else is happening when the gold derivatives blow up. If it is Zimbabwe Ben driving inflation up past 15% per annum on its way to infinity, the demand for physical will continue and its price in fiat will climb unabated. On the other hand if it is nuclear war, then indeed it will be difficult for the scattered survivors to exchange their physical gold for safe water and food for anything like the pre-conflagration price.

Just sayin!! :-)


Sun, 04/11/2010 - 11:54 | 295412 MsCreant
MsCreant's picture

Hey Mister!

So what I am hearing from you is that there are "dimensions" of failure to consider.

1. Failure of faith in fiat.

2. Failure of faith in deliverable physical gold.

3. Failure in the system of distribution of goods.

4. Failure of the political system.

5. Failure of the ecosystem. 

What I was trying to get someone to think through with me is what the beginning of the gold endgame is going to look like if/when it is on. Up above, I proposed the idea that the paper price of gold will go down, and at first, drag the physical price with it, because folks won't know that it is fake undeliverable gold paper that is crashing. When they see the price go down, some weak handed holders of gold will panic and sell. That will make some of the paper shorties be able to pick up gold at a good price and start delivering. That will stabilize gold at a lower price for a bit. Then more shorts, more panices, wash rinse, repeat. As a gold bug, I am wondering if we are going to see a series of price crashes, before the moon shot. But... as you point out, the derivatives failure does not occur in a vacuum. Different folks buy gold for different reasons or more than one reason. If there is obvious inflation in the air when they blow, I am wrong.

I know no one can know for sure... 

Just thinking out loud on a blog... 

Sun, 04/11/2010 - 13:20 | 295480 Madcow
Madcow's picture

Gold would have little value in a world in which nobody has any money.

What will be valuable are things that enable grid independence, meaning "income" independence. 

Think paid-up farmland with a water well, food production equipment, the ability to make tyour own clothes, etc.  So, basically, the future belongs to those who have most steadfastly resisted innovation and global trade. 

Maybe the Amish will take us in.



Sun, 04/11/2010 - 14:05 | 295517 Shameful
Shameful's picture

No one in the USA owns farmland, or any land.  We are a nation of renters.  If you don't believe me see what happens to people who don't pay property tax.  If you don't pay they take the land, sounds like rent to me.  Seems to me in the last great depression the bank recovered a lot of land.  Think the state will pick up a lot because of taxes this time.

Sun, 04/11/2010 - 15:27 | 295607 Hulk
Hulk's picture

As I have stated before, I originally got into gold to pay the taxes on our farmland and houses, which we own outright

Otherwise, as you have stated and history has shown, we would be out on our ass in a financial collapse.

Sun, 04/11/2010 - 18:27 | 295729 MsCreant
MsCreant's picture

We really do need a representative government, don't we? No way to get your head above water. We are letting this happen to us.

Sun, 04/11/2010 - 19:02 | 295749 Hulk
Hulk's picture

They are and have been thieves, taking and squandering what is not theirs. Quite burdensome

Sun, 04/11/2010 - 15:01 | 295583 dumpster
dumpster's picture

well i will give it a shot .. gold will be the foundation.. to buy the farm , to buy the bread..

it is money .

the inscrutable make believe world of those who make up reality in the back yard swimming pool of spit lol

take a good Austrian text book get caught up on mises .

every where one turns comedians trained in the best university of Keynesian folly.

the background of the spewers of nonsense is hidden in pizza delivery and on the foundation of sand


Sun, 04/11/2010 - 15:42 | 295624 Amish Hacker
Amish Hacker's picture

Sure, come on in! There's always room for another mad cow in my barn.

Independence, in the sense of "self-sufficiency," is always a good thing, but each of us is self-sufficient in different areas, and we're never 100% self-sufficient in every area. The guy who can repair a generator probably can't do a root canal---at least, not on himself. And that's where money comes in. Money enables the exchange of expertise (i.e. energy), so that the dentist can get his generator fixed and the mechanic can put an end to his toothache. In a MadMax future, "in which no one has any money," we will very quickly find something that will serve as money, so that we can conveniently exchange energy with each other. For the past several thousand years, that "something" has been gold. 

Sun, 04/11/2010 - 14:11 | 295527 Attila
Attila's picture


There has never been a Gold "end game"

Gold is forever...



Sun, 04/11/2010 - 18:28 | 295731 MsCreant
MsCreant's picture

And there it is. I stand corrected.

Sun, 04/11/2010 - 14:06 | 295520 A_MacLaren
A_MacLaren's picture

I disagree.  When the derivatives blow, what will be demanded is physical.

Derivatives are the digital embodiment of fractional reserve Ponzi markets.

You cannot make a loaf of bread (or thousands) with a digital wheat contract, anymore than a digital gasoline contract can be poured into the tank of your vehicle to take you from points A to B to C to ...

The digital financial revolution ends when faith and trust in the digital record keeping and digital dollars die.

The digital run on the bank following Lehman being taken down proved the sanctity of physical.

Short term price volatility aside, physical is what matters.

Sun, 04/11/2010 - 10:42 | 295375 Internet Tough Guy
Internet Tough Guy's picture

Christian is a disaster; he keeps confirming the accusations of his critics and providing more details of the ponzi. JPM should arrange a car accident for this guy, he is a loose cannon.

Sun, 04/11/2010 - 10:46 | 295379 Mae Kadoodie
Mae Kadoodie's picture

I attended an investor conference in NYC back in February sponsored by these guys,  One of the speakers was this little fellow, Jeffrey Christian and honestly if I knew then what I knew now I would have had some pointed questions for him.  He seemed very bright and not malicious but it would have been a great opportunity to put him on the spot.  oh well.


Sun, 04/11/2010 - 11:14 | 295390 williambanzai7
williambanzai7's picture

TROGs of the world unite!

Sun, 04/11/2010 - 11:23 | 295393 xPat
xPat's picture

Ignorance is an amazing thing.

Jeff Christian gets it. Jim Puplava gets it. Tyler durden doesn't. GATA never did. It's really that simple folks, but if you prefer to stay immersed in your conspiracy theories, that's your trip. Enjoy...



Sun, 04/11/2010 - 12:06 | 295415 MrPalladium
MrPalladium's picture

Oh, I get it too!

Because speculative paper trading in perishables like corn and wheat represents hundreds or thousands of times the physical supply, and there has never been a successful short squeeze that busted the exchanges, stability of the derivative system will continue in perpetuity for all physical commodities.

Of course, the demand for corn and wheat is limited by the caloric intake needs of the planet's animal and human consumers.

Gold is a bit different. We all remember what happened to Bunker Hunt when he threatened the solvency of the shorts in the silver markets. The shriveled little wizzards who control the NYMEX simply changed the rules and forbid delivery.

What you and Jeffery Christian argue, sub silentio, is that we bumpkins fail to recognize the power of the mailed fist enforcing the derivative scheme.

But our insistence on taking physical delivery is a very precise recognition of the mailed fist of raw power and its inherently fraudulent, heads we win, tails you lose derivative exchange scheme.

And what if some hopelessly indebted nation repudiates its external debt and then adopts a gold backed currency, forswearing future imprudent borrowing, protecting the value of currency denominated savings, and drawing in huge amounts savings from other nations while continuously taking delivery of additional gold to back those savings inflows? That would be a perfectly rational solution in a regime change brought about by a debt crisis.

Forbearance by the 180 plus separate nations of this World from taking such a step depends on the continued delivery of benefits from having a dollar based reserve currency based on increasing debt. Thus, your wisdom is basically dependent upon the uniformity of opinion in 180 fractious and potentially desperate debtors, any one of which can essentially blow up the inverse pyramid of derivatives precariously balanced atop a tiny deposit of physical gold.

Sun, 04/11/2010 - 13:50 | 295508 Pure Evil
Pure Evil's picture

"The shriveled little wizzards who control the NYMEX simply changed the rules and forbid delivery"

Finally someone had to say it. If this thing goes nuclear as in Chernobyl then no one gets delivery. There is no way in hell that any of that physical metal is leaving those vaults in this day and age, either by delivery or ledger accounting tricks.

The government will step in and state that national security is at stake and protect the custodians that hold the gold/silver. Either through nationalization or some other means of legislative fiat.

It ain't leaving those vaults folks, if it were, then what would stop some foriegn government from perpetuating the very same delivery demands as delineated in the above comments.

If you want to play the game and demand delivery then you will/may be forced to wait until your gold/silver becomes available on the spot market.

But, the way the rules are written for GLD, only the truly big boyz can take delivery, for the average joe the whole thing is a ponzi scheme.

You hand over FRN's with the hope of making a significant monetary gain while the major shareholders are betting against you that you will not sell your shares in time before taking a haircut.

And, just like a casino they put up with a few small time winners knowing that the rest of the rubes are their to lose their shirts.

Sun, 04/11/2010 - 14:21 | 295539 RockyRacoon
RockyRacoon's picture

Looks like xPat dropped in for a while, dropped his little turd in the punchbowl, and then fled the scene.  So much for a constructive discussion.  Closed minds are cluttering up the place.

Sun, 04/11/2010 - 13:40 | 295497 Segestan
Segestan's picture

<<<but if you prefer to stay immersed in your conspiracy theories, that's your trip. Enjoy...>>>


 Thanks... I'll enjoy my trip , so how has you're trip been?

Sun, 04/11/2010 - 14:49 | 295576 akak
akak's picture

"Jeff Christian gets it. Jim Puplava gets it. Tyler durden doesn't. GATA never did. It's really that simple folks, but if you prefer to stay immersed in your conspiracy theories, that's your trip."


X-Pat, I laugh in your smug and servile face for peddling the greatest conspiracy theory of all: that there ARE no conspiracies --- nor corruption among the power elite.

Now back to your regularly-scheduled shilling for the financial establishment, Nadler.

Sun, 04/11/2010 - 15:08 | 295597 dumpster
dumpster's picture

ignorance comes in many packages ... some wrapped in folly. some wrapped in ignore the evidence .  some still getting around to playing little league baseball.  strutting  adjusting belt , kicking dirt . and then swinging  for an attempt to provide commentary . strikes out.

and your credentials for knowing besides a quick read of mad magazine.  and a put down of those who spend years studying the problem  


Sun, 04/11/2010 - 15:57 | 295635 Womb Service
Womb Service's picture

Not a theory. Proven fact. Try to keep up.

Mon, 04/12/2010 - 08:52 | 295666 Al Gorerhythm
Al Gorerhythm's picture

Hey Xpat,

Can you please elaborate what "It" is and in you answer describe in layman's terms, if "it" in any way, contributed to the global solvency crisis and can "it" be fixed, using "it' to fix "it"?

Just askin'.

Sun, 04/11/2010 - 11:26 | 295396 glenlloyd
glenlloyd's picture

It's comincal that he fails to grasp the reality of the situation he presents. The fact that he discusses quite frankly and suggests it is legitimate that gold itself has or rather should continue to be treated as having the same characteristics as paper currencies or any other investment is absurd. This guy is a fool.

What's worse though is that those characteristics of gold that make it unique, that people should use to evaluate the worth of the derivative products are totally ignored by the CFTC.

I think one would be better off investing in manure rather than GLD, certainly those are more alike than they aren't, and certainly more alike than GLD is to gold.

Sun, 04/11/2010 - 12:15 | 295423 Gold...Bitches
Gold...Bitches's picture

at least something would grow from the manure.  GLD just stinks.

Sun, 04/11/2010 - 14:21 | 295537 Pure Evil
Pure Evil's picture

The way to prove your point would be to have something like a Pepsi challenge.

Sit people down at a table with one ounce of gold/silver and the equivalent number of fiat paper shares in GLD in front of the them and ask them to choose.

My guess is that like in the Clorox commercial where people are asked to choose the whitest sock, only an idiot would choose the fiat paper shares.

But, no matter how much money people lose in the casino's of Las Vegas and Atlantic City, the rubes just keep knocking down the door to get in and lose more money.

Sun, 04/11/2010 - 15:34 | 295615 Hulk
Hulk's picture

Here is your Pepsi challenge


Sun, 04/11/2010 - 16:12 | 295647 Burnbright
Burnbright's picture

Holy crap I didn't realize people were that clueless.

Sun, 04/11/2010 - 17:12 | 295687 Hulk
Hulk's picture

Thats what we are dealing with!

Sun, 04/11/2010 - 11:29 | 295401 SilverIsKing
SilverIsKing's picture

From today's NY Post:

When the mainstream media jumps on board the metals manipulation stories, the fuse will have been lit.

Sun, 04/11/2010 - 11:32 | 295403 Stuart
Stuart's picture

Look, Christian is dancing here.  Christian clearly upset some people with his CFTC comments and is trying to distance himself from them. In the process of doing so, he's now making himself out as an apologist for the fraud, incredibly naive and just an outright patsy.   Puplava is usually pretty good in his interviews but in this case he let Christian off the hook way too many times with very obvious points of contention as pointed out by ZeroHedge.   Ya, I know Jim, your game is to let your guest speak to get their points out, but that doesn't let you off from asking difficult questions.  Shame on you Jim.  

Sun, 04/11/2010 - 12:16 | 295426 RAFE
RAFE's picture

> Christian clearly upset some people with his CFTC comments and is trying to distance himself from them. <

Yeah, and the more he says the deeper he sinks.

I have been reading ZH, off and on, for awhile, but only decided to sign on because I was so impressed by the way Tyler picked up on this PM price suppression whistle-blower story  that almost everybody else (including Taibbi) was too cowardly to acknowledge.

I hold as much in old, circulated 90% silver coins as I can afford to keep tied up. I expect that, someday, I (or my heirs) will be able to buy things with them that people wont want to sell for fiat. I like old dimes because I expect silver to be worth so much that spending an EAGLE will be like using 500 Euro bills for a cup of coffee ... you will have to take too much garbage fiat in 'change'. ALSO, the small denomination, circulated (worn) coins are self-authenticating, whereas who will know if a 'round' or small bar is genuine once they become so valuable.

As for gold, I have started selling my Philharmonics when the gold price is high (as last December) and reinvesting in silver when the price is at or below the 200 dma. This also works out to an arbitrage of the gold:silver ratio, which I expect to mean-revert eventually.


Sun, 04/11/2010 - 12:19 | 295428 Kina
Kina's picture

If the GLD ETF blows up I wonder how it would.

Soros has 6.2m shares of GLD so it is hard to see investors being scared off if he is still in, along with any other major holders.

Soros for one would have a vested interest in ensuring confidence in GLD with his skin in the game. A plunge in price would hurt his $700m.

So I would imagine something coming out reassuring everybody of the physical support held for ETFs at least. Like a big player buying another million GLD shares for instance.

I could only see the ETFs blow in a crisis when everybody is ready to sell off gold at peak prices, which for ETFs would simulate a run on gold.


Sun, 04/11/2010 - 14:39 | 295530 Pure Evil
Pure Evil's picture

What you fail to realize is that Soros is not in GLD to ensure its confidence. Like a casino player he is betting that something will happen to increase the share price of GLD. When that happens he will take his profits.

But, what will happen to the uninitiated average investor that is beguiled into thinking that just because Soros put his money in GLD, then GLD would make a good investment for his money.

When that day comes will the average joe have his stops in? Or will the market blow right through his stops. Or will he be too late and left holding the bag for the big boyz.

Currently Soros is betting that the UK will have to devalue the Pound. Soros is part of the cabal from Wall Street. The cabal of Wall Street are like a school of rapacious piranha waiting for ever newer victims to fall into the their clutches so that they can shred them to pieces.

I'm not an expert, but I can't even imagine Soros doing anything in the best interest of the greater good. He likes socialism because he has figured out a way to make the system work for him, as in, redistributing your wealth to his bank accounts. And, if the UK is forced to devalue the Pound due financial profligacy on the part of the Labour government, then so much the better for him and fuck all the taxpayers that have to take the hit in the wallet.

Everything being perpetrated in the financial realm is just a smokescreen so the Wall Street Gordon Gekko's can make a killing and collect big bonuses. Whether its bailouts or soveriegn defaults, some master criminal somewhere is making out like a bandit, and Soros is one of those someones.

GLD is just a speculative tool and was never meant to be a vehicle to take delivery of physical metal. That language is only put in to mislead the rubes. And, if you read the prospectus you can see the Byzantine layers of devilish details to inhibit this very act.

The big boyz, largest shareholders, have no interest in taking physical delivery either. They are only interested in taking advantage, as many commenters have pointed out earlier, of the ability to drive up the share price through futures and options, and taking gains around expirary.

And this is the major point a lot of commentors are trying to make, if you are interested in investing in gold, physical possession is 9/10ths of the law. The other 1/10th is to back it up with rhetoric through high caliber arguments.

Sun, 04/11/2010 - 14:17 | 295535 Stormdancer
Stormdancer's picture

I'm quite sure that Soros would have whatever connections to "authorized dealers" are necessary to take delivery of any real metal the ETF has accrued and run with it. It's a wonderful vehicle for concentrating real gold in one place to make the ultimate theft of it much less complicated.

Sun, 04/11/2010 - 15:07 | 295585 Pure Evil
Pure Evil's picture

That may be true, but then what's the point?

GLD is not set up so that the big players can take physical delivery. Much less, they don't even want to take delivery.

That's why GLD is setup as a trust. The GLD trust does not want responsibility for the physical and that is why they have contractural walls between the trust and the custodians. So that way if any of the custodians default the trust is not on the hook for the physical.

GLD is in essence like HFT or sub-pennying. Now who's to say that Soros is not the actual owner of the some of the gold and is a custodian of some of that physical metal. Let's say that he is a custodian to GLD the 'trust'. And GLD leases his custodial gold through derivatives, options and futures contracts, and then Soro's purchases a signficant number of shares of GLD along with Paulson. Now why would Soros or Paulson want to take physical delivery of their own gold?

The mind boggles at the amount of futures contracts, as specified earlier by another commenter, and options that can be traded between Soros and Paulson.

And it makes you wonder if the BoC isn't getting in on the game by providing their own gold to be leased to GLD, 'the trust', knowing full well that their physical gold will not be delivered.

Now the average investor that thinks they can invest in GLD and make a killing is only giving Soros and Paulson the money they need to write even more futures and options.

I'm not an expert on this but this has got to be going on under the surface. You'll never find out if it's actually Soros or Paulson that own the physical gold as custodians because they hide behind corporate shells like Enron did.

They own the most shares in order to control the game and derive the most benefit.

Other than that, what is the real purpose of GLD, especially when you can own your own physical metal.

If it was illegal to own gold and silver then GLD/SLV might make sense but only in a speculative frame of mind.

If you want to speculate on the price of gold and silver then GLD and SLV are the perfect vehicles for this type of gambling, er, investing. Just don't be surprised to wake up one day and find out that you can't take delivery on any physical metal.

Sat, 06/04/2011 - 16:57 | 295458 asotavb
asotavb's picture

i dont know......

Sun, 04/11/2010 - 13:50 | 295509 Madcow
Madcow's picture

Across the globe, people are being encouraged to sell their gold - "quickly, while prices are still at an all time high."  Its fun, its fast, its easy! So turn in that old, broken and nasty old unwanted gold - that's just sitting around collecting dust into cold hard cash you can actually use !! Here's a small selection for your viewing pleasure:


Sun, 04/11/2010 - 14:44 | 295572 Misthos
Misthos's picture

I wouldn't say across the globe.  In China, the World Gold Council partnered with the ICBC at the request of the Chinese gov't to encourage it's citizens to *buy* gold as an investment.

So what's going on in the US and UK?  The masses are asked to get rid of their "useless, unwanted gold."  I wonder if the masses were fleeced before in the past....  dot com, real estate, etc... see a pattern?

Yup, gold's in a bubble all right... lol....



Sun, 04/11/2010 - 15:36 | 295589 CombustibleAssets
CombustibleAssets's picture

When people holding paper gold discover they can't convert they will try to sell, en mass.

 Holders of PMs may not be pleased with the results.

Sun, 04/11/2010 - 15:16 | 295599 akak
akak's picture

"I've worked at major banks banks and these guys are incredibly conservative, risk averse people. Banks make their money at the margin. They borrow from so and so at 75 bps and they lend it out at 85 bps. They've made a tenth of a percent and they are very happy."  And that's why JPMorgan, would never, never, risk by a naked short in the COMEX, even though with their massive inventory, they are the COMEX."


In the face of this incredibly disingenuous and intellectually insulting defense of the massively and demonstrably corrupt and reckless financial establishment, Jm Puplava should have snorted and mercilessly raked this lying, soulless leprechaun Christian over the coals --- but he refused to bite on what I found to be Christian's most outrageously laughable statement of the whole interview.  This bankster imp must really believe we "troglodytes" are gullible beyond belief if he expects such a ludicrous assertion to be accepted by anyone at this point.


(On second thought, I realize that Christian is no leprechaun, as leprechauns are well known for holding REAL physical gold.  He is in fact more akin to Rumpelstiltskin, continually weaving (straw-derived) paper into gold.)



Sun, 04/11/2010 - 15:35 | 295613 dumpster
dumpster's picture


yes i find your commentary to the point . and  a spot on read. 

these laughable   babes in toy land ,, and the history of the sound of fools is legion

of course these people have nothing to preserve, nothing to show for a life time of work.. but a large brown wart on their nose lol

Sun, 04/11/2010 - 15:37 | 295618 Giuseppe Bagodonutti
Giuseppe Bagodonutti's picture

If I may recommend the following...

It was Christian's attempt to explain this 100:1 situation, back in 2000

You may be able to shave a further 5 IQ points from your already debased Troglodyte neural-matrix...


Sun, 04/11/2010 - 16:51 | 295661 MrPalladium
MrPalladium's picture

An absolute hoot!! ROFLMAO!!

Not one syllable about the elephant in the room back in 1998, namely the huge leasing of central bank gold which was, indeed, sold into the market to suppress prices. A bullion bank would starve if it depended upon such piddling stuff as Christian describes.

It is the typical Goldman Sachs sales tactic. Intimidate the corporate mark by flaunting your supposed intellectual superiority, imply that the mark will look like a bumpkin if he says no, and then drop a few subtle references to your golf outings with the CEO.

During my working career, I was paid astronomic hourly rates to attend meetings with the outside investment banker in the role of "bad cop" to give the hapless and defenseless mark cover.

Every time the investment bankers called me "unsophisticated" I laughed all the way to the bank and the client saved a bundle.

Heartwarming to see that nothing has changed.

Sun, 04/11/2010 - 16:20 | 295651 RobotTrader
RobotTrader's picture

Sun, 04/11/2010 - 16:44 | 295669 MrPalladium
MrPalladium's picture

Dude, what the ZH world really wants to know is what Alessandra Ambrosio - your avatar - thinks about rising bottoms, inverse head and shoulders, and upside breakouts! :-)

Sun, 04/11/2010 - 17:32 | 295698 RobotTrader
RobotTrader's picture

What?  You talkin' to me?

Sun, 04/11/2010 - 17:41 | 295701 MrPalladium
MrPalladium's picture


Nice head and shoulders. Now if we can invert them, and then lift up those rising bottoms to a point where they can be savored, she is certain to provoke an upside breakout to enjoy.

Gotta love that gold chart!!

Sun, 04/11/2010 - 16:20 | 295652 markar
markar's picture

Forget GLD. Perth Mint certificates are guaranteed redeemable for spot price(less fees) or physical--even if unallocated. No leverage--1:1 certificates issued to physical in stock and audited quarterly by the govt of Western Australia.

Sun, 04/11/2010 - 16:29 | 295657 akak
akak's picture

Oh, well, they're guaranteed by a government --- and one halfway around the planet!

Forgive me if my doubts are not assuaged.

Sun, 04/11/2010 - 16:56 | 295676 MrPalladium
MrPalladium's picture

Western Australia - a provincial (state) government - one without a printing press.

Kinda like having your gold delivery guaranteed by California or New Jersey!

Mon, 04/12/2010 - 06:14 | 296178 Bron Suchecki
Bron Suchecki's picture

Australia moving up I think to 2nd largest producer of gold in the world, Western Australia where most of the gold is, plus oil/gas, iron. Has its own precious metals mint, so why would we want a printing press when we can just go to a gold standard should SHTF.

Sun, 04/11/2010 - 17:01 | 295681 Al Gorerhythm
Al Gorerhythm's picture

Backed by a "State " government. They don't got no printing press, man. The people of the state aren't aware of this government "guarantee". Even if they were, they still think that the government is some thing other than themselves.

Sun, 04/11/2010 - 18:34 | 295737 MarketTruth
MarketTruth's picture

ARGH!!!!  Perth Mint, that was a major fiasco about two or three years ago. RUN AWAY!!!!Look at the rate they charge for actual conversion to physical, it is FAR HIGHER than normal spread. So say NO to Perth Mint.

Sun, 04/11/2010 - 18:48 | 295745 Shameful
Shameful's picture

No idea why anyone would trust a gov half a world away.  What's so wrong about keeping it with you or knowing where it's at?  A few coins in a paint can in the garage is not going to be stolen even if your house is robbed.  Odds are some burglar is not going through your garage junk piles for hours on end, and if he is the house owner is probably in a place where he won't be needing gold.

Mon, 04/12/2010 - 06:09 | 296176 Bron Suchecki
Bron Suchecki's picture

I've got no problem with storing it yourself (the Perth Mint makes more money from its physical business than Depository) but I think you are being a bit close minded. One of our clients is a lady who lives in Israel in an apartment - where is she going to store $500k safely? You may consider storing that amount of gold way off in Perth a risk, but to her it is less of a risk than keeping it in Israel.

Sun, 04/11/2010 - 16:51 | 295672 paladin
paladin's picture

and the rest of the story..



if you all have read the ...another... writing then this is clear



understand what is money..


and what is paper gold????

Sun, 04/11/2010 - 17:03 | 295682 paladin
paladin's picture



this is a long read...I hope you all read it...paladin

Sun, 04/11/2010 - 19:55 | 295773 DoChenRollingBearing
DoChenRollingBearing's picture

I have learned a lot from reading fofoa.

Sun, 04/11/2010 - 23:07 | 295879 Segestan
Segestan's picture

That is a great read. If only we could get a world view of tomorrows events from this?

 As Caesar once said' The grown man should know the world he lives on'.

Sun, 04/11/2010 - 17:31 | 295697 Double down
Double down's picture

This guy is catastrophic!

He honestly does not understand the implications of what he is saying. 

He is fabulous, so completely lost he loses the listeners.


Sun, 04/11/2010 - 18:03 | 295712 paladin
paladin's picture

you said..


This guy is catastrophic!

He honestly does not understand the implications of what he is saying. 

He is fabulous, so completely lost he loses the listeners.



so I ask who are you talking about.....there are so many post...paladin

Sun, 04/11/2010 - 17:59 | 295709 cognitis
cognitis's picture

Jeffrey Christian proposes as usual a sane and balanced report; since Christian usually writes for a literate and expert audience, many Bloggers who write for an illiterate stupid poor audience are offended and confused by Christian's clear diction.  

Sun, 04/11/2010 - 18:06 | 295715 MsCreant
MsCreant's picture


You couldn't come up with a better name than that?

Geeezus! Sad as your verbal stumbling and bumbling.

illiterate stupid poor audience 

Yeah, real literate there.

Sun, 04/11/2010 - 20:34 | 295789 truont
truont's picture


If you live in a glass house, don't throw stones...

Mon, 04/12/2010 - 00:24 | 295942 Hephasteus
Hephasteus's picture

That reminds me of a dream. I laid down a very clear very precise question and asked for an answer. I got this crazy lady laying down 100 tarot cards and babbling nonsense. It's one thing to ship off the "Your stupid" package. It's quite another thing to get the person to sign for it and take delivery.

"No being, not the sun itself, exceeds due measure, but contending powers set things right." -Heraclitus

Sun, 04/11/2010 - 19:17 | 295741 MrPalladium
MrPalladium's picture

Look folks, bottom line - Jeffery Christian is a pimp for the bullion banks. He consults with gold mining companies about hedging forward their physical gold production, purportedly to protect them from falling prices but also to fill the pipeline of bullion banks. In return the bullion banks shower CPM consulting with respect and recommendations. After all, once a client of CPM hedges forward, the Bullion bank exploits the anxiety of the miner, pricing the hedge so as to allow the widest spread possible between the hedge price and what bullish investors are willing to pay to take the other side of the derivative trade.

Does anyone on this blog sincerely believe that Christian does not talk about central bank sales and central bank interventions to his mining company clients?

CPM always tries to appear "balanced" and conservative, so as not to arouse suspicions about its impartiality and to pace with and match attitudes, even speech patterns with the typical mining engineer type (one who is foolish enough to enter a commodity business with no moat around it, and with either near perfect competition, or no network for oligopoly signalling on production and pricing. And that is the way Jeffery Christian wants to keep it. He is the impartial "substitute" for the oligopoly signalling network - a source of competitive information that speaks their language and looks like them.

Riddle me this!!

Is Jeffery Christian on record predicting the last 10 years of relentless price rises in gold?

During the past 10 years did Jeffery Christian ever advise his clients that their shareholders would be better off if they did not hedge their production, but rather, hedge forward their production costs to the extent possible and leave as much of their gold as possible (after meeting debt service and costs) in the ground?

I wonder what odds he assigned to such a scenario in his power point presentations?

Christian should cut the patronizing and sophomoric lectures and show us what he was telling his clients over the past 10 years!

Was the actual price history that unfolded in the past 10 years ever the mid-range forecast?

Was it ever even at the 3 standard deviation extreme?

Sun, 04/11/2010 - 19:38 | 295758 Giuseppe Bagodonutti
Giuseppe Bagodonutti's picture

Christian did an interview last year with Resource Intelligence

March 24, 2009

GRR: You told me last year: “The fact that the financial markets are so much larger than the gold market means that even small changes in investor attitudes toward gold have this dramatic effect in the price of gold.” There must be a lot at play here, because investors on one hand have been spooked out of a lot of investments, and yet gold is often perceived as a safe haven. Are the two nullifying each other to some extent and keeping the price of gold buoyant?

JC: They are to some extent. First off, since we spoke a year ago gold went up to a record price and then came back down. But if you look at gold in euro terms it’s still very close to its March peak. One of the things that you’re seeing is that gold prices have held up much better than industrial commodities. That makes sense, because gold is not an industrial commodity—it’s a financial asset. You have seen enormous buying of gold worldwide. The other thing that you saw starting in September was this massive liquidation of leveraged gold positions—futures, options, gold-linked notes written by banks—and that is what caused the price of gold to fall as much as it has over the last six months. But that’s a temporary thing. The physical market will always ultimately trump the paper market.

GRR: There was a lot of excitement as gold pushed through $1,000 per ounce last year. Will we see that again in the next 12 months?

JC: I wouldn’t be surprised to see it. It would have to be pushed by investor fears. If you have continued problems in the economic environment, say GM comes along in March and says, “We’ve spent your $10 billion and we still don’t have a viable plan to go forward,” and Citibank is breaking up, corporations are having further problems, and final demand across the economy is not recovering, you could see another wave of investor fears that could easily drive the gold price higher.


His opinion of Silver I found more amusing, though...


GRR: So what sort of a year can we look forward to for silver?

JC: A pretty volatile year still. I wouldn’t be surprised to see the price rise. We wouldn’t be surprised to see the price at $13, $15, maybe even $18 or $20 at some point on a spike in the first half of this year, and then it will probably come and we’re thinking when it comes off it might come down to $11 or $12 per ounce, maybe not even that low, because the silver market’s still fundamentally tight. It’s a much smaller market, less liquid than gold, it doesn’t have the inventories lying around that the gold market has.


Someone should tell that to the "Big 4"...


The current record is about $1,228, which was set in early December 2009. It could go back up there, it could go to $1,300 or even $1,400 in a spike. But if we are correct on the economy and the global economy continues to improve over the course of 2010, and if the US economy continues to improve over the course of 2010 and investors catch on that we’re not going into a double dip recession, but that we are in fact moving into an economic recovery you could actually see the gold price peaking in the first four months of this year, on a cyclical basis.
I think that the gold price towards the end of 2010 will be around $1,100, maybe $1,150. Basically where we are today, but I wouldn’t be surprised to see record prices between now and then.


Then there's this article from GoldSeek

Overall, his opinion vacillates considerably... which is understandable, since he's Hedge Oriented...

I just don't trust his haircut, personally... it gives me the heebie-jeebies...


Sun, 04/11/2010 - 19:48 | 295768 h4rdware
h4rdware's picture

While this interpretation does indeed fit the evidence, it is quite clear that this person is unable to defend his corner concisely under pressure, and even shows signs of not understanding the implications of his statements, through interpretation (including misinterpretation) by others. I really don't know what he thinks he is doing in defense of his (and CPM's) position. At best he has succeeded in muddying the waters further.

When blame comes calling, there is usually a balance of mis/malfeasance to incompetence involved, and this unfolding pantomime feels a little like something is trying to nudge the ratio after the fact.

Mon, 04/12/2010 - 03:33 | 296043 MrPalladium
MrPalladium's picture

"it is quite clear that this person is unable to defend his corner concisely under pressure, and even shows signs of not understanding the implications of his statements, through interpretation (including misinterpretation) by others."

Yes a remarkable failing to be found in the owner of a consulting firm. Very puzzling indeed!

However, it is crystal clear that he does not understand the mindset of the physical buyer, and thus the mindset of the ultimate long term driver of gold prices on which his beloved hedges and paper claims depend.

He also fails to comprehend that as the number of physical buyers and their physical stocks of gold and silver increase, their protests over the effects of his paper market will get louder and louder, eventually catching the ear of the media and politicians.

It is no longer just the quiet proprietor of that huge vault under the historic chateau Lafite in the middle of that storied vinyard near the banks of the Gironde Estuary in Southwestern France who matters.

A large and rowdy mob of commoners have a substantial physical stake as well.

Sun, 04/11/2010 - 19:44 | 295762 paladin
paladin's picture

Jeffrey Christian


is noise in the back ground...


as Jim Sinclair has posted......recourse.......non-recourse


in your gold/silver stocks..


good luck



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