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LBMA Closes Off Public Access To Key Bullion Bank Trading Data

Tyler Durden's picture





 

Is something (abnormally) fishy in the state of precious metals manipulation? GATA's Adrian Douglas (recently famous for facilitating the emergence of whistleblower Andrew Maguire) seems to think so, after his observation that the LBMA has decided to block "access to statistics relating to the trading activities of its member bullion banks. This information has been available to the public since 1997 but as of this week it is available only to LBMA members." His conclusion: "There is a cover-up of back-door injections of liquidity of physical gold, and the LBMA now is trying to conceal trading information. I interpret the LBMA's move to secrecy as a sign that the opportunity to get real metal is closing fast." Read on for his argument...

From GATA's Adrian Douglas

The LBMA joins the gold squeeze cover-up, via GATA

The London Bullion Market Association has just taken the highly
unusual step of blocking access to statistics relating to the trading
activities of its member bullion banks. This information has been
available to the public since 1997 but as of this week it is available
only to LBMA members. (See http://www.lbma.org.uk.)

I have recently written a series of exposes of the LBMA (see
References 1-4 below) using the association's own data to show that the
LBMA's bullion banks are operating on a "fractional reserve" basis. My
analysis indicates that the bullion banks are holding only 1 real ounce
for about every 45 ounces of gold that they have sold, a reserve ratio
of just 2.3 percent

At the March 25 public hearing of the U.S. Commodity Futures Trading
Commission on precious metals futures markets I cited the LBMA's own
statistics to label the "unallocated gold" accounts of the bullion
banks as a Ponzi scheme. (See Reference 3 below.) There were bullion
bank representatives at the hearing but no one expressed an objection.
That hearing was videotaped and posted at the CFTC's Internet site but
the bullion banks have not made any public statement rebutting what I
said. In fact at that hearing Jeffrey Christian, CEO of the CPM Group,
acknowledged that what is widely called the "physical market" is in
reality a largely "paper market" trading gold and silver as if they are
financial assets and not physical metals. Christian stated that 100
ounces of paper gold are traded for every 1 ounce of physical gold.

When the LBMA first made its trading statistics available in January
1997, observers and analysts were shocked. (See Reference 5 below.) No
one could reconcile the statistics with other market data, nor
comprehend how the bullion banks could be trading on a net basis more
than 240,000 tonnes of gold annually while the global mine output was
only 2,400 tonnes. Over the years the furor over these statistics had
subsided until the end of 2009, when I commenced writing about my
studies, showing that the statistics can be reconciled with other
market data if the bullion banks are operating a fractional-reserve
bullion banking operation with a recklessly low reserve ratio. I have
also shown how the price of gold is suppressed because 45 ounces of
demand are being diluted to result in purchase of only 1 ounce of real
metal. If instead all 45 ounces were to be sourced and purchased, the
gold price would be multiples of the current price.

Typically when people are exposed in a scandal their first reaction
is a cover-up. The most notorious examples of this are the Nixon
administration, when it doctored the Watergate tapes, and Arthur
Anderson, which shredded millions of pages of documents relating to
audits of Enron Corp.

The LBMA has now commenced a cover-up with respect to the gold
trading activities of its member bullion banks, withdrawing statistics
from the public domain.

This appears not to be the only cover-up going on in the gold market.

For years the International Monetary Fund has made great fanfare of
its mere contemplation of selling some of its gold, and actual sales by
the IMF have been widely publicized. Since February the IMF has been
surreptitiously selling large tonnages of gold each month, but these
sales now are to be found only by digging through the IMF's financial
statements, and even there the recipients of the gold are not
disclosed. (See Reference 6 below.) One has to wonder why the IMF now
is trying to fly under the radar with its gold sales.

Similarly it was recently discovered that the Bank for International
Settlements didn't feel it necessary to announce its involvement in the
largest gold swap in history, 346 tonnes. (See Reference 7 below.) The
BIS swaps instead were discovered only because a market analyst dug
through the footnotes of the bank's financial statements.

These developments have all the hallmarks of cover-ups.

In June the LBMA trading statistics showed that in May 2010 the
average net daily trading in gold by LBMA member banks jumped a massive
50 percent from the month before to 24 million ounces each day from 16
million ounces each day. That translates to $7.5 trillion annually. If
an operation is running on a razor-thin fractional reserve basis, such
step changes are often fatal.

It appears that a run on the bullion banks has commenced.

There is a cover-up of back-door injections of liquidity of physical
gold, and the LBMA now is trying to conceal trading information.

There has been much debate about how investors, politicians, and
regulators didn't see the 2008 financial crisis coming, and lack of
transparency was cited as a key reason. Clearly those who have been
manipulating the gold market are trying to skulk deeper into darkness.
They have a lot to hide.

Investors could have been blindsided by the events of 2008, but
anyone who misses the writing on the wall about what's going on in the
bullion markets is just foolish. The bullion banks have sold far more
metal than they can deliver, and more and more customers are asking
them to deliver. This has led to back-door bailouts and cover-ups.

Anyone who has "unallocated" bullion should be very concerned. The
LBMA itself describes owners of "unallocated bullion" accounts as
"unsecured creditors." That means that the account holder has no
collateral or title to any bullion.

Bullion bank unallocated account agreements require the bank only to
settle in cash for non-performance. That means when the physical
squeeze that is evolving takes gold and silver prices to multiples of
the current price, holders of unallocated metal accounts will not get
any bullion, nor will they be compensated at the prevailing market
price.

I interpret the LBMA's move to secrecy as a sign that the opportunity to get real metal is closing fast.

----

References:

1. Adrian Douglas: Proof of Gold Price suppression -- Gold and the U.S. Dollar:

http://www.gata.org/node/8844

2. Adrian Douglas: Price Suppression Follows Inevitably from Fractional-Reserve Gold Banking:

http://www.gata.org/node/8820

3. Adrian Douglas: It's Admitted to the CFTC: London Gold Market Is a Ponzi Scheme:

http://www.gata.org/node/8478

4. Adrian Douglas: Jeff Christian's CPM Group Explains How to Make Paper Gold:

http://www.gata.org/node/8627

5. The Grand LBMA Expose: A Collective-Mind Analysis:

http://www.gold-eagle.com/gold_digest/baron907.html

6. Adrian Douglas: IMF Can't Explain Gold Sales Now Without Revealing Squeeze:

http://www.gata.org/node/8607

7. Adrian Douglas: Mysterious BIS Gold Swaps Are Likely a Bullion Bank Bailout:

http://www.gata.org/node/8803

 


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Sun, 07/25/2010 - 18:54 | Link to Comment bugs_
bugs_'s picture

Trading data showing a bit of rust?

Sun, 07/25/2010 - 19:15 | Link to Comment nmewn
nmewn's picture

LOL.

If Bart Chilton is to be believed the suppresion of PM's is starting to get a little to hot for politicians to handle. Think I read something somewhere of a 180 day window that JPM & HSBC will have to close their monstrous paper shorts in silver to a certain level.

I have no idea what that level is, probably niether do they.

But it seems like a squeeze developing to me, bearing in mind these are some of the biggest thieves on the planet.

 

Sun, 07/25/2010 - 19:46 | Link to Comment truont
truont's picture

Nah, JPM and HSBC are not worried about the COMEX position limits.  Remember, the FinReg abomination capitulated to the Squids and will let them use OTC derivatives with gold and silver (but no other commodities, oddly enough...)

http://www.gotgoldreportsubscription.com/COTflash20100725.pdf

This author says that the COMEX only has 5% of the derivatives volume in gold/silver that the OTC market (read: dark pools) does.

FinReg is not the nail in the coffin of the short manipulation in PMs, I am afraid.

Sun, 07/25/2010 - 20:01 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

I did not read the FinReg (nor Obamacare for that matter), but I think we all get the idea...  Nothing important will change except that the Boyz will benefit even more.

We edge ever closer to totalitarianism by the day.

Sun, 07/25/2010 - 20:51 | Link to Comment bigkahuna
bigkahuna's picture

I have always thought that if the price of gold goes over $2000 per ounce that we are all in big trouble because our economy will have hit the nitrous down it's death spiral. Well--if the pin falls out of this one, I am not sure how high the price could be bid up. You guys (you super bugs)appear to be correct--there may be an opportunity to receive a high price--in real assets (or in fiat) for gold. I was previously of the mind that if gold sky rocketed-we were all screwed anyway.

Sun, 07/25/2010 - 23:13 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

bigk, thank you for your kind words and observations.

I really do not have any idea if we get to fofoa's $55k or not.  But, I am edging to 7% of my wealth in gold (and smaller % in Ag and Pt).

Best to be prepared.  PMs.  Guns & ammo.  Food in storage.  Water source.  Not there yet, but working my way there...

Mon, 07/26/2010 - 01:23 | Link to Comment dnarby
dnarby's picture

Historically, if you look at the the percentages of gold and gold stock ownership in times of stress, they are typically ~25%, and they are currently at 0.8%

http://www.zerohedge.com/article/gold-we-trust-special-report-gold-erste...

That would indicate a coming 35x increase in the price of gold and gold stocks to reflect historical levels, which puts gold at ~$42,000.00/oz.

So figure on an overshoot, $55,000.00 + isn't unrealistic.

Mon, 07/26/2010 - 08:41 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

Speaking of times of stress - in case it wasn't publicized here, the absolutely devastating 1975 tome When Money Dies by former MEP Adam Fergusson has finally been reprinted. It is available at Amazon.uk, and goes for ~$20 shipped to the US. It is everything I expected it to be, which means it is more of a page turner than the best horror fiction. Now I know why the hardcover commanded up to $800 when it went out of print.

Mon, 07/26/2010 - 10:44 | Link to Comment genieous
genieous's picture

I just ordered mine per your comment.  $27.39 delivered to my business (which is gold and silver broker BTW) in Fargo (yes, that Fargo)ND.

 

 

Mon, 07/26/2010 - 11:14 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

yes, that Fargo

Tell the feds you keep your bullion in the wood chipper   ;-)

Mon, 07/26/2010 - 12:51 | Link to Comment genieous
genieous's picture

hahahahah....hehehehehehehe......uproarious laughter erupts in whole office.

 

Wait, that's a good IDEA!

 

Thanks Ben

Mon, 07/26/2010 - 02:19 | Link to Comment TGR
TGR's picture

7% of wealth in gold makes one a superbug?

Guess that makes me a supercalifragilisticexpialidociousbug

Mon, 07/26/2010 - 14:47 | Link to Comment SWRichmond
SWRichmond's picture

:)

Sun, 07/25/2010 - 20:29 | Link to Comment nmewn
nmewn's picture

Thanks for that tru...I'll have to look this over a little deeper. Like I said, we're dealing with some of the worst/best thieves on the planet.

From your link...wisdom;

"Unless the CFTC focuses on the main problem – concentration caused by way too
large exemptions granted to too few entities, and unless the CFTC limits aggregate
positions as a percentage of the open interest no matter which side of the battlefield
and no matter if a “bona fide hedger” or not, we cannot expect very much
“improvement” to come from FinReg, or on the largest futures bourse for gold and
silver."

Regards.

Sun, 07/25/2010 - 21:35 | Link to Comment RockyRacoon
RockyRacoon's picture

More blather, for what it's worth:

CFTC's Chilton explains hope for freer, more transparent gold, silver markets

Section:

11:38p ET Friday, July 24, 2010

Dear Friend of GATA and Gold (and Silver):

The member of the U.S. Commodity Futures Trading Commission who has been advocating imposing position limits on traders in the precious metals markets, Bart Chilton, has made a video explaining why he thinks the financial regulation law just enacted by Congress and President Obama promises great progress, particularly in making the commodity markets freer and more transparent. The law, Chilton explains, requires the CFTC to establish position limits and authorizes the commission to prosecute "disruptive trading practices." Chilton says he is especially pleased with that, because the commission's market manipulation standards have failed almost completely for many years.

Chilton has been amazingly conscientious on the precious metals manipulation issue and has been amazingly responsive to gold and silver investors who have complained to the CFTC about market manipulation. He'll need their support as the CFTC writes the position limits regulations required by the new law. The big commercial shorts are sure to be heard as the commission continues to take public comment, so gold and silver investors can't let up yet.

You can watch Chilton's presentation at YouTube here:

http://www.youtube.com/watch?v=K1_q88rlUkw&feature=player_embedded

Sun, 07/25/2010 - 22:53 | Link to Comment DarkMath
DarkMath's picture

COMEX != LBMA

Adrian Douglas's article is suggesting that the LBMA is running out of physical Gold to deliver. Position limits on the Comex would be meaningless of the LBMA is broken (as was the London Gold Pool in 1968). If the LBMA can't deliver the gig is up for everyone.

 

Sun, 07/25/2010 - 22:57 | Link to Comment truont
truont's picture

LBMA can get gold from the central banks.

They cannot, however, get silver from the central banks....

I think the fireworks will happen in the silver market first, then gold will react violently to the silver failure-to-deliver, coming in the sometime not-too-distant future...

Mon, 07/26/2010 - 00:39 | Link to Comment JLee2027
JLee2027's picture

Yes, silver blows up first, then it's switch to physical Gold if you can and catch the second wave.

Mon, 07/26/2010 - 01:26 | Link to Comment Bob Sponge
Bob Sponge's picture

Need to demand physical delivery of gold and silver until this Ponzi crashes.

Sun, 07/25/2010 - 19:47 | Link to Comment DavidPierre
DavidPierre's picture

A few years ago JP Morgan took the price of silver down from a high of $21.50 to $8 an ounce, raping speculators in the process. No doubt a huge hunk of that short position was JPM.

Think of the money they made on that kind of move.

What is so wrong and fraudulent about that is what we learned from Andrew Maguire at the CFTC hearing on March 25 of this year.

Morgan set up an orchestrated attack, which is illegal, with numerous trading partners and then went after the market with a vengeance.

This is exactly what Maguire conveyed to the CFTC by telling them in advance of raids from November through last March were going to occur … and THEY DID!

Over the past many months we have heard of delays in taking delivery of Comex futures positions.

The panicky way the Bank of Nova Scocia is handling clients who want to take possession of the silver they own, such as were the cases with Toronto’s Harvey Organ and the Toronto cancer victim.

The bank is petrified of losing any of the physical silver it has on hand.

The likelihood is that JP Morgan’s silver short positions are naked and not backed by physical silver in London.

 Morgan has never produced proof to the CFTC their massive short positions are hedged …except maybe Texas hedges (shorts backed by more shorts). This tells ... they are very vulnerable should a flurry of physical buyers decide to take them on.

The coming Sprott silver EFT could be just the vehicle which sends JP Morgan scurrying before they have to declare force majeure, or default. But Morgan has a big problem should that occur because of all the flap over their monstrous short positions by the GATA and Ted Butler camps.

How can they say all has been kosher with their operations and then default?

Can you imagine the lawsuits?

The gold market is under stress as pointed out so aptly by Adrian via his analysis of the BIS swap...

the low or negative gold lease rates...

the lack of any selling of gold by the European central banks, etc.

There still has been some gold around to handle emergency situations, as per the BIS swap.

While growing scarcer, it’s still there.Silver is a different story. There just isn’t any excess visible supply around as in gold.

GO GATA !

Sun, 07/25/2010 - 22:03 | Link to Comment sgt_doom
sgt_doom's picture

+100,000

Fantastic comments, DavidPierre, and soooo on target!

Sun, 07/25/2010 - 22:20 | Link to Comment SWRichmond
SWRichmond's picture

FWIW I concur with your anaylsis, to the extent that we can see what we can see from so far away.  I think it's not unrealistic to expect a collapse / liquidity crisis / liquidation to bring some metal "home" to the BBs.  Bernanke is of course capable of providing this.  The only question is are there enough suckers who would fall for it and liquidate (or who are leveraged enough to be forced to liquidate) their PMs? 

Those of us who've been watching this have seen it before; those of us who aren't traders simply held on to our positions and especially our physical, and bought more (thank you very much JPM).  Nothing has changed that would change the ultimate outcome, so why would I get off of my position?  Id have to be nuts, or johnny bravo.

The only question left for me to wrestle with is whether or not to take the hit on my IRA accounts, cash them out, pay the tax, convert to metal and bury it somewhere.  This government is easily capable of seizing retirement assets "in the name of national security".  EASILY capable of it.

Sun, 07/25/2010 - 23:00 | Link to Comment What_Me_Worry
What_Me_Worry's picture

Don't worry, they'll hand you an IOU for the IRA balance.  They promise to pay it back too, pinky swear.  I mean, all our SSI IOU's are as good as gold, aren't they?

I really wish there was an option to sell your future SSI current account value for a discounted cash payout.  I would easily accept 50% of its current appraised value, in relation to a comparable annuity. 

FWIW, I am in the same boat as you with my IRA.  Think of it this way, though.  They tax you as ordinary plus 10% penalty.  On my business, they tax me at ordinary PLUS 15% SE tax.  So, technically it amounts to less or just about the same as you would have paid had that been earned income from a job/business.

My only issue is taking out too much and moving into a higher tax bracket.  So I am compromising by taking out decent chunks every year as a slight hedge and moving all those funds straight into bullion.  In the mean-time keeping most of the IRA in cash/miners with a few long term puts for a little protection.  JPM is one of my short positions, so seeing them burn on their silver shorts would be a double for me.

It hurts to pay taxes on money that would eventually never be taxes 1 cent under current laws.  However, I have way too far to go to ever hope that the system will still be in place then.

If there is a huge bullion crash then I will probably up my timelines/purchases.

Mon, 07/26/2010 - 00:42 | Link to Comment JLee2027
JLee2027's picture

I've always believed IRA's are tax traps because almost no one can go 40 years w/o needing the money. So inevitably you pay the extra tax.

I can't tell you guys what to do, but whatever you decide good luck.

Mon, 07/26/2010 - 00:59 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

As (everyone?) knows, I cashed in my IRA in late 2008.  Took my tax and penalties hits, and have since slept better.  Lot of that money went to gold.

That's just me though.  Keep thinking for yourselves.  ZH is a good place to get and assess ideas.

Mon, 07/26/2010 - 07:46 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

SWRichmond and other posters...excellent comments, thank you.

I took the hit on IRA accounts after the IT bubble collapsed and moved into more PMs and cash. It was painful then but I have more than off set losses due to penalities and taxes I paid back then with the rise in PMs since 2001. The decision was not too difficult because I have never had faith in Fiat and have been a gold/silver buyer as an extension of coin collecting when I was a kid. I have never been a seller or trader of PMs, hold only physical PMs, but I do trade other commodities.

I was holding silver at $21, stayed with it down to $8 and am still with it at ~$18...and I was a buyer at ~$9. Can anyone point out my loss? Opportunity loss? Not if I had sold silver and shifted into another asset class that dropped in fiat numbers...and making that type of error is easy in these market conditions. I did make money when oil ran up to ~$147. I started shorting it at almost the peak...lucky, I suppose, but I follow oil closely.

Many 'weak hands' will be forced out of PM positions because they are levered across asset classes...hedgies, and others.

We should keep in mind that central banks are waging battles on many fronts...but their big battle is against deflation and that is where their focus is. Propping up the world financial system takes a lot of effort and demands choices be made every day, sometimes every minute.

If PMs increase in fiat currencies it could be viewed by the casual observer as a result of inflation in the money supply. I believe Central Banks would rather have that interpretation than an increase in PMs denominated in fiat as a flight to safety; ie, fright of holding fiat currencies because of an impending collapse in fiat across most of the world. Loss of faith in capitalism (even if it is a brand of capitalism that Adam Smith would not recognize) by the world is the last thing central banks want.

Sun, 07/25/2010 - 20:11 | Link to Comment knukles
knukles's picture

I believe that the final draft of FinReg formally excluded "banks" from reporting requirements of gold and silver positions with respect to centralized clearing facilities.  In short, t'was an obvious effort to maintain Opacity. 

Interesting that Opacity was the whole reason for the expanded reporting requirements, eh?  So why the exception? 

And isn't that interesting that in something like 2,200 pages which were written, rewritten, negotiated, renegotiated, amended, dropped, added, conferred and agreed there upon, such a blatantly clear, fine point was included in the final passage. 

Something feels amiss, folks.

 
Same as the Fed audit (not the shill of the Open Market Committee deliberations which was the replacement for the commensurate complete detailed audit of all operations) which when shone upon gold, would have draw the public spotlight to loans, leases, to whom, for how long and under what conditions. 

At some point, a body of lies, obfuscations errors of omission and commission become simply too burdensome for the perpetrator to maintain.
Are we there yet?

 

Sun, 07/25/2010 - 22:48 | Link to Comment breezer1
breezer1's picture

the father of the lie is the other guy. gold and to a large extent silver remain political. their unimportance is vital to the survival of paper. 

if you want to strike back at the corruption get physical. it is the one attack they cannot defend against if is done in any serious attempt.

they will defend paper with brute force if necessary. ask andrew mcguire.

may the force be with us.

Sun, 07/25/2010 - 21:35 | Link to Comment brushfire
brushfire's picture

the CFTC and DOJ will soon announce a suit against JPM and certain traders at the LBMA for manipulation in the metals markets.  for all the skeptics out there, you're about to get served.

Sun, 07/25/2010 - 21:40 | Link to Comment RockyRacoon
RockyRacoon's picture

And you are getting your info from?  A source would be nice.

Thanking you in advance.

Sun, 07/25/2010 - 22:02 | Link to Comment brushfire
brushfire's picture

Rocky,

You're gonna have to take this one on faith. Feel free to doubt me, but the anonymity of this forum is the only reason I'm here. I've been a longtime fan of what ZH does and feel obliged to give a heads up to the reading community here. You're right to be skeptical, but in a few weeks you will wish you had hadn't been.

Sun, 07/25/2010 - 22:15 | Link to Comment RockyRacoon
RockyRacoon's picture

I'm not skeptical!  I wanted to revel in the news.  I hope it turns out better than the SEC/GS crapola suit.  I want jail time!

Thanks for the kind reply.

Sun, 07/25/2010 - 22:31 | Link to Comment brushfire
brushfire's picture

understood. you'll be reveling soon enough; revel in that in the meantime.

Sun, 07/25/2010 - 23:19 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Rocky!  Brush!  Billhilly!

Damn it that's it!  After I see the Dr. tomorrow I am off to the gold shop for more yummy PMs.

I will do my reveling when .gov actually does something positive.  In the meantime, time to buy!

Mon, 07/26/2010 - 00:44 | Link to Comment JLee2027
JLee2027's picture

Does DOJ really just file lawsuits for civil actions?  I think you mean indictments.

Mon, 07/26/2010 - 08:07 | Link to Comment goldfreak
goldfreak's picture

Brush we will hold you to it

Mon, 07/26/2010 - 08:29 | Link to Comment goldfish1
goldfish1's picture

DoJ? What's to revel about?

Mon, 07/26/2010 - 09:46 | Link to Comment huntergvl
huntergvl's picture

Sorry, I don't share your implication that JPMorgan will be castrated and gold will soar, if that is in fact what you are alluding to.

Worst case scenario, JPMorgan has to fess up $550 million too....about an hour and a half of profits......chump change....business as usual.

The simple fact that they are obscuring the trades just shows one more level of obfuscation and one more level of security....for them!

Mon, 07/26/2010 - 10:24 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

Yup - FinReg PM loophole shows that Legislative Branch is on board with the manipulation. The barbaric relic is just a commodity? How much more evidence to people need? JPM pays fine - little to nothing changes - until it implodes.

Sun, 07/25/2010 - 22:05 | Link to Comment sgt_doom
sgt_doom's picture

Geez, how I hope and pray you're right, but then I used to pray for Santa Claus also.....

Mon, 07/26/2010 - 03:09 | Link to Comment i.knoknot
i.knoknot's picture

ah, but regardless the final reality... for while, he *did* come...

:^)

Mon, 07/26/2010 - 12:16 | Link to Comment wyosteven
wyosteven's picture

Brushfire said, "the CFTC and DOJ will soon announce a suit against JPM and certain traders at the LBMA for manipulation in the metals markets.  for all the skeptics out there, you're about to get served."

Your comment made me laugh.

Oil, not gold/silver, is THE business for worldwide collusion and manipulation (on ICE).

Oil price manipulation enriches vastly much more than gold or silver (by an order of magnitude) and hence it would be more fitting to end that racket (and it IS a corrupt racket) than go after a hand slap to JPM.

This illustrates that any premise involving fairness or "justice" in commodities is again orchestrated, and a distraction from truth (as defined where the real racket/money is).

Perhaps by suit you really meant "promotion," which is the only outcome of commodity fraud.

For those seeking anonymity, you need to know that all Internet traffic that leaves the "safety" of the US is scoured/parsed by the NSA and Mr. Patriot.  To think anonymity exists by interacting with the zerohedge website directly is incorrect.  Thank you ZH servers in Europe.  Anonymity is anything BUT.

Mon, 07/26/2010 - 10:30 | Link to Comment Problem Is
Problem Is's picture

"Trading data showing a bit of rust?"

You mean spots of rust like a Russian gold coin??

Sun, 07/25/2010 - 18:55 | Link to Comment asotavb
asotavb's picture

the value of gold is already set, it only needs to be set free.

freegold is near........

 

Sun, 07/25/2010 - 20:01 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Another fan of fofoa!

fofoa.blogspot.com

+ $55,000

Sun, 07/25/2010 - 23:09 | Link to Comment RockyRacoon
RockyRacoon's picture

I guess the info is locked up as the article states:

Last week when I clicked my GOFO bookmark that I have been using for years, for the first time ever it asked me to log in, which apparently costs "an application fee of £1,000 (which is not refundable if the application is rejected for whatever reason) and an annual levy of £2,500." I'm sure this was just a normal LBMA site improvement though, because they put the new URL for free GOFO data in the small print down at the bottom.

http://fofoa.blogspot.com/

Sun, 07/25/2010 - 21:00 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

RoboTrader's post, http://www.zerohedge.com/article/lbma-closes-public-access-key-bullion-bank-trading-data#comment-487971, has caused me to rethink this article.  He makes a good arguement that smart money would have already jumped on this, if is true. Efficent market theory-meet gold-meet babes and charts.

Sun, 07/25/2010 - 23:07 | Link to Comment truont
truont's picture

It is not that easy.

Since the US/UK/Western governments of Earth are supporting this LondonGoldPool2.0 since the 1970s, only a powerful sovereign nation can "jump on this", and invite the hedgie specs to join in.  And that nation wants to first be convinced that the LBMA does not have the gold it claims to have, and that the Western Central Banks will not rush to rescue a gold-run on the LMBA physical stocks.

It is not so easy.

 

Sun, 07/25/2010 - 18:59 | Link to Comment OpenEyes
OpenEyes's picture

Gold Bitches!!  

 

sorry, had to be said.

Sun, 07/25/2010 - 19:23 | Link to Comment teaddy bearish
teaddy bearish's picture

you mean gold bitcheeeeeeeeeeeeeeeez i suppose ?

Sun, 07/25/2010 - 18:59 | Link to Comment breezer1
breezer1's picture

access to data will continue to be restricted as collapse progresses.

http://www.oftwominds.com/blog.html

goebbels would be proud.

Sun, 07/25/2010 - 19:28 | Link to Comment Monkey Craig
Monkey Craig's picture

this is such  a great link....thanks!

i think false flag attacks will become more prevalent. i look for an attack dealing with the internet, where it will be some type of 'national security' reason for shutting it down.

Mon, 07/26/2010 - 03:12 | Link to Comment i.knoknot
i.knoknot's picture

as others have pointed out, shutting down the net shuts down billions in commerce/bill paying systems. a bit of a quandry, that one.

agree on the greatness of that link.

Mon, 07/26/2010 - 11:20 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

I started reading Smith's Survival+, but it got preempted by a delivery from London mentioned above. A good read nonetheless, and in many ways a guy who bridges the left-right chasm.

Sun, 07/25/2010 - 19:03 | Link to Comment doublethink
doublethink's picture

Is something (abnormally) fishy in the state of precious metals manipulation?

Perhaps as rotten as the state of Denmark?

In the most high and palmy state of Rome,
A little ere the mightiest Julius fell,
The graves stood tenantless, and the sheeted dead
Did squeak and gibber in the Roman streets.

---William Shakespeare, Hamlet

Sun, 07/25/2010 - 19:06 | Link to Comment TheGoodDoctor
TheGoodDoctor's picture

Could someone explain what the BIS gold swaps do? Thanks.

Sun, 07/25/2010 - 20:16 | Link to Comment DavidPierre
DavidPierre's picture

The inescapable conclusions are...

· the gold price is suppressed through fractional reserve bullion banking

· the gold market is selling on average 45 ounces of gold for every one ounce of real physical gold via “unallocated gold” (fractional reserve bullion banking). In other words the gold market is backed by only 2.3% gold

· The true price of physical gold is currently around $54,000/oz if fractional reserve bullion banking did not exist.

In the presence of fractional reserve banking with 2.3% gold backing the market price of “gold” is reduced to $1200/oz

· The US dollar has a purchasing power that is 45 times over valued

· The way to end gold price suppression is for investors to ensure they have allocated physical bullion preferably held outside of the bullion banking system

Sun, 07/25/2010 - 21:16 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

Could someone explain what the BIS gold swaps do?

 

See the article and discussion here:

 

http://www.zerohedge.com/article/guest-post-gold-swap-signals-roadmap-ahead

Sun, 07/25/2010 - 19:21 | Link to Comment Nihilarian
Nihilarian's picture

Goldmoney.com no longer a good idea?

Sun, 07/25/2010 - 19:22 | Link to Comment DavidPierre
DavidPierre's picture

The bottom line is that the entire system...

IS ALREADY BROKE AND BANKRUPT!

Here is the humorous part, banks have sovereign government bonds as their primary investment assets.

Central banks and sovereign governments have spent the last 2 years blowing up their balance sheets and borrowing to oblivion which has caused the beginnings of the "sovereign witch hunt".

SOVERNIANS WILL DEFAULT with the big enchilada being the U.S..

 Of course when the U.S. goes, there can be nothing left standing because the Dollar is held everywhere and is the foundation for the global banking system, so why bother with a stress test for European banks?

Why not not just do a "bankruptcy clock" for the U.S.?

What's the upside to these tests. If they all pass then what sort of test is it? And what happens to those banks if they do fail? Does that serve to "help" them raise capital?

Actually in a worst case scenario a bank run could even get started!

Maybe Europe is hoping to kick off a "U.S. style" rally in their banks, it worked here right? So why not?

I have a better idea for these pinheaded accountants, why not run a "stress test" that assumes that everyone who has purchased "paper Gold" suddenly comes to their senses and asks for delivery.

Can you say "the MOTHER OF ALL BANK RUNS"!?

Now THAT would be one hell of a test huh!? Maybe just a bit too stressful though! 

 Bill H. @ GATA

Sun, 07/25/2010 - 19:28 | Link to Comment TheGoodDoctor
TheGoodDoctor's picture

No Bank Left Behind!

Mon, 07/26/2010 - 01:09 | Link to Comment MrPalladium
MrPalladium's picture

Touche!!

Sun, 07/25/2010 - 22:27 | Link to Comment SWRichmond
SWRichmond's picture

Of course when the U.S. goes, there can be nothing left standing because the Dollar is held everywhere and is the foundation for the global banking system

Not to mention, U.S. Treasuries will lose their status as the basis for the "Risk-Free Rate of Return."

Muahahahaha

Sun, 07/25/2010 - 19:34 | Link to Comment basejump66
basejump66's picture

I wonder how many tons China, Russia, India, etc. can buy at $1190?    They probably know not much, but are probably playing the game per Western Central Bank rules.  

Sun, 07/25/2010 - 19:49 | Link to Comment Temporalist
Temporalist's picture

Looks like the India CB purchase was great timing...if they got delivery.

Mon, 07/26/2010 - 07:35 | Link to Comment Hunch Trader
Hunch Trader's picture

The proper question is how many tons Russia and China want to buy on the market, when they're actually mining the stuff by the truckload. Russia has been an active price supporter to hold up the value of what they mine, China not even that as they do a splendid arbitrage with their cheap, plentiful and expendable labor force.

 

Sun, 07/25/2010 - 19:41 | Link to Comment AUD
AUD's picture

"nor comprehend how the bullion banks could be trading on a net basis more than 240,000 tonnes of gold annually while the global mine output was only 2,400 tonnes."

I ask again; What about the 150000+ tonnes of gold mined since the dawn of human history?

While I don't doubt central & bullion banks are leveraged, to assume that none of the existing stocks of gold circulate is potentially leaving a large margin for error.

Sun, 07/25/2010 - 21:28 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

What about the 150000+ tonnes of gold mined since the dawn of human history?

 

I think they are making allowance for that. 240,000:2,400 = 100:1, whereas the GATA guys suggest a paper trading to gold trading ratio of 45:1.

I have no idea if GATA's 45:1 figure is correct but they seem to have made allowances for some regular trading of extant gold, haven't they?

 

 

Mon, 07/26/2010 - 00:12 | Link to Comment fibowave
fibowave's picture

Well he's not stated any numbers to indicate he's accounted for it.

 

I don't know if its even possible to weed out what's old gold and new gold. Do daily spot trader transactions count towards the 240k number?

Mon, 07/26/2010 - 00:36 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

As per my post, it does seem as if he is accounting for sales of extant gold. Please reread.

 

If you are truly curious about the origin and nature of the figures cited in the article, I would imagine that a review of archived material at GATA would ameliorate your concerns.

Mon, 07/26/2010 - 07:07 | Link to Comment breezer1
breezer1's picture

three times more gold traded than oil in $$$.

Sun, 07/25/2010 - 19:43 | Link to Comment BurningFuld
BurningFuld's picture

So why don't the Gold miners grab a set and cut off the ever so distinguished London Bullion Mental Association and set up their own Bullion Association? Call it "Dial a Bar". Not like their is no demand for Gold right now. Something tells me this would fix the price issue very quickly.

Sun, 07/25/2010 - 20:07 | Link to Comment ArrestBobRubin
ArrestBobRubin's picture

+100

Sun, 07/25/2010 - 20:17 | Link to Comment breezer1
breezer1's picture

very good point. 70% of the worlds mining companies are registered in canada. publicly traded companies in canada are easily manipulated and controlled. barrick only dumped it's hedges because it was an embarrassment.

professor Fetke made the same point in a paper suggesting that gold mining companies hold their production after costs.

Sun, 07/25/2010 - 19:53 | Link to Comment beastie
beastie's picture

This should get real interesting real fast. Can I buy some default swaps on Comex default? :)

Sun, 07/25/2010 - 20:19 | Link to Comment knukles
knukles's picture

Call Goldman.  They'll "take care of 'ya" real good.

Sun, 07/25/2010 - 20:20 | Link to Comment malusDiaz
malusDiaz's picture

Sure! The Comex sells those and backs them as well!

 

Physical Gold Bitches & Hard Silver Ho's!

Sun, 07/25/2010 - 21:16 | Link to Comment The Rock
The Rock's picture

DEMAND DELIVERY BITCHEZ!!!

I wish that everyone who "owns" gold (not physical) would  demand delivery.  What a run that would be!

http://www.youtube.com/watch?v=vWz9VN40nCA

 

Sun, 07/25/2010 - 20:00 | Link to Comment tempo
tempo's picture

I fully expect the Treasury (IRS) to demand a full listing of all gold holdings as part of your tax return.   Then a annual holding tax will be imposed on all gold holdings.   Then a limit will be placed on the value of holdings that individual can own.  Perhaps a sliding scale annual tax on holdings above $5000.....then confisication.  Private individuals can only hold paper, not gold under penalty of $100,000 and 10 years in prison for ever oz of gold held. Now that should guarantee the value of the dollar

Sun, 07/25/2010 - 20:07 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

They might.  I think probably not though.

But, if they do, I think LOTS of gold goes into deep hiding, exported, or used in various black markets to come.

I think fofoa's Freegold is more likely.  China is encouraging their citizens to buy gold.

Sun, 07/25/2010 - 20:15 | Link to Comment ozziindaus
ozziindaus's picture

China is encouraging their citizens to buy gold.

So you'd consider the possibility of the US confiscating gold from it's citizens but China wont?  

Sun, 07/25/2010 - 20:36 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

ozz, I think that .gov will NOT seize the gold.  They may try, who am I to know?  But, I think LOTS of people would not comply.

I use the China example as a sort of piece of evidence that allowing gold to flow freely is a good thing, and even the "Reds" see this.

.gov trying to seize gold would be the surest sign of real bad dictatorship just around the corner.

Sun, 07/25/2010 - 21:53 | Link to Comment UncleFester
UncleFester's picture

Not sure if the 'Reds' view free flowing gold as a good thing.  I'm more inclined to see it as a shot across the (Atlantic oligarchs') bow.  My interpretation:

"We both want the same thing, to control our populations.  But you better reserve a high seat for us when you remake the World Order.  Do not forget: we produce, you consume.  Just to prove the point, look what happens when I convert this big V8 engine of growth into consuming gold and oil instead of producing all the cheap plastic shit you guys crave.  Step lightly or we'll blow up that scheme of yours right in your face."

It's either something like that or China's doing exactly what Lord Rothschild told them to do.  You decide.

Sun, 07/25/2010 - 23:27 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

A touché to you Uncle!  I had not thought of that wrinkle(s). I will toss your idea into the hopper for further analysis (assuming I do not forget it first.

Uncle Fester was, of course, my favorite character in The Addams Family (duh...).

Mon, 07/26/2010 - 03:27 | Link to Comment i.knoknot
i.knoknot's picture

i liked 'hand', as in "watch the other..." - bought the black&white TV series for domestic consumption (ad-free :^)

re: the comment - general agreement - my sentiment is that the BRICs are taking their time and someday (soon?) going to announce general agreements to trade in some new gold-backed currency... but only after they've *quietly* migrated their dollar holdings to real goods. brazil/SA is the only big player that i haven't seen making big noise about their gold collection activities. the rest of 'em couldn't be more clear in their intentions.

a completely dollar-stuck/desperate europe and US vs the BRICs and friends... pick your side.

and BTW, they are patient.

(2cts)

Sun, 07/25/2010 - 22:25 | Link to Comment mrgneiss
mrgneiss's picture

The gov't won't try to seize gold any time in the future - why?  Far far fewer of the sheeple hold it than back in the 1930's, the sheeple have been convinced by Fed influenced MSM propaganda that gold is worthless.  Back then, people knew what holding gold meant.

Mon, 07/26/2010 - 00:00 | Link to Comment merehuman
merehuman's picture

read today.  In 3 states of the USA it is now illegal to videotape a policeman while he is on duty. 4 to 10 years prison. Free country? Where?

Sun, 07/25/2010 - 21:07 | Link to Comment nmewn
nmewn's picture

"So you'd consider the possibility of the US confiscating gold from it's citizens but China wont?"

In my opinion, discussion of confiscation has to be kept in reality.

The gold they can quickly and effortlessly confiscate is outside of ones control. Safe deposit boxes at banks & etc. They have no idea what GPS fishing coordinates might mean to someone else ;-)

If it comes to door knocks, I would expect a "patriotic plea" first to all citizens along the lines of "look we really screwed up and if you'll give us just one last chance..."

What they will have to take under consideration is we, unlike the Chinese are armed and by that time all that will be left to confiscate is a few gold chains that a hefty percentage of the officers in charge would filch before it got back to them. Whoever them is.

Hardly worth the effort...IMHO.

Sun, 07/25/2010 - 21:30 | Link to Comment ozziindaus
ozziindaus's picture

I just don't think it will happen in the US. The last time it did, it was legal under government decree and international agreement. Gold backed dollars meant that gold was required to inflate dollars to meet demand just like taxes are somewhat required to back the USD through the US treasury today. If the gov. could not confiscate a portion of your earnings, income, capital gain etc, the bond rates would be unsustainably high and hence no inflation of the money supply without immediate collapse. 

So the US does not need anyones gold. Silver on the other hand would likely be purchased back due to scarcity induced by war or embargoes. I don't know but no one should be worried IMO. 

Sun, 07/25/2010 - 21:51 | Link to Comment RockyRacoon
RockyRacoon's picture

Yup.   401k is a much easier target.

Sun, 07/25/2010 - 22:22 | Link to Comment ozziindaus
ozziindaus's picture

The absolute scam of the century but i doubt it too will be confiscated. It performs it's purpose well enough as Wall Streets liquidity spigot. 

But I envision something else. Why isn't the public demanding a premium (interest rate maybe) from the mutual funds for using our money rather than us paying them a fee? Where else could they have access to so much guaranteed money?

Mon, 07/26/2010 - 09:57 | Link to Comment grunion
grunion's picture

Once they have had a taste, it is really hard to get them back down to the farm....

Mon, 07/26/2010 - 02:07 | Link to Comment Temporalist
Temporalist's picture

The tax structure is already enough to chase people out of the U.S.  That would just be another nail in the coffin.  There are too many people that would make a stink too that would be a very public issue.

Sun, 07/25/2010 - 20:03 | Link to Comment fibowave
fibowave's picture

Gold mined to date is approximately 165,000 tonnes* and there isn't really any way to 'consume' gold, so why is he comparing annual gold traded versus annual gold mined?

What about gold sales from people who previously owned it?

[*] http://www.gold.org/faq/answer/76/how_much_gold_has_been_mined/

Sun, 07/25/2010 - 20:04 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Gordon_Gekko wrote a great article a few months ago on how time is short for us to buy physical gold.

I absolutely concur.  Buy physical Au, Ag, and or Pt soon.

Sun, 07/25/2010 - 20:20 | Link to Comment billhilly
billhilly's picture

good to see you back DoChen

buy, buy, buy!

Sun, 07/25/2010 - 20:27 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Back at you!

+ $1190

+ $18.00

Now go and buy some Pt and and get + $1500!

Sun, 07/25/2010 - 21:09 | Link to Comment billhilly
billhilly's picture

got a piece 2 weeks ago, just 1 oz but its a start...nice little old lady sold it to me for spot too!

Sun, 07/25/2010 - 23:30 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ $1500 to you then! 

We have a winner!  Diversification in PMs gets you into about the best club that exists!

Sun, 07/25/2010 - 20:25 | Link to Comment RobotTrader
RobotTrader's picture

If there was any truth to this...

Some hedge fund would have already taken advantage of it, requested physical delivery, and the gold price would have been skying already by now.

Way too easy money to be made in this case, and someone would have already jumped on it.

Sun, 07/25/2010 - 20:51 | Link to Comment beastie
beastie's picture

You would think. But it appears to be penned by GATA but I can't find it on their site.

 

Sun, 07/25/2010 - 20:54 | Link to Comment beastie
Sun, 07/25/2010 - 20:59 | Link to Comment Stonecold
Stonecold's picture

John Paulson did.  He seems to do pretty good.

Sun, 07/25/2010 - 21:10 | Link to Comment TheJudge2012
TheJudge2012's picture

It could be getting very close considering:

"The developing slowdown in delivering physical silver to fulfill maturing commodity contracts"

http://news.coinupdate.com/global-economy-gets-closer-to-the-precipice-0...

Might give somebody an idea.

Sun, 07/25/2010 - 21:10 | Link to Comment hack3434
hack3434's picture

Uhhh Paulson & Soros? (Through GLD) Sprott (PHYS)? 

 

If GLD had a "run" who would get the gold that they claim to have? 

From GLD prospectus:

REDEMPTION OF THE SHARES

The Shares may only be redeemed by or through an Authorized Participant and only in Baskets.  (Basket equals a block of 100,000 Shares). 

 

Paulsons GLD holdings: 31,500,000

Soros GLD holdings: 6,500,000 (as of Feb '10)

 

 

 

 

Sun, 07/25/2010 - 20:33 | Link to Comment Kreditanstalt
Kreditanstalt's picture

Recently there have been many persuasive articles about this likely upcoming shortage of physical gold, like this excellent one on the GOFO gold leasing rate:

http://ftalphaville.ft.com/blog/2010/07/21/287566/the-story-of-the-gold-curve-so-far/

We know that there is a gradual run on unallocated accounts and bullion banks.  It's slow but ongoing.  Real metal is in shorter and shorter supply and the only reason I can surmise as to why it hasn't dried up altogether is that the public is not in on it yet, or that demand is still being 'bought off' through stocks, ETFs and other forms of 'paper gold'.

The price, of course, is largely determined through the trading of various kinds of paper gold and gold futures contracts, not through the actual metal changing hands.  It's a really rigid and unresponsive mechanism and doesn't reflect the real scarcity of bullion.

My question is this: we know the price will slowly and gradually come to be more representative of the underlying (scarce) physical metal...how will this transition show itself in the price structure and the gold price?  What signs will we see early on?

 

 

Sun, 07/25/2010 - 21:38 | Link to Comment dark pools of soros
dark pools of soros's picture

the ticking of the clock is getting louder for everyone to bail out of their 401k's etc and grab physical

 

anyone have a recent experience going through that??  penalties? taxes? gun to your head stopping you from doing it??

 

that would trigger the mother of all runs on physical once that became a trend...

Mon, 07/26/2010 - 00:50 | Link to Comment Mariposa de Oro
Mariposa de Oro's picture

DPS,

I cashed one of my 401ks to
buy gold coins. I had Vanguard
take out 30% for the IRS. I had to
sign (original signatures only) two
forms before I got my money. I'm
on a remote island in the Pacific
with only two planes a week. The
whole process took about a month.
Also, Vanguard asked if I was
married because if I were, I'd
need permission from my spouse.

Mon, 07/26/2010 - 11:32 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

If one has the ability to take out a loan against the balance, then there is no distribution hit and you pay yourself back at a tolerable interest rate.

Tue, 07/27/2010 - 23:41 | Link to Comment dark pools of soros
dark pools of soros's picture

thanks MDO...  most people are way too scared.. 

 

but yes Bend Strain,   I did a small loan to give it a go and it worked fine.. I paied off some high % debt..  next loan will be large and turned into physical...  it is the bast way to take chips off the table

Sun, 07/25/2010 - 22:19 | Link to Comment saulysw
saulysw's picture

"My question is this: we know the price will slowly and gradually come to be more representative of the underlying (scarce) physical metal...how will this transition show itself in the price structure and the gold price?  What signs will we see early on?"

My thoughts --

  1. Shortage of physical metal. 1oz coins are probably the ones to watch.
  2. Growing "premium" for physical metal. This shows stresses in the pricing mechanism.
  3. Large outflows from bullion banks as larger investors claim the metal or converting from "unallocated" to "allocated".
  4. Restrictions of information, as the broken market is covered up
  5. Changing of laws. This will be deemed a "national security issue" and on that basis almost anything can be done.
  6. Chaos of bilical proportions in the market, as everyone tries to squeeze though the door marked "exit", only to find it's been bricked over, ala the matrix.
Sun, 07/25/2010 - 22:38 | Link to Comment Kreditanstalt
Kreditanstalt's picture

I agree...here in Taiwan I can still buy one-ounce bars and coins from the banks - UBS bars or Canadian/Australian coins at 2-3% premium.  I can't say how limited their supplies are ~ most people here buy them, wait for the price to rise in local currency and "sell" them back...it's a game.

But in the U.S. it seems that it may be more difficult.  Sure, there are lots of outfits flogging gold everywhere you look, but take a closer look: most of them are trying to sell outrageously overpriced collector coins, encapsulated modern GAEs and other modern bullion coins or multi-level-marketing pushed schemes to sell their own gold "rounds" at massive premiums.

Not many have large quantities of basic bullion coins available all the time.  They are often 'out of stock' or sold in limited quantity as faras I can see.

Yeah, I imagine the premiums for basic unslabbed bullion coins will rise irrespective of the "gold price".

Sun, 07/25/2010 - 23:16 | Link to Comment dark pools of soros
dark pools of soros's picture

i'm not a plug for scottsdale silver but i find their site to be the most open about their inventory and more an dmore i am seeing them print right on their product page 1-2 week delays..  just a few weeks ago they had a good amount in stock of everything

 

http://store.scottsdalesilver.com/storefront.php

 

 

Sun, 07/25/2010 - 20:32 | Link to Comment EconomicDisconnect
EconomicDisconnect's picture

What kills me is many people I know (and respect) think of gold and silver as a stupid thing goldbugs are fixated on, yet when I ask them if this stuff is crap why do central banks hold it and why can we not get audits, etc.  They have no answer but still say its all crap.  Never got why so many hate the metals.

Sun, 07/25/2010 - 20:46 | Link to Comment knukles
knukles's picture

Exact same experience.  Poo poo it, barbarous relic, good for jewelery, only nuts buy it, you some kinda traitor (?!?!), got any more conspiracy theories, silence and shaking of head....

Then ask why is it that Central Banks hold so damned much of the stuff in some of the most secure vaulting locations in the world, and you get the "it doesn't matter, none of my business, or your business for that matter, the gubamint gotta do stuff we don't understand....  The full range of bucking the system, asking questions not to be asked, upset the apple cart, ostracized from the hive as a nutter....

Why?
Because there's something there, that's why.
And I don't need to be a genius or a conspiracy theorist to figure out that some thing's amiss with what I'm being told by the powers that be.  QED 

Moreover, if there is a "problem" this should only make it "worse", as more folks reconsider the risk trade offs and are drawn to the physical, physical allocated unencumbered types of holdings which will place further pressure on good delivery.

Sun, 07/25/2010 - 21:02 | Link to Comment Stonecold
Stonecold's picture

The problem is the government could decide gold is worth nothing. 

Sun, 07/25/2010 - 21:13 | Link to Comment nmewn
nmewn's picture

LOL.

The people could decide the government's word is worth nothing...then where would we be ;-)

Sun, 07/25/2010 - 22:19 | Link to Comment Rusty Shorts
Rusty Shorts's picture

 - exactly, why in the hell are g***ernments so afraid of Rothschild?? Can't we just grow a pair of fucking balls and issue our on currency, WTF. Where is Andrew Jackson when you need him?

Sun, 07/25/2010 - 22:23 | Link to Comment LeBalance
LeBalance's picture

lol. could?

Sun, 07/25/2010 - 22:33 | Link to Comment Fast Twitch
Fast Twitch's picture

Jim Rickards tweet today : "One more step towards a one world government. Meet the Cross-Border Resolution Group." Suppose we get a global policy where no bank would be allowed to convert gold to cash...Just saying... BTW still long gold, but wouldn't be surprised to get the shaft.

Mon, 07/26/2010 - 11:48 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

That is when it would suck to be a Jim Rickards (whom I respect). In Argentina, you already don't go to a bank to convert your metal. That is why smaller fractions are worth the premium. That is why silver should ride shotgun on the journey. I expect "Governments" to do stupid and crazy things as they thrash about in death throes.

It will take fortitude to physically survive the waterfall. One World Gummint is a tell that people should start thinking beyond physical survival. It's not like we weren't warned about how that plays out.

Sun, 07/25/2010 - 22:14 | Link to Comment Burnbright
Burnbright's picture

The problem is the government could decide gold is worth nothing. 

That has to be the stupidest comment of the day.

Sun, 07/25/2010 - 22:19 | Link to Comment sgt_doom
sgt_doom's picture

Then it'll be time to buy in on those Lithium ETFs and Food ETFs.....

Mon, 07/26/2010 - 10:10 | Link to Comment grunion
grunion's picture

...big bucks for treating bi-polar disorder....

Mon, 07/26/2010 - 12:34 | Link to Comment wyosteven
wyosteven's picture

They already have.   It's called $50, and printed right on every double eagle.

All that is left is that pesky "legal tender" mumbo jumbo.

 

Sun, 07/25/2010 - 21:05 | Link to Comment israhole
israhole's picture

These naysayers might be correct, but at least GOLD will hold it's purchasing power in an uncertain world.

 I already own it, and am a buyer on all "pukes", so to speak.  My next purchase is due this week.

 

Sun, 07/25/2010 - 21:45 | Link to Comment dark pools of soros
dark pools of soros's picture

ZH community says they look for answers but they are all solo artists...  why not use this medium to organize??

why not get the word out and explain the facts on pulling out retirement funds to buy physical?  Does anyone believe Gold/Silver will crater in the next few years?  How many believe it will double?? triple?? etc?

 

where is the risk?  Penalties too severe?  Stigma? Dogma? why contribute to the status quo stasis??

 

Sun, 07/25/2010 - 20:41 | Link to Comment Jasper M
Jasper M's picture

One thing that seems to be missing from the article is a time unit. We are told that 100 ounces are traded/ounce held . . . is that traded per year? Per day? 

Big honking difference. 

Given the value of all the derivative 'insurance' that will be asking to be paid off in the next deflationary leg down, I think we may find it is the much maligned $US that will be in short supply. "Quadrillion". Say it with me. "Quadrillion". Credits will be revalued to nothing as they are made, leaving not enough FRNs, and not enough presses to make them.

Sun, 07/25/2010 - 20:44 | Link to Comment ozziindaus
ozziindaus's picture


In light of the US holding a 1/4 of all the gold held in reserves by governments and CB's, why would the US sit idly by while it gets manipulated down or furthermore, be involved in it's suppression? How would this benefit the US? You CAN have a strong dollar and high gold prices simultaneously.

USD floats freely on the market and so does gold. There is no direct relationship between the two except to say that gold is widely accepted to be priced in USD, otherwise it's correlation is meaningless. They both have separate dynamics influencing their values especially since the USD is so profoundly accepted and liquid internationally. Having said that, someone please explain to me why and how a rising gold price undermines the USD?

Sun, 07/25/2010 - 21:18 | Link to Comment basejump66
basejump66's picture

it doesn't.  but somehow the FED still think it does.  I'm amazed that this "suppression" allows other countries like Russia and China to buy at cheap prices.  BRIC's love the "suppression"... it's blue light specials for them.  

Sun, 07/25/2010 - 21:42 | Link to Comment ozziindaus
ozziindaus's picture

But that's my point. Is it really being suppressed? If anyone has concrete evidence of this, then take it to the Hague. 

Short positions are no evidence of suppression. It's just a business decision (bet) some hedge fund has placed no matter what the size. 

If this suppression theory is correct, then it's a first for me. I don't know of anything else of value so wildly known to be deliberately kept down in price while everything else has the burden of facing the market. eg. houses, oil, food, equities etc. If anything, it looks as though gold is being held up. Just compare it to the examples listed. 

Sun, 07/25/2010 - 21:48 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

I don't know of anything else of value so wildly known to be deliberately kept down in price...

 

Like the value of gold, the value of liberty is suppressed.

This is not a coincidence.

Mon, 07/26/2010 - 00:12 | Link to Comment merehuman
merehuman's picture

What if, what if there is a deal where we keep the silver price low so the oil sellers can trade the cheap dollar for their precious oil. Often the silver price and oil price would rise or fall together. Just my imagination, running away with me

Mon, 07/26/2010 - 11:56 | Link to Comment Sabremesh
Sabremesh's picture

You are not familiar with the basic arguments regarding gold price suppression?

Gold is the world's oldest and purest form of money. Since Nixon severed the last vestiges of the gold standard in 1971, all global economies have been pushing a rival form of money - fiat (paper backed by steel in the form of a printing press). The principal danger to the fiat experiment is a general realisation that paper money really is just paper, and people start hoarding gold once again. Governments have therefore been actively suppressing the gold price since the spike of 1980 (central bank sales, short selling, and a brilliant scam called GLD). In the last ten years, this activity has become more blatant, more desperate and increasingly less effective. Many believe that a tipping point is not far away, and that fiat will be destroyed by hyper-inflation, leaving gold and silver as the only recognised forms of money.

Sun, 07/25/2010 - 21:31 | Link to Comment zen0
zen0's picture

why is someone flagging a question as junk? whats that about?

Sun, 07/25/2010 - 22:01 | Link to Comment RockyRacoon
RockyRacoon's picture

Looks like he might not have had a full swig of the kool-aid and a rabid gold-bug took his revenge.  More likely, the junker didn't really read the post fully.  The questions were a bit naive but on the right track. 

Sun, 07/25/2010 - 22:12 | Link to Comment ozziindaus
ozziindaus's picture

naive no, esoteric yes

Sun, 07/25/2010 - 22:20 | Link to Comment RockyRacoon
RockyRacoon's picture

You have my apologies.  I guess I'm so steeped in the years of acceptance of what actually goes on that I imagine everyone else is, too.  Not so.

I hate to do this to you, but if you are not an avid FOFOA reader then it's time to start.

http://fofoa.blogspot.com/

 

Gold is cheap insurance against calamity, dishonesty in the financial and political systems, and it is a soporific.  It is cheap insurance because you pay the premium only once. 

Sun, 07/25/2010 - 23:13 | Link to Comment Mitchman
Mitchman's picture

Great article from fofoa.  Thanks Rocky.  

Sun, 07/25/2010 - 23:39 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

fofoa is the man.  His writing IS dense and hard to wrap your brain around, but I have learned so much from his site.  My recommendation to goldophiles is to go back at least a year (which IS a time investment) to better understand his ideas.

His goldporn is nice too!

Mon, 07/26/2010 - 00:14 | Link to Comment merehuman
merehuman's picture

Because there is no gold in ft knox?

Sun, 07/25/2010 - 21:49 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

someone please explain to me why and how a rising gold price undermines the USD?

 

Money has three characteristics: it is a medium for exchange, a store of value and a unit of account. Fiat money works well as a medium of exchange but it fails as both a store of value and as a unit of account.

When gold priced in fiat currencies rises the fact that fiat currencies are not stores of value is highlighted. If more folks understand that gold is a reliable unit of account and fiat is not, then the manipulation of official economic statistics such as CPI becomes more apparent.

 

 

Sun, 07/25/2010 - 22:09 | Link to Comment ozziindaus
ozziindaus's picture

OK so sticking to golds resilient store of value, do you see any compromise today? ie. does it still maintain purchasing power? Can you still buy that too often quoted suit, belt and slipper ensemble? The answer is most likely yes and so I ask, how has gold been manipulated if it has served and continues to serve it's purpose regardless of what it's worth in USD's, Euro's or Rupees? Funny thing is, the dollar almost buys the same stuff it did 10 years ago except gold oil and some foods. So ooooooowi, what up with that? 

http://www.hulu.com/watch/102975/saturday-night-live-what-up-with-that

Sun, 07/25/2010 - 22:29 | Link to Comment Burnbright
Burnbright's picture

Well there is no way to know how much gold has been manipulated so it is difficult to tell you how much gold it would take say to buy a house or a car even comparing to previous era's because technology, innovation, and increases in population cause deflation. If you looked at the value of the dollar when gold and silver were used before banks were allowed to lend out money on leverage the value of the dollar was appreciating over several decades because the cost of capital and labor was deflating while the supply of gold was steadily increasing yoy (I think historically it has been about 2% a year on average however I don't really know for sure).

So for example in the 1920's it cost about 2000 dollars to buy a house (average cost of a home nation wide), ~1 ounce of gold was 20 dollars and ~1 ounce of silver was a dollar. So it would have taken about 100 ounces of gold or 2000 ounces silver to buy a home. Today the average price of a home is 250k and a 100 ounces of gold would be roughly 120k, 2k ounces of silver would 40k dollars. So as you can see something is rather off about ratio of gold/silver to houses and further more I would think with more homes available than people can afford to the point that their are at least 3-5 empty homes per neighborhood in my small town of Arcata the cost should be much lower. 

Sun, 07/25/2010 - 22:39 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

golds resilient store of value...how has gold been manipulated if it has served and continues to serve it's purpose regardless of what it's worth in USD's...

 

One dollar in gold or silver bought more in 1900 than it did in 1801.

If gold had remained in circulation as a currency throughout the 20th century, savers would have reaped the benefit of a strong deflationary trend created by modern increases in productivity. This is exactly what happened in the 19th century. One can argue that even greater productivity gains were made in the 20th century and that the deflation benefit would be greater as well.

Sun, 07/25/2010 - 22:55 | Link to Comment Fast Twitch
Fast Twitch's picture

1 oz of gold buys 298 Big Macs today...

Sun, 07/25/2010 - 23:18 | Link to Comment ozziindaus
ozziindaus's picture

But only 120 in 2000. Whaaaaaaat up wit dat?

Sun, 07/25/2010 - 23:34 | Link to Comment Fast Twitch
Fast Twitch's picture

LOL...

Mon, 07/26/2010 - 01:10 | Link to Comment Fast Twitch
Fast Twitch's picture

Mac ingredients represent a basket of commodities. Gold represents money. Q; are ingredients rising faster than money? If so then Gold is suppressed.

Mon, 07/26/2010 - 01:39 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

Mac ingredients represent a basket of commodities

The Mac does indeed represent a basket of commodities (I liked that, that was good). But these ingredients are priced in Federal Reserve Notes and not gold. The value of Federal Reserve Notes can be rather volatile.

 

Gold represents money.

Therein lies the rub. Actually gold used to be money. Then money represented gold. Now gold is priced in dollars. Dollars used to be defined as a specific quantity of gold  or silver  -- about 1/20 oz. of gold or 3/4 oz. of silver -- so the dollar was itself a basket of select commodities. Today the dollar is not defined as being of any particular value. One can ask how much a Mac costs in undefined dollars and compare that to how much gold costs in undefined dollars but such calcualtions will inevitably leave us scratching our heads. If the gold price spikes on a particular day due to some political event but the Mac price remains constant on that same day, what does that tell us?

If the US was still on a gold or bi-metal standard these questions would be much easier to answer as metals more or less faithfully fulfill the monetary role of being a unit of account.

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