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A very compelling read. It's at the point that those orchestrating such blatant price management don't give a damn anymore who knows though. Stakes are too high now. This paper needs to go viral.
Great reading, but what can we do about this? Where's the action?
I cannot read (or see) the paper at work; look forward to reading tonight.
Let me add a tangental article, that I can only assume was not the point of this paper:
Ex Pit transactions are the bread and butter of the grain trade, at least the grain export trade as sales are priced on the 'basis', which is the price relative to the nearby futures price at a given moment. The buyer and seller, a terminal elevator perhaps and the foreign buyer are both hedged so the swap of futures, ex pit, clears the hedges and the payment in cash is the 'basis'.
There is nothing stinky about this. I suppose the same thing happens with gold except I can't quite get my head around who is doing all the hedging.
While this paper makes sense, I still have one question. Why, when I buy physical gold do I not have any trouble actually taking delivery of my product? For the past several years I have regularly taken delivery at these supposedly artificial prices. You would think that the large dealer that I purchase from would be knowledgeable of this problem and not want to actually sell me the product at this price, or at least have trouble making the delivery.
the person who wrote this does not understand the gold etf market. and while the gold market may or may not be rigged, it has nothing to do with the author is writing about.
first, the efp (exchange for physical market) exists because market participants trade the physical, etf and futures arbitrages. after accumulating one side or the other, they wish to unwind their account and a broker seeks another counterparty that is looking to unwind the other way (or assume the position for a price). there is absolutely nothing nefarious about this. there are traders whose job is to make markets in gld and offset it in futures. at the end of the day they accumulate a position and seek to unwind. that's it. others trade the physical gold market against the futures. and they need to unwind. there are different kind of efp's.
second, the gld etf is designed so that authorized participants can exchange 100,000 share blocks of gld for metal (and vice versa). yes, it is true that individuals are not authorized participants. however, if you had an account and were allowed to accumulate 100,000 shares of gld, i would expect that your clearing firm or broker to allow such a transaction provided they were authorized participants. a list of participants online (from another conspiracy source) lists a number of authorized participants. http://www.goldensextant.com/GLD.html note that they indicate ewt and fimat are "myserious." i am not familiar with ewt but fimat is one of the largest clearing houses for the exchanges (they now go by the name of newedge). the reason is that the most common user of efp's and gld efp's in particular are entities that clear at fimat, merrill pro (which was a division of merrill dedicated to clearing exchange members) and goldman (i.e., goldman sachs execution and clearing -- old spear leeds and kellogg). most exchange members are not clearing members -- they hire clearing firms, most often those above.
i do not care for goldman at all. i am not even telling you that there is not a conspiracy. but do yourself credit and ask a few questions first. i wouldnt expect an individual investor to know these facts. but i would expect the author of the essay to.
on the other hand, if the author wrote that he cleared one of these firms, tried to submit 100,000 shares of gld and was not allowed then i could see red flags going up. until then or until there is real evidence that gld does not have its full backing in gold, i would work on gathering real evidence.
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