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Central Bank Gold Manipulation “Steady As Ever” - Avoid “Paper Gold”

GoldCore's picture




 

Gold may have its worst week in 2012 as it is currently down 3.5% for the week in dollar terms and nearly 3% in euro and pound terms. However, gold is still higher so far in June and the fundamentals suggest we have bottomed or are very close to a market bottom prior to a summer rally.

However, further short term weakness is possible as speculators go to cash and support is at $1,540/oz (see chart above).

Gold will be supported by safe haven demand due to the risk of contagion from European countries sovereign debt. There is the possibility of successive sovereign defaults like a child’s game of dominoes.

The poor economic data should also support gold. Economic data yesterday showed euro-area manufacturing fell at its fastest rate in 3 years, and Chinese output was also down.  Americans seeking jobless benefits have increased and existing US home sales contracted.  

US economic woes are far from over.  The Operation Twist program extended by the US Federal Reserve doesn’t look like it will be the salvation to spur growth in the US economy.   

We fully expect “QE3” to occur which will also be positive for gold.

Chris Powell, Secretary and Treasurer of the Gold Anti-Trust Action Committee told Bernie Lo on CNBC Asia overnight that central banks are continuing to manipulate the gold market as they are interested in supporting government bonds and the dollar and keeping interest rates low.

Powell warns about “paper gold” and says that we “try to persuade investors that if they are purchasing gold, they had better get real gold – metal. They should not get “paper gold” and keep it within the banking system.”

He says that “there is huge naked short position in gold” and estimates that perhaps “75% to 80% of the gold that the world thinks it owns does not exist and is just a claim on a bullion bank that is underwritten basically by the central banks.”


Click here to watch video

Bernie Lo asks what is the “end result”?

With regard to price Powell said that he does not make predictions but he wonders “what the value or the price of gold will be if the world ever discovers that 80% of the gold that it thinks it owns – does not exist.”

“There may not be enough zeros in the world to put behind the gold price then.”

Powell said that buyers should own gold in “your hand”or in allocated format outside of the banking system.

He concluded by saying that surreptitious intervention in the gold market can continue as long as gold buyers do not own real physical bullion.

We do not endorse GATA’s opinions however some of their evidence and many of their arguments are persuasive. We have yet to see any analyst or commentator address the substantive issues they have raised and debunk or refute their allegations.


Currency Ranked Returns – (Bloomberg)

Free markets need freedom of speech and a plurality of opinion.  Group think and cosy consensus got us into today’s the financial and economic mess. Therefore, open, frank and rational debate about all aspects of the precious metal and other markets and our current monetary system is important.

Being fully informed of all of the facts and fundamentals driving markets are essential in order to protect and grow wealth. 

OTHER NEWS
(Bloomberg) -- LBMA Says Gold Trading Rose 8.5% in May as Silver Fell 4.1%
Gold trading climbed 8.5 percent to an average  of 19.5 million ounces a day in May compared with a month earlier, the London Bullion Market Association said today in an e-mailed report.

Silver trading declined 4.1 percent to a daily average of 135.3 million ounces, the LBMA said.

(Bloomberg) -- Gold-Silver Ratio Climbs to Highest Level Since June 5
One ounce of gold bought as much as 58.3138 ounces of silver today, the most since June 5, according to Bloomberg data. The so-called ratio was at 58.0126 by 7:36 a.m. in Singapore.

(Bloomberg) -- IShares Silver Trust Holdings Unchanged at 9,821 Metric Tons
Silver holdings in the IShares Silver Trust, the biggest exchange-traded fund backed by silver, were unchanged at 9,821.45 metric tons as of June 21, according to figures on the company’s website.

================================================================================

                   June 21    June 20    June 19    June 18    June 15   June 14

                      2012       2012       2012       2012       2012      2012

================================================================================

Million Ounces     315.767    315.767    315.767    315.233    313.293   311.741

 Daily change            0          0    533,507  1,940,108  1,552,109         0

--------------------------------------------------------------------------------

Metric tons       9,821.45   9,821.45   9,821.45   9,804.85   9,744.51  9,696.23

 Daily change         0.00       0.00      16.60      60.34      48.28      0.00

================================================================================

(PTI) -- Canadian citizen arrested, gold recovered
 A Canadian citizen was arrested after three kg of gold was recovered from his possession at N S C B International airport here.

Airport sources said Abdul Salam Chamundi came in a Quatar Airlines flight from Dubai and was about to come out from the international terminal when security recovered three kg of gold from his shoes early today.

(Bloomberg) -- Gold Seen Averaging $1,800 an Ounce by Fourth Quarter by RBS
Gold will average $1,800 an ounce by the fourth quarter, Royal Bank of Scotland Group Plc said in an e-mailed report today.

“From there, we reiterate our view that this move will be a ‘last hurrah’ for gold. We continue to see a downtrend commence from that point, which should see gold gradually fade to average $1,200 an ounce by 2015F.”

(FT) -- Gold market loses leading senior figure
The gold market has just lost one of its most senior figures.

Jeremy Charles, the veteran head of precious metals at HSBC, retires on Friday after a career of nearly four decades at the heart of the bullion industry. In that time, he helped to revolutionise the market.

Under Mr Charles, HSBC’s precious metals division has become one of the largest and most profitable franchises in the industry. With just 27 front office staff, competitors estimate that the bank’s precious metals division makes annual revenues of $200m-$300m a year, rivalled only by ScotiaMocatta, UBS, and JPMorgan. Along with JPMorgan, HSBC trades more gold in the London market than any other bank, traders say.

Mr Charles, who started his career in 1975 as a 19-year-old “tea boy” at NM Rothschild and went on to become chairman of the London Bullion Market Association, has witnessed the transformation of the gold market from a backwater to one of the most profitable areas of many banks.


Cross Currency Table – (Bloomberg)

For breaking news and commentary on financial markets and gold, follow us on Twitter.

NEWS
Gold heads for biggest weekly loss since December  - Reuters

NatWest online banking meltdown: Millions of customers unable to move money or pay bills as accounts freeze – Daily Mail

Gold Poised for Worst Week This Year as Silver Drops to 2012 Low – Business Week

Gold market loses leading senior figure – Financial Times

Euro's big four seek way out of crisis in Rome - Reuters

Gold futures fall sharply after data, Fed - MarketWatch

COMMENTARY 
Central Banks Manipulate Gold Markets - CNBC

Summer Lows At Hand? - GoldSeek

Keiser Report: Runaway Greek Cash – Max Keiser

Taibbi Is Back With The Scam Wall Street Learned From the Mafia – Zero Hedge

 

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Fri, 06/22/2012 - 19:11 | 2552769 Hannibal
Hannibal's picture

So much bullshit!...I think I'll move to Guatemala.

Fri, 06/22/2012 - 16:59 | 2552475 devo
devo's picture

When past fiats went to zero, do you think people were better off in gold or those currencies? All fiats eventually go to zero. US debt and monitary policy shows the dollar will go to zero. What else do you need to know? The only quesiton is the time line. With each QE having diminishing returns, gold could go exponential sooner than later. "Make it on Wall St, bury it on Main St" is a famous slogan for a reason. Even the anti-gold schills own a lot of gold. They just want Joe Sixpack to remain in dollars.

Fri, 06/22/2012 - 14:13 | 2551844 GlomarHabu
GlomarHabu's picture

Why are so many Wall Street pooh bahs and FED officials uncircumcized?  Because there's no end to those pricks.

Pass the ammo and lets water the tree of liberty.

Fri, 06/22/2012 - 13:53 | 2551789 debtor of last ...
debtor of last resort's picture

I believe we should discuss the price (value) of gold en silver when comex is in coma. Untill then, it's just subprime copper. Keep stacking.

Sat, 06/23/2012 - 06:22 | 2551776 Zola
Zola's picture

Ah the classic if you can't beat them join them. I have a quote for you : "Timid men prefer the calm of despotism to the tumultuous seas of liberty". Not only is it morally wrong to go along with what you know is evil and bad, it is the sign of a coward.

Fri, 06/22/2012 - 13:00 | 2551631 Bastiat009
Bastiat009's picture

I think I understand the difference between real gold and paper gold but I have never heard anyone explain how real gold was priced compared to paper gold.

Yes, real gold is a bit more expensive than paper gold just like you can never buy a currency at the price set by the "market" even though it's just paper.

€1 is worth $1.25 says the market. Now go to your bank, or to a currency trader and you will pay more than that.

Fri, 06/22/2012 - 15:37 | 2552166 Alpha Monkey
Alpha Monkey's picture

My understanding is, Phys gold price = Spot Price * (1+X), where X= the percent based on the quantity of gold sold.  At 1oz, you pay roughly 5%, at one gram you pay close to 40%.  Though, I have recently seen a chinese 1/20th oz coin (1.55g) at about 25%.  Perhaps small denominations of gold are going to get cheaper soon.

The spot price is determined by a spot contract, a contract to buy or sell gold and settle the contract almost immediately.  In other words, these are people wanting gold now, and their trading is a large influence on the spot price. 

However, another influence on the spot price is the futures market.  A gold future is a contract to buy or sell gold, at some point in the future, weeks, months, years.  This is the market, in my understanding, where the manipulation takes place.  It is here, where people are not necessarily looking to take physical delivery of gold, but instead can profit from the fluctuations of price.  Some legitimate business is conducted in the futures market, however, since physical delivery is less demanded, paper can be circulated in its place.  Large institutions are able to dictate changes in the futures price by "dumping" massive amounts of futures contracts (allegedly, un-backed contracts to sell gold they don't have), the price in the not too distant future gets pulled lower, and as a result, the spot follows.  It may be a form of arbitrage, like if the spot price starts riding high, and the future price is low, sell spot, buy future, and wait to take delivery later.

Fri, 06/22/2012 - 13:45 | 2551762 Jack Sheet
Jack Sheet's picture

to quote FOFOA

paper gold price - whatever the CRIMEX says it is

physical gold in your possession: priceless

 

Fri, 06/22/2012 - 13:19 | 2551704 ilovefreedom
ilovefreedom's picture

It all comes down to counter-party liability.

Wherein physical gold in your hand has no liability and in a breakdown is convertible to goods and services.

However paper gold like securities and even digitally held dollars in a bank account are at the mercy of whatever institution is providing the holding.

Just like there could be runs on the bank that prevent you from withdrawing currency, the same thing could happen to the paper market and is almost guaranteed to happen.

Infact it would be worse with the paper gold market as this article above says there is not enough physical bullion against the market, not even close.

Fri, 06/22/2012 - 14:06 | 2551828 DosZap
DosZap's picture

Infact it would be worse with the paper gold market as this article above says there is not enough physical bullion against the market, not even close.

And with most ETF Gold there is in the fine print at their discretion, to pay you in fiat, not in physical.

Read carefully.

Fri, 06/22/2012 - 18:16 | 2552635 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1 

Paper gold is bad for various reasons, including that little bit of fine print.  Most of the ETFs and similar are also paper (or even electrons)...  

There is plenty of gold, but the big owners of gold are NOT selling!  Who are they?  The ones who buy and hold their gold through the generations (the "Giants") and the central banks.

Go for the real thing: physical gold!

Fri, 06/22/2012 - 12:11 | 2551407 Stuck on Zero
Stuck on Zero's picture

So, if I'm not mistaken, it appears that the big financial groups are practicing "fractional reserve gold holdings."  As soon as a gold ETF purchases a huge pile of gold it "lends it out" to another firm for interest.  This firm lends it to another account, such as a commodity broker, and so on multiplying the apparent amount of gold held in the system by 10-15 times.  When it all starts to crumble then the "owners" will be stuck looking for the pea under the shells.

 

Fri, 06/22/2012 - 12:05 | 2551384 outamyeffinway
outamyeffinway's picture

Good news!!! According to RBS all the world's problems should be fixed by year end! Back to "normal".

Fri, 06/22/2012 - 12:27 | 2551193 Jack Sheet
Jack Sheet's picture

I wish you would distinguish between Crimex and physical when referencing prices.

Fri, 06/22/2012 - 11:19 | 2551150 Bay of Pigs
Bay of Pigs's picture

"We do not endorse GATA’s opinions however some of their evidence and many of their arguments are persuasive. We have yet to see any analyst or commentator address the substantive issues they have raised and debunk or refute their allegations."

They just answered their own question.

Fri, 06/22/2012 - 11:10 | 2551107 BanjoDoug
BanjoDoug's picture

How many Greeks (see pics ::  http://www.zerohedge.com/news/photos-fixed-greece ) wished they had a few pieces of PHYSICAL GOLD &/or SILVER right now ?

You can't compare dollars with gold, esp right now during the manipulation process.   Buy now and hold for the long term, in 10 years or so you'll be really glad you did......

Fri, 06/22/2012 - 10:54 | 2551008 swanpoint
swanpoint's picture

ZH is what I read to feel good about my PHYS and PSLV getting CRUSHED. I hope my wife doesn't find out.

Fri, 06/22/2012 - 10:35 | 2550895 diogeneslaertius
diogeneslaertius's picture

taking delivery of physical metals > all

Fri, 06/22/2012 - 10:31 | 2550871 duckarooni
duckarooni's picture

Considering there are 100 paper claims for every ounce of physical gold in existence I should think paper gold is the last thing anyone would consider getting into right now.

Fri, 06/22/2012 - 11:13 | 2551116 BanjoDoug
BanjoDoug's picture

Hummm.....  I doubt it's 100.....  I would expect it is FAR HIGHER......    Paper G is fine if you want to trade in ranges measure in hours or less, but worthless otherwise - a lot of people will get totally screwed when paper can't be resolved into the physical.....

Fri, 06/22/2012 - 10:30 | 2550863 Richard Head
Richard Head's picture

"...security recovered three kg of gold from his shoes early today"????????

Fri, 06/22/2012 - 10:54 | 2551009 SilverRhino
SilverRhino's picture

That guy was a dumbass .... just wear a few rings, a four bracers (two wrists, two upper arms), a lot of necklaces and one heavy medallion

Fri, 06/22/2012 - 13:09 | 2551663 chiswickcat
chiswickcat's picture

Or just one pretty cool looking medalion :-)

Fri, 06/22/2012 - 10:16 | 2550791 The Continental
The Continental's picture

Unfortunately, I manage a 7 figures Keough for my partner and me. There is no place else to put the funds but gold and silver bullion, mining shares and dollars. It's all paper. If I surrender the account I will be left with half after taxes and penalties. It's just not worth it and my partner is not as enlightened as us ZeroHedgers vis-a-vis the fiat money- empire of debt scam. Personally, I have 80% of my liquid wealth (cash and cash equivalents) in physical bullion. My guess is that all these private Keoughs will be virtually nationalized at some point and forced into Treasuries, for the collective good of course. /sarc

 

I'm counting only on assets in my physical possession. All corporate holdings are monopoly-casino money IMHO - I don't count on them at all.

So, should I buy 20 more ounces of physical gold today?

Fri, 06/22/2012 - 11:19 | 2551151 BanjoDoug
BanjoDoug's picture

Having a biz partner is MOST OFTEN like being in a bad marriage - yes all you biz partners, you are married to the other biz partner....  

I would split the empire into two KEOUGHs... and find someone that will allow you to buy physical.  OR PAY THE FRIGGIN' TAX and then buy the physical to be placed in the bank of Mason-Ball (in the back yard).    Better have 1/2 in the backyard than wortheless paper in some binary account.   Think it over..... 1/2 or ZIP ......

 

Fri, 06/22/2012 - 12:27 | 2551461 The Continental
The Continental's picture

I have discussed converting the Keough into physical gold bullion with myself as custodian with my Keough administrator. He said it is doable but a bit of a hassle. I'm still deciding whether to pull the trigger.

There is no doubt in my mind that this fraudalent paper money game will end some day and gold and silver will be restored to their rightful places as the only true money. But, I don't know when this collapse will occur. TPTB have been very skillful in promulgating the dollar-based Ponzi for over 8 decades now. This game could conceivably go on for another decade. So, I am using my paper assets like Keoughs, Life Insureance and Annuities as my hedge - that the masters of the money universe will be able to keep this game going for a few more years. I am 57. If TSHTF I still have my physical bullion to fall back on. If TS does not HTF then I will have my paper assets to fall back on and my children will get the metals. Sooner or later, the books must be settled and the world must face economic reality.

Fri, 06/22/2012 - 11:10 | 2551105 Pladizow
Pladizow's picture

Does your Keough allow for ETF purchases, like Sprott's PHYS or PSLV or GLDX, GDX or GDXJ?

Fri, 06/22/2012 - 12:02 | 2551369 The Continental
The Continental's picture

Yes. Your ETF list is a virtual description of my portfolio: 

CEF 45%

GDX 10%

GDXJ  10%

PHYS 10%

PSLV 5%

PVG 5%  (thank you Bob Chapman - I miss you so much - RIP) 

TRX 5% (anything that Jim Sinclair is willing to put his $millions into is good enough for me!)

Cash (US dollars) 10%

Fri, 06/22/2012 - 11:05 | 2551084 i-dog
i-dog's picture

 

"should I buy 20 more ounces of physical gold today?"

Well, there's a guy further upthread who claims to be really, really smart and he is recommending that you rush down to your local BAC and take out a 30-year mortgage on another depreciating pile of bricks that will attract not only usurious interest charges and property taxes, but also other local, state and federal 'mandatory green improvement' costs long after the zombie hordes have burned it to the ground in a search for your prior gold acquisitions. The chances that it will be claimed back from you by the federal government under eminent domain for a nature reserve are also really quite low-ish.

It seems like a no-brainer when one considers the terrible risk of an unfortunate canoeing accident when out fishing with any gold purchases on board.

I hope that helps.

Fri, 06/22/2012 - 09:49 | 2550675 Bullwinkle Moose
Bullwinkle Moose's picture

Paper gold is just that: paper

Fri, 06/22/2012 - 09:58 | 2550728 Peter Pan
Peter Pan's picture

It's worse than just paper. It's fraud that so far has gone unpunished.

Fri, 06/22/2012 - 09:45 | 2550640 Gloomy
Gloomy's picture

Why would anyone ever want to invest in something that the government is actively supressing? That would be what's called a losing propisition.

Fri, 06/22/2012 - 12:31 | 2551479 Jack Sheet
Jack Sheet's picture

@ gloomy
It's the PAPER price that is being suppressed. Your homework assignment for the weekend: FOFOA's website
Best Wishes JS

Fri, 06/22/2012 - 10:30 | 2550866 GubbermintWorker
GubbermintWorker's picture

Because real money will win out in the end.

Fri, 06/22/2012 - 10:13 | 2550782 CrockettAlmanac.com
CrockettAlmanac.com's picture

 

Why would anyone ever want to invest in something that the government is actively supressing? That would be what's called a losing propisition.

 

Analogy: You and another fellow like the same girl. He's telling her awful lies about you in an effort to manipulate her into going with him instead of you. Is the logical reaction to throw in the towel? Does it really make sense to abandon what you consider to be a worthy goal simply because someone else is telling stories in order to make it harder for you to succeed? Where does it end? Will you refuse to compete for anything that someone else wants to control?

Fri, 06/22/2012 - 13:42 | 2551754 Bastiat
Bastiat's picture

He and his girl will both go with the other guy.

Fri, 06/22/2012 - 15:43 | 2552193 CrockettAlmanac.com
CrockettAlmanac.com's picture

It's funny because it's true.

Fri, 06/22/2012 - 10:01 | 2550736 gaoptimize
gaoptimize's picture

Because that supression cannot be continued when fiat money comes into existence much faster than real assetts do.  PM price suppression is a buying opportunity that will not last forever.

Fri, 06/22/2012 - 09:56 | 2550708 Peter Pan
Peter Pan's picture

And why would you want to invest in something the government is constantly propping such as property and stocks? That is the real losing proposition.

Fri, 06/22/2012 - 10:00 | 2550734 Gloomy
Gloomy's picture

Cause if they prop it, it will go up. If they suppress it, it will go down.

Fri, 06/22/2012 - 10:17 | 2550792 tarsubil
tarsubil's picture

Gold is being suppressed and it still goes up. What happens when it can't be suppressed anymore?

Fri, 06/22/2012 - 10:39 | 2550911 Gloomy
Gloomy's picture

The point is it's not being suppressed. It just trades like anything else with speculators on both sides. If it were being suppressed it wouldn't have gone up.

Fri, 06/22/2012 - 11:24 | 2551172 BanjoDoug
BanjoDoug's picture

SORRY BUT Gloomy is a bonehead.....  from an earlier comment I made ::

How many Greeks (see pics ::  http://www.zerohedge.com/news/photos-fixed-greece ) wished they had a few pieces of PHYSICAL GOLD &/or SILVER right now ?

Gloomy will be one of those that wished he had some physical, but will have none....

Fri, 06/22/2012 - 11:17 | 2551136 Bay of Pigs
Bay of Pigs's picture

You've been here almost three years Gloomy and you haven't figured out the gold story yet?

Do you read anything here at ZH or just troll?

Fri, 06/22/2012 - 12:44 | 2551565 Gloomy
Gloomy's picture

Doesn't make sense for something that is supposedly suppressed to have gone up so much, does it? Why would it go up at all?

Fri, 06/22/2012 - 20:39 | 2552890 cranky-old-geezer
cranky-old-geezer's picture

 

 

Government keeps home prices up when demand is falling, and keeps gold price down when demand is rising.

That's (moronic) central planning for ya.

 

Fri, 06/22/2012 - 16:12 | 2552322 GCT
GCT's picture

Gloomy they are suppressing paper, just like they are debasing fiat currency and screwing people that save.  Paper is alot easier to play with as we see everyday.  Physical is a tangible asset.  There are several good sites around the world where several big banks in europe have lost it all playing this game.  I like you would think the same way until I read what is going on.  Unlike paper though you have lost nothing with physical and you can hand it to your children without paying taxes on it.

I would ask an honest question of you gloomy.  Why would you think they are not trying to hold gold back?  I do have an open mind or try to have one.  I hope you get back with me. 

Fri, 06/22/2012 - 15:51 | 2552223 Alpha Monkey
Alpha Monkey's picture

Because if they were too agressive about the scheme, it would not last as long.  It is impossible to keep it at 0, but if they can slow the ascension, then it will take longer for people to realize they are missing out on the opporutinity to preserve their wealth at reasonable prices.  Perception management. 

It goes up because there is demand for it.  It goes up slowly because western media is proficient at promoting the concept that gold is nothing but a shiney rock. 

Fri, 06/22/2012 - 13:52 | 2551753 akak
akak's picture

Your inability to use basic logic is positively breathtaking.

Did it ever occur to your feeble and syphilitic mind that perhaps the price of gold can and does increase DESPITE that official if unacknowledged suppression, and that it might have increased even MORE were it not actively and officially suppressed?

Does your car instantly screech to a stop the nanosecond that you begin to apply the brakes?  Why doesn't it instantly do so, if you are suppressing its forward motion?

Fucking idiot.

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