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

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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.”


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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.

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                   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)

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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