The FT Goes There: "Demand Physical Gold" As One Day Paper Price Manipulation Will End "Catastrophically"

Tyler Durden's picture

What have we done: after a series of reports in late 2012 in which we showed, with no ambiguity, that not only might the Bundesbank's offshore held gold be severely "diluted" (follow our 2012 exposes on German gold here, here, here, and here), but that on at least one occassion, the Fed and the Bank of England conspired against the Buba in returning subpar quality gold, the Bundesbank shocked everyone in early January 2013 when it announced it would repatriate 300 tons of gold helt in New York and all of its 374 tons of gold held in Paris. But convincing the Bundebsbank to demand delivery was peanuts compared to changing the tune of the Financial Times - that bastion of fiat "money", and where the word gold is mocked and ridiculed, and those who see the daily improprieties in the gold market as nothing but "conspiracy theorists" - to say the magic words: "Learn from Buba and demand delivery for true price of gold", adding that "one day the ties that bind this pixelated gold may break, with potentially catastrophic results."

In other words, precisely what we have been saying since the beginning.

Welcome to the 'conspiracy theorist' club, boys.

From the FT's Neil Collins: "Learn from Buba and demand delivery for true price of gold: One day the ties that bind the actual and the traded commodity will snap:

A year ago the Bundesbank announced that it intended to repatriate 700 tons of Germany’s gold from Paris and New York. Although a couple of jumbo jets could have managed the transatlantic removal, it made security sense to ship the load in smaller consignments. Just how small, and over how long, has only just become apparent.


Last month Jens Weidmann, Bundesbank president, admitted that just 37 tons had arrived in Frankfurt. The original timescale, to complete the transfer by 2020, was leisurely enough, but at this rate it would take 20 years for a simple operation. Well, perhaps not so simple. While he awaits delivery, Herr Weidmann is welcome to come and look through the bars in the Federal Reserve’s vaults, but the question is: whose bars are they?


In the “armchair farmer” fraud you are told: “Look, this is your pig, in the sty.” It works until everyone wants physical delivery of their pig, which is why Buba’s move last year caused such a stir. After all nobody knows whether there are really 260m ounces of gold in Fort Knox, because the US government won’t let auditors inside.


The delivery problem for the Fed is a different breed of pig. The gold market is far more than exchanging paper money for precious metal. Indeed the metal seems something of a sideshow. In June last year the average volume of gold cleared in London hit 29m ounces per day. The world’s mines are producing 90m ounces per year. The traded volume was many times the cleared volume.


The paper gold in the London Bullion Market takes the familiar forms that bankers have turned into profit machines: futures, options, leveraged trades, collateralised obligations, ETFs . . . a storm of exotic instruments, each of which is carefully logged, cross-checked and audited.


Or perhaps not. High-flying traders find such backroom work tedious, and prefer to let some drone do it, just as they did with those money-market instruments that fuelled the banking crisis. The drones will have full control of the paper trail, won’t they? There’s surely no chance that the Fed’s little delivery difficulty has anything to do with the cat’s-cradle of pledges based on the gold in its vaults?


John Hathaway suspects there is. He worries about all the paper (and pixels) linked to gold. He runs the Tocqueville gold fund (the clue is in the name) and doesn’t share the near-universal gloom of London’s gold analysts, who a year ago forecast an average $1700 for 2013. It is currently $1,260.


As has been remarked here before, forecasting the price is for mugs and bugs. But one day the ties that bind this pixelated gold may break, with potentially catastrophic results. So if you fancy gold at today’s depressed price, learn from Buba and demand delivery.


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Meat Hammer's picture

Catastrophically for those not holding the phyzz. My shiny is excited about true price discovery. It'll feel like the prettiest girl at the dance.

Millivanilli's picture

It is perfectly legal to sell things that you don't have.   cough...

GetZeeGold's picture



Germany has big guns.....and they can't even get their gold back.


Apparently it's been......ummm.......misplaced.

kliguy38's picture

Germany is toast and has been for 60 years.......the masters of the universe stole their gold and it AINT COMIN get over're OWNED....wait let me rephrase that......WE'RE all owned in the West..........we just don't want to admit Warren Buffoon said......when the tide goes out you'll see who's wearin a swim suit....

BaBaBouy's picture

Deutche GOLD Go "Bye Bye Mister"

""Fed 'almost assuredly' no longer has Bundesbank's gold, Gold Newsletter's Lundin says""

BoNeSxxx's picture

I see the Serial Junker is back...

Junk away ya chicken shit.

BaBaBouy's picture

GOLD Is Being Siphoned Out Of The GLD ETF.
Another Five Tonnes GONE At Weeks End From The Vaults.


Value US$32,189,109,567.02

InjectTheVenom's picture

You didn't repatriate that !

Temporalist's picture

It costs five dollars to dig it out of the ground.

TruthInSunshine's picture

"If you like your gold, I unfortunately must inform you, due to the biggest Pyramid Scheme in the history of mankind being implemented the world over, known as fractional reserve banking, that creates fiat currency not from gold nor any other tangible thing whatsoever, but conjures it purely from thin air... can not have your gold nor keep it if you were foolish enough to have any fractional reserve central bank act as a custodial Hailee of your gold."

Troll Magnet's picture

Well, that's what they get for ever trusting the Jewish banking system.

TruthInSunshine's picture

I hate auto spellchecker - it's supposed to read custodial "bailee" and not Hailee above.

Pinto Currency's picture

The FT says that the LBMA trades 29 million oz. per day.

That is the end of day amount after netting between trading houses.  The actual daily trading is 10x times that amount or 290 million oz. per day which is 900x as much as the gold that is mined globally each day.

This exchange was carefully designed to trade paper instead of gold and the FT is a bit late after ignoring this issue for decades while bubbles were blown worldwide and the central bankers said 'wow there is no inflation - see the price of gold is low'.

The gold price rig was carefully coordinated by the BIS.

mister33's picture

b.i.n.g.o. and bingo was his name-o

James_Cole's picture

Interestingly FT published an article the other day about analysts being extremely bearish based on a survey of 28 folks who last year predicted gold would avg 1700$ (in 2013) lol

Explaining their caution this year, analysts cited a possible strengthening of the US dollar, an oversupply of gold and potential further ETF sales. Weak inflationary pressure was another concern, since gold is viewed by investors as an inflation hedge. 

Oversupply of gold? 

Xibalba's picture
Comex Potential Claims Per Deliverable Ounce are only 112:1  
JohnnyBriefcase's picture

The idea of buying gold but not taking delivery of the physical gold seems insane. You think someone will look after your investment better than yourself?

It's like calling the cops and waiting a half hour for them to arrive during a violent home invasion vs. shooting the perps yourself.

akak's picture


Oversupply of gold?

Why of course!  Didn't you ever read the many "analyses" of Jon Nadler, until recently the official spokesman of Kitco, who almost daily tried to convince us that there are literally mountains of scrap gold just littering the landscape?  And that all the gold bought and held by Asian women in the form of jewelry is all merely "baubles" and frippery, not investment gold at all, and that they can and will sell it at the drop of a hat?

What are you, some kind of "radical goldbug extremist"?

James_Cole's picture

It's a questionable analysis. In 2013 gold production was clearly ramping up, in 2014 it's likely to contract. Guys just move the goal posts to whever they want them. 

akak's picture

Please tell me you realize I was only being sarcastic!

Bay of Pigs's picture

Remember, he's a little thick in the head when it comes to gold akak.  :)


Aloha from Maui pal!

zhandax's picture

He's a little thick in the head, period.  Cites a source you have to subscribe to see.  Fuck that, just disregard.

N2OJoe's picture

I hope they can hold it together for another year or two. I'm not done stacking yet...

James_Cole's picture

Please tell me you realize I was only being sarcastic!

Yes of course. I was just pointing out that these guys never make any fucking sense. And it's not that they're not smart or knowledgeable or even that I doubt their sincerity. Just don't get it...

Phil at the start of 2013: 

Well we’re pretty bullish still. We think that we’re going to see an average about $1775 in the first half, and for the full year we’re quite a bit above the consensus with our full year average annual price forecast in US dollar terms of $1847.

Phil at the start of 2014:

The metal has enjoyed a decent start to 2014, rising about 3 per cent. But Philip Klapwijk, of Precious Metals Insights, said this was in fact disappointing, given the lead-up to Chinese New Year, when purchases are usually strong.

“I would have thought gold would have gone to $1,350 this month,” Mr Klapwijk said.

He expects the price to fall below $1,180 – a level where it has previously enjoyed support – in the coming months.


Huh? Where was this brilliant insight last year, or did the Chinese skip new years 2013?

akak's picture

Is this the same Philip Klaptrap who has repeatedly and vehemently attacked GATA and denied that there is even the SLIGHTEST degree of official manipulation in the gold market?  That Philip Klaptrap?

Yeah, I thought so.

(But to his credit, he has not consistently called for gold to fall to approximately $500 LESS than its current price, whatever that current price happened to be, unlike Jon Nadler.)

Bay of Pigs's picture

Hey Einstein, did you read the article above, or are you just trolling again? The market is rigged.

Fuck this guy Clapdick, and all the TA "experts". Why can't you connect the dots yet on this bullshit going on in gold?


Stuck on Zero's picture

All Buba has to do is toss a short for 300 tons of gold early one morning, wait for the price to crash and then order 300 tons of gold on the spot market.  It can then pick up the real gold on the spot market and later when the short is due for delivery tell the COMEX to go pick it up from the Fed. 


zhandax's picture

You would need Dimon's lawyers to get away with it, but I like the way you think.

Tall Tom's picture

I hope that Buba is reading this...

-NaN-'s picture

Ya, oversupply.  Everyone knows that as mines shut down and mining companies lose investment capital (as is the case), you end up with an oversupply of gold.  /s

SAT 800's picture

An OVERSUPPLY OF GOLD !! HA HA HA, HA. LOL, and LULZ CATZ !  That's a good one, alright. Boy it's a lucky thing we have these sober respectable financial newspapers like the Financial Times to keep us up to date on important news, like THE OVERSUPPLY OF GOLD. HA, HA, HA. OMFG, what a joke.

cnmcdee's picture

Whatever the mainstream c*cksuckers recommend - do the opposite.  If they say it's going down it means they are hoping more will sell before price manipulation breaks down and true price discovery comes back.

My co-worker bought $160,000 in phyzz it only cost him about $1650 / ounce PLUS $3000 for delivery.  Call the 10 major banks ask a quote for $100,000 in phyzz delivered.  See what price they put it all at.  The stuff hasn't dropped below $1500.

TheGardener's picture

If you like your gods, you can keep `em. Not the gold, you did not mine that.

If you don`t like our money changers, time and again proofed in the successful dilution of currencies, we cannot keep you alive.

The true babelish is giving everyone the same language,
so no one will ever understand a thing.

jerry_theking_lawler's picture

man, get it right....that is silver...bitchezzz.

El Oregonian's picture

Merkel: "Bernanke, is that my gold bar in your pants, or are you just happy to see me?"

BanksterSlayer's picture

[and then Merkel proceeds to shove a broken ski pole up his arse]

Tall Tom's picture

At this point...


Merkel: "Janet Yellen, is that my Gold bar in your pants or are you wearing your strap on?"

Wahooo's picture

We probably used German gold to pay China interest on the treasuries they hold.

The Heart's picture

"We probably used German gold to pay China interest on the treasuries they hold."


Give this man a cigar folks.

All the gold has gone to china for decades, and is CONTINUING to go to china. The last thing the criminals do, is to loot the govt just before the crash and attack. Happens to every country in the days leading up to their end. Too bad there is no more learning from the same CYCLES in history. Nazi America is being set up to lose the next world war.



Overfed's picture

Krugman and Bernyellen seem to have opened ZH accounts.


Papasmurf's picture

Krugman and Bernyellen seem to have opened ZH accounts.

They can print.  But can they read?

CultiVader's picture

Gold Bitchezzzz...I feel better now

holgerdanske's picture

Ha ha, that idiot has only one button on his PC, a down arrow!

Wonder if he is from NSA?



Oracle of Kypseli's picture

If he/she was NSA, you would have many more arrows.

Bearwagon's picture

As I already mentioned, we aren't worried about gold the slightest bit over here. We are the world's favored armory, and you really think we won't get gold? Trust me, no one worried here 'bout that.  ;-)

edit: May I get downvoted because I didn't make myself clear. Let me get it this way to some anonymous idiots: We got a merchandise over here! We build stuff we sell. What do you do all day?!

johny2's picture

the bargain is about to go out of the stock. and than the fireworks start.


as for the germany, it is a colony. it even has US troops stationed on its land. it may be rulling the smaller european countries for the rotchilds, but it is still going to be without gold when the gold becomes reserve currency again. and the neighbours are without gold to take this time too.