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The Fed On Gold Price Manipulation

Tyler Durden's picture


Lately various media outlets have been swamped with stories and allegations of precious metal manipulation ranging from the arcane, to the bizarre to the outright ridiculous. At issue is not that these claims of price fraud are unfounded - they very well may be completely true - but without a notarized facsimile of an actual trade ticket signed by Brian Sack, or his replacement Simon Potter, or any of the BIS traders confirming they are indeed selling gold on behalf of the Fed, BOE, ECB, SNB or BOJ simply to keep the price of the metal down, what such constant factless accusations (and no, sorry, a chart showing that the price of gold may go up or go down sharply indicates merely that and nothing about the underlying factors for such a move) do is to habituate the broader public to the real issues surrounding precious metal, and other asset class, manipulation. So instead of searching for circumstantial evidence which one can easily find everywhere, we decided to go straight to the source. To do that we go back to a post we wrote back in September of 2009, based on an internal previously confidential Fed document, which conveniently enough explains everything vis-a-vis gold manipulation and leaves nothing to speculation or misinterpretation. Zero Hedge presents the smoking gun that may provide responses to all the various open questions regarding the Fed's Modus Operandi in the gold arena which answer the core question - motive - courtesy of a declassified memorandum, written by none other than the then Fed Chairman, and addressed to the president of the United States.

From Zero Hedge, September 27, 2009.

Exclusive Smoking Gun: The Fed On Gold Manipulation

Zero Hedge has recently presented several declassified documents from the pre-1971 "Nixon Shock" days, that endorse the case for gold as a major historical factor in US monetary and foreign policy, as demonstrated by State Department and CIA disclosure. Gold's special status in policy and administrative decision-making was a direct factor in Nixon's choice to abolish the gold reserve at a time of an exploding budget deficit.

Yet what about the days after 1971, and specifically, how did that critical "behind the scenes" organization, the Federal Reserve, perceive and manipulate gold in the post Bretton-Woods world? Was gold, freed from its shackles to the dollar, once again merely a symbolic representation for money?

Zero Hedge presents the smoking gun that may provide responses to all the various open questions, courtesy of a declassified memorandum, written by none other than the then Fed Chairman, addressed to the president of the United States.

On June 3, 1975, Fed Chairman Arthur Burns, sent a "Memorandum For The President" to Gerald Ford, which among others CC:ed Secretary of State Henry Kissinger and future Fed Chairman Alan Greenspan, discussing gold, and specifically its fair value, a topic whose prominence, despite former president Nixon's actions, had only managed to grow in the four short years since the abandonment of the gold standard in 1971. In a nutshell Burns' entire argument revolves around the equivalency of gold and money, and furthermore points out that if the Fed does not control this core relationship, it would "easily frustrate our efforts to control world liquidity" but also "dangerously prejudge the shape of the future monetary system." Furthermore, the memo goes on to highlight the extensive level of gold price manipulation by central banks even after the gold standard has been formally abolished. The problem with accounting for gold at fair market value: the risk of massive liquidity creation, which in those long-gone days of 1975 "could result in the addition of up to $150 billion to the nominal value of countries' reserves." One only wonders what would happen today if gold was allowed to attain its fair price status. And the threat, according to Burns: "liquidity creation of such extraordinary magnitude would seriously endanger, perhaps even frustrate, out efforts and those of other prudent nations to get inflation under reasonable control." Aside from the gratuitous observation that even 34 years ago it was painfully obvious how "massive" liquidity could and would result in runaway inflation and the Fed actually cared about this potential danger, what highlights the hypocrisy of the Fed is that when it comes to drowning the world in excess pieces of paper, only the United States should have the right to do so. 

Another notable observation is that despite a muted antagonism between the Fed and the US Treasury persisting for decades, the fuse is and always has been short, and the conflict can promptly hit a crescendo, with the Fed ultimately always getting the upper hand. In the case of the Burns memo, the Fed's position was diametrically opposed to what the Treasury proposed was the proper approach. The result: full on assault by the Federal Reserve over the Treasury's credibility and even then, more than three decades ago, a veiled threat by the Fed involving escalating problems if the recommendation of the Treasury was picked over that of the Fed. "Severe criticism on the part of prominent and influential financiers would inevitably follow if the Treasury's present position prevailed." It is not surprising that the Fed's modus operandi has not changed one bit since 1975: it is our way or virtually assured destruction/embarrassment way.

Additionally, a curious tangent of the Burns memo is the fact that gold was explicitly used as an engine to enact political doctrine: "If the United States took a stand on the gold question that failed to satisfy the French in current international negotiations, would there be adverse economic or political consequences? I doubt it... If we do ever accede to French views on gold, we should at least use our bargaining leverage to achieve some major political advantage." And while gold as a policy mechanism was unable to satisfy its role this time, one wonders on how many subsequent occasions was global democracy trampled over in order to placate the US Federal Reserve:

"I have consulted Henry Kissinger as to whether there is some political quid pro quo we might want to extract from the French in exchange for acceding to some part or all of their desired position on gold. But Henry tells me there is none at this time."

At some point governments of advanced nations will say "enough" to the covert domination of their controlling bodies by the Federal Reserve, which through manipulation of its gold and money interests, effectively has control over not just the French, but every government which has a monetary basis to its respective economy and a relationship to the US "reserve" currency... Which means virtually every country in the world. The backlash, if and when it occurs, will be memorable.

Lastly, the memo presents a useful snapshot into the cloak-and-dagger, and highly nebulous world of Central Bank negotiations and gold price manipulation:

"I have a secret understanding in writing with the Bundesbank that Germany will not buy gold, either from the market or from another government, at a price above the official price."

So to all conspiracy theorists claiming that gold is being manipulated on a daily basis by the Federal Reserve: when it occurs over and over, and is so well documented, it is no longer a theory, it is merely sad. And the fact that the US government goes to great lengths to hide the illicit dealings of the Federal Reserve, which through its monetary tentacles, has prima facie control over not just US policy but also over sovereign governments, is an unprecedented failure in the checks and balances system that the founding fathers had planned when they created the United States of America. Yet saddest is that the United States no longer pursues strategic goals that are in the best interest of the majority of its citizens, but merely manipulates other, less powerful nations into a servile existence that only provides gain to a very limited subset of the American financial oligarchy. It is time for the Fed's unprecedented control over affairs, both global and domestic, to end.

Full memo from Arthur Burns presented, compliments of Geoffrey Batt who collaborated in the creation of this post.


* * *

As a post-script to all those complaining about gold, silver and other PM price suppression, here is one simple question: can one buy more gold at $1,600 or at $16,000? This is not a trick question.


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Mon, 07/30/2012 - 20:42 | 2663847 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

Theft, Bitches!

Mon, 07/30/2012 - 20:46 | 2663855 Colombian Gringo
Colombian Gringo's picture


Mon, 07/30/2012 - 20:46 | 2663857 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

Also, Fuck You Arthur Burns!

Mon, 07/30/2012 - 21:06 | 2663887 I think I need ...
I think I need to buy a gun's picture

I still can't believe they would manipulate something for a profit,,,,,,,

Mon, 07/30/2012 - 21:09 | 2663896 BaBaBouy
BaBaBouy's picture

As I Keep Expounding... GOLD $50K, Bitchies.

Mon, 07/30/2012 - 21:30 | 2663930 BaBaBouy
BaBaBouy's picture

"" I still can't believe they would manipulate something for a profit,,,,,,, ""


Please let me correct that... "For FUN and Profit" ...

Mon, 07/30/2012 - 21:45 | 2663948 BaBaBouy
BaBaBouy's picture

Just Y'all Remenber WHO took The USA off the GOLD-Standard ...


T'was Honest-Dick... NIXON.

Says It all.........  And also tells you what action you should be taking.

Mon, 07/30/2012 - 21:51 | 2663958 BaBaBouy
BaBaBouy's picture

... Dick (From the Grave) Just -1'nd everybody ...

PS... He's still Bitchin' about Why the Tape-Recorder was ever invented... 


Mon, 07/30/2012 - 22:36 | 2664024 strannick
strannick's picture

but without a notarized facsimile of an actual trade ticket signed by Brian Sack, or his replacement Simon Potter, or any of the BIS traders confirming they are indeed selling gold on behalf of the Fed, BOE, ECB, SNB or BOJ simply to keep the price of the metal down, what such constant factless accusations

A ridiculous impossible standard not attainable or aspired to in any other realm. Ie. Without a Crown Prosecutor holding a video camera while you blow a guys brainsout and then fingerprinting as he confesses, no charges will ever be laid. So now that we have declared their will never be any charges of manipulation laid, then disband the SEC CFTC ect, if its possible for them to prove manipulation.

CFTC former Justice Painter declared that CFTC Chairman Wendy Gramm (wife of chief deregulator Phil Gramm) instructed him never to rule on behalf of a plaintif claiming manipulation. The current CFTC of Sommers, Gensler, Chilton and Omalia have proven themselves 1. useful idiots, 2. moronic twits, or 3. criminal enablers. Whichever is motivating their mindbendingly stupid useless evil conduct, they should be fired at least, or thrown in jail.

The corruption is institutional and endemic. Gershoms law = wealth flows from bad money to good money. Since the paper gold market is so irredeamably criminal, money will flee from it, and from bonds for that matter.

Mon, 07/30/2012 - 22:37 | 2664045 JustObserving
JustObserving's picture

"A ridiculous impossible standard not attainable or aspired to in any other realm"

Completely agree.  A good mathematician can analyze the trading in gold and especially silver and conclude with high degree of certainty that manipulation has occurred.

Mon, 07/30/2012 - 23:01 | 2664071 strannick
strannick's picture


This articles reveals some great, telling quotes from Arthur 'the last duty of a central banker is to tell the truth' Burns.

Its sentiments are also apparently endorsed by Europes former head central banker Jean-Claude 'When it gets serious you lie' Junker

Tue, 07/31/2012 - 01:03 | 2664197 Oh regional Indian
Oh regional Indian's picture

The age of revelation is well and truly upon us it seems. WHich would seem to be a short step away from prophetic things coming to pass.

A drought, a fractal drought looms. 



me >

Tue, 07/31/2012 - 01:40 | 2664218 AldousHuxley
AldousHuxley's picture


Hear from poor communist country about Rockefellers and Rothschilds

Tue, 07/31/2012 - 10:28 | 2664984 engineertheeconomy
engineertheeconomy's picture

According to my calculations it is 100% guantareed that all Precious Metal prices are highly manipulated and supressed.

To find the actual value of Gold, take the Global M3 and divide it by the quanity of above ground precious globally.

Physics Bitchez...

Mon, 07/30/2012 - 23:06 | 2664082 BroCharlie
BroCharlie's picture

Shi is sad

Tue, 07/31/2012 - 01:44 | 2664220 Bringin It
Bringin It's picture

Great post.  I think you meant this though

... then disband the SEC CFTC ect, if its [im]possible for them to prove manipulation.

And I agree.  Of course.  Why do they collect a salary?

Tue, 07/31/2012 - 05:07 | 2664324 Benjamin Glutton
Benjamin Glutton's picture

heh...when do we get to see the Fed Res REPO 105 transactions and Derivatives book?

Mon, 07/30/2012 - 23:13 | 2664088 cranky-old-geezer
cranky-old-geezer's picture



Just Y'all Remenber WHO took The USA off the GOLD-Standard ...

No one took me off the gold standard,  I still look at how many dollars it takes to buy an ounce of gold.

USD has lost 99% of it's original value now, meaning gold should be $2,000 / oz, but it's hovering around $1,600.   So yea, it's a bargain.

Back then one ounce of gold would buy a very nice suit.  It still will today.


Tue, 07/31/2012 - 00:12 | 2664148 RockyRacoon
RockyRacoon's picture

Greetings old coot -- from the old coon.   I see that Iran has a solution for the manipulation of markets. I wonder if the US will intervene on their behalf and send Jamie Dimon as an emissary?

"An Iranian court has sentenced four people to death for their role in a $2.8bn bank fraud, in a ruling that is set to intensify the battle between president Mahmoud Ahmadi-Nejad and conservative opponents ahead of a crucial election next year."

Iran sentences bank fraudsters to death

Tue, 07/31/2012 - 00:32 | 2664166 Deo vindice
Deo vindice's picture

You obviously buy much nicer suits than I do. I wear a lot of suits and none of them cost me an ounce of gold (in dollar terms).

Tue, 07/31/2012 - 00:39 | 2664176 RockyRacoon
RockyRacoon's picture

There is a range in the pricing of suits.  The saying should say that you can buy a good man's suit.   In the 1930s you could get a $10 suit or a $100 suit.  About $35 was the average nice suit.  Argument for the sake of it doesn't help the theorem.

Tue, 07/31/2012 - 01:23 | 2664209 BigInJapan
BigInJapan's picture

Here in Japan, I could buy 6 GOOD men's suits for an ounce of gold. (Not in Tokyo, though)

The arguement is solid and the saying, outdated.

Handmade suits, the same price as a storebought.


Tue, 07/31/2012 - 06:03 | 2664348 BigJim
BigJim's picture

Instead of measuring how many suits an ounce of gold buys, it probably makes more sense to look at its price vs. a basket of commodities. I have no idea, though, whether anyone's done this properly.

Although the pricing of suits comprises elements of labor, energy and commodity prices, fashion has too large an impact to make it a useful yardstick. Go to an art museum and you'll see that formal dresswear ('suits') has changed wildly over the centuries.

A good Roman toga was quite a complex garment with a lot of cloth...

Tue, 07/31/2012 - 06:29 | 2664357 francis_sawyer
francis_sawyer's picture

Toga... Toga... Toga!

Mon, 07/30/2012 - 23:37 | 2664112 Malachi Constant
Malachi Constant's picture

They don't care about profit. WHY, in the entire Universe, would they - with a printing press on their side?

This whole State thing is nothing but an exercise in power. This is their fun. They don't give a flying Firefox about money, because it's all theirs anyway - all of it. It's the thrill of manhunt, of humiliation, of moving millions with a phone call. Not money.

No matter how much money exists, all it takes to leave every rich man naked is a new law. Rules change when the house sees a chance of losing.


"For FUN."

Tue, 07/31/2012 - 02:00 | 2664227 Daily Bail
Tue, 07/31/2012 - 06:49 | 2664366 Ace Ventura
Ace Ventura's picture

Ahhh, Iceland. Highest per capita ratio of gorgeous women I've ever seen. And now another reason to love that frozen rock in the north Atlantic.

Odd, wouldn't you say, that Iceland's ongoing battle with the banks never seems to rate even a casual mention in the mainstream news?  /turbo-sarc

Tue, 07/31/2012 - 08:41 | 2664600 gaoptimize
gaoptimize's picture

Yeah, sigh.  If I could live my life over it would be making a large family with an Icelandic woman who wanted the same thing.  Other pursuits don't seem as trivial until they have been pursued, and by then time is up.

Mon, 07/30/2012 - 21:38 | 2663936 engineertheeconomy
engineertheeconomy's picture

If you found a nice victorian house in a good neighborhood for $100,000.00, wouldn't you buy it?

Gold is going for anywhere between 50% to 90% discount off it's fair market value, thanks to Benwards & Co.

I just keep stackin Gold, Silver, Palladium, Platinum & Rhodium like a squirrel

 I could give a shit where the price goes from here.

 I'll look at the price again in maybe another 10 or 20 years 

Mon, 07/30/2012 - 22:48 | 2664049 strannick
strannick's picture

I could give a shit where the price goes from here

That would make a great GATA T-Shirt slogan, or could righteously be stamped on gold and silver eagles, instead of the hypocritical In God we Trust

Mon, 07/30/2012 - 23:03 | 2664076 engineertheeconomy
engineertheeconomy's picture

That's why Gold Bars simply state the metal content, we're not interested in measuring it's value in any paper currency any more than we would measure it in terms how many caveman clubs it could buy

Tue, 07/31/2012 - 00:42 | 2664182 RockyRacoon
RockyRacoon's picture

The $50 face value on the 1 ounce American gold eagle as its uses.  I know of a used car bought for "$50" and assessed at that price since the dealer invoice said so.  The dealer took a "loss" on the sale, of course.  I'd say that worked out quite well.

Tue, 07/31/2012 - 06:32 | 2664359 francis_sawyer
francis_sawyer's picture

Kind of makes the case for the utility of "junk silver"...

Tue, 07/31/2012 - 06:51 | 2664368 Ace Ventura
Ace Ventura's picture

+ <1964



Tue, 07/31/2012 - 13:44 | 2665643 hidingfromhelis
hidingfromhelis's picture

@RR:  Coin for Clunkers, free market style!

Thu, 08/02/2012 - 09:21 | 2671804 MeelionDollerBogus
MeelionDollerBogus's picture

is it defendable? Will it have enough land for water and food needs?

Because if the answer is "no" and the additional answer is "it's right next to the fucksticks all the civil-unrest protesters want to kill for stealing from them" then no, I would prefer not to live there.

Stacking rhodium? Fail. Sorry, do what you want but re-selling it for profit as any holding and not directly for industrial use is just absurd. Unless you're an engineer and you're directly using it in which case I grant status of Epic Win.

Mon, 07/30/2012 - 21:58 | 2663973 sullymandias
sullymandias's picture

It depends on how much dollars you have. If you don't have some ridiculous amount of dollars, of course you can buy more gold at the lower price. But if you have a ridiculous amount of dollars, you can buy more at the higher price, because there will be more sellers at the higher price.

Thu, 08/02/2012 - 09:19 | 2671790 MeelionDollerBogus
MeelionDollerBogus's picture

no, there won't. When the price is really high because all currencies are collapsing I won't consider paper to be a valid trade. I'll barter gold for a house or something but I won't trade 1 bar of gold for 50k. That 50k will be so worthless it will make no sense to hold it even for a day by the time gold hits that value.

Mon, 07/30/2012 - 22:01 | 2663981 I think I need ...
I think I need to buy a gun's picture

"gold 50K"

"The problem moving forward won't be collapse, it will be digestion" Byron Wien CNBC a few month ago ;)

Mon, 07/30/2012 - 22:01 | 2663982 I think I need ...
I think I need to buy a gun's picture

"gold 50K"

"The problem moving forward won't be collapse, it will be digestion" Byron Wien CNBC a few month ago ;)

Mon, 07/30/2012 - 23:46 | 2664123 SilverIsKing
SilverIsKing's picture

It won't be digestion. It will be indigestion. Buy gold, silver, and Alka Seltzer.

Mon, 07/30/2012 - 23:49 | 2664124 SilverIsKing
SilverIsKing's picture

Fucking iPhone.

Mon, 07/30/2012 - 23:49 | 2664125 SilverIsKing
SilverIsKing's picture

Fucking bad wifi signal.

Mon, 07/30/2012 - 22:35 | 2664040 DoChenRollingBearing
DoChenRollingBearing's picture

@ BaBa  $50k...

Yes, although that is a notional figure, but is in the right ballpark.  Physical gold is WAY underpriced.

"Gold, get you some!"  -- "Aristotle"

Mon, 07/30/2012 - 23:19 | 2664096 boogerbently
boogerbently's picture

No matter the price, it is being bought hand over fist, and the buyers only profit when the price of their holdings rise.

The USA will lose hold of gold like everything else, the world will find a way to do business around them.

The govt. can confiscate "physical", but not investments in foreign companies......mining companies.

That's my thinking.

Mon, 07/30/2012 - 23:38 | 2664115 CompassionateFascist
CompassionateFascist's picture

When gold, silver, other PMs begin their terminal, asymptotic rise, the gov'ts concerned will confiscate the mines. So stack at home, then protect with lead.

Tue, 07/31/2012 - 06:31 | 2664358 Freegold
Freegold's picture


I actually think you are a bit conservative, my guess is $65K :)


It may go on for a couple of more years but i´m patiently stacking. This one will be epic, but beware paperlongs, you wil get crucified on this journey!



Mon, 07/30/2012 - 20:53 | 2663862 Marginal Call
Marginal Call's picture


Death terms in Iran bank scandal.



Mon, 07/30/2012 - 21:35 | 2663939 Henry Hub
Henry Hub's picture

What! Executing bankers for criminal fraud. How barbaric! Why in civilized countries like the United States we allow them to collect their multi-million dollar bonuses and go on there way. Shows the difference between democracy loving free enterprise system and brutal Moslem dictatorships

Mon, 07/30/2012 - 22:49 | 2664063 strannick
strannick's picture

You only get jailtime in the US if you steal less than $10,000

Mon, 07/30/2012 - 23:15 | 2664089 engineertheeconomy
engineertheeconomy's picture

They should treat all the Iranian Banksta's to lollypops and bubblegum! Then give them the nobel peace prize... just like in the U.S.

Mon, 07/30/2012 - 23:41 | 2664116 El
El's picture

Indeed! What is shocking is that Goldman Sachs didn't snap those fellows right up and put them to work.

Mon, 07/30/2012 - 22:30 | 2664025 Davalicious
Davalicious's picture

"Two people were sentenced to life and others received jail sentences of up to 25 years, Mohseni-Ejei said. In addition to jail time, some were sentenced to flogging, ordered to pay fines and banned from government jobs." The last part is very important - banned from government jobs. We need to ban fraudsters from every taking money from the public purse.

I wonder how many of the fraudsters are crypto Jews.

Iranians in Canada are trying to get the chief Iranian fraudster kicked out:

Bet your bottom dollar that this guy is a Jew. They bypass any regulations for immigration and are pretected from expulsion.

Mon, 07/30/2012 - 23:04 | 2664077 JimmyCDN
JimmyCDN's picture

Signed, thanks.

Tue, 07/31/2012 - 00:40 | 2664177 bankruptcylawyer
bankruptcylawyer's picture

crypto jews. i'm a plain jew. no crypto hear. your statements are why i thank the u.s. constitution for having the 2nd amendment. 

maybe youre a crypto X or Y or Z. they should lock you crypto's all up.

Tue, 07/31/2012 - 09:30 | 2664772 oddjob
oddjob's picture

If you really are a lawyer, STFU..your worth as human is zip.

Thu, 08/02/2012 - 09:12 | 2671761 MeelionDollerBogus
MeelionDollerBogus's picture

at least he's not a banker or politician.

Lawyers don't look so bad these days.

Tue, 07/31/2012 - 02:35 | 2664243 stacking12321
stacking12321's picture

news flash for you, genius - there aren't a whole lot of jews in iran.

you might want to ask for a refund for that college degree of yours, they're doing it all wrong.

Tue, 07/31/2012 - 03:38 | 2664285 TPTB_r_TBTF
TPTB_r_TBTF's picture

Wish i coud ask for a refund of my college degree, but the statutes of limitations have expired...


Iran is home to the biggest population of Jews in the Middle East outside Israel


by:  Damien McElroy

Tue, 07/31/2012 - 03:42 | 2664287 piceridu
piceridu's picture

Iran hosts the largest Jewish population of any Muslim-majority country.

Tue, 07/31/2012 - 03:43 | 2664289 fnord88
fnord88's picture

there are lots of jews living in iran. The world is not so simple as any colledge degree may imply.

Tue, 07/31/2012 - 18:54 | 2666716 Goner
Goner's picture

While I like that someone is getitng punished, the details of the story sound similar. A few lower level people losing their freedom and lives while the top level gets away with free

"Mahmoud Reza Khavari, the former head of Iran's biggest bank, state-owned Bank Melli, resigned over the affair and fled to Canada where records show he owns a $3m home, Iranian and Canadian news agencies reported"

"Ahmadinejad has rejected claims that the investment company at the heart of the scandal has links to his closest aide, Esfandiar Rahim Mashaie, a powerful figure who has become the prime target for the president's adversaries within the hardline ruling elite.

Ahmadinejad's economy minister, Shamseddin Hosseini, survived an impeachment vote last year, where members of parliament accused him of lax banking supervision"

"But one of the defendents complained that, while the judiciary had pursued some low-level players in the fraud vigorously, senior officials involved in the scandal had gone unpunished."

Free Corzine and Khavari!

Mon, 07/30/2012 - 21:40 | 2663945 Buck Johnson
Buck Johnson's picture

Big time.

Tue, 07/31/2012 - 01:29 | 2664213 Victorio
Victorio's picture

The whole shock and rage thing is getting old isn't it?  This article first ran in two thousand and fucking nine.  Its all out there folks. Has been for some time.  Criminality from top to bottom and side to side, plain as day for anyone who wants to look. When is enough enough? I've had my fill of it. How about you?

Tue, 07/31/2012 - 03:32 | 2664284 terryfuckwit
terryfuckwit's picture

Giveaway, Bitches!


Mon, 07/30/2012 - 20:47 | 2663854 surfersd
surfersd's picture

The physcal price of spot gold on the London Bullion Exchange  (and silver) is now over (cash bid/offer over futures offer/bid) the futures price. This move into backwardation is a sign that the Fed has lost control. We might see a few more pushes to the downside, but the train is about to leave the station. Toot Toot All Aboard!

Mon, 07/30/2012 - 21:14 | 2663904 Pladizow
Pladizow's picture

Wish it were true, but this has occured serveral times over the past handful of years!

Mon, 07/30/2012 - 21:17 | 2663911 AUD
AUD's picture

It is likely that the spot you mention is actually unallocated gold, that is to say, gold deposits of one kind or another. The vast majority of 'gold' being traded is in the form of unallocated gold.

This makes claims of backwardation of dubious value, since you are pricing futures against another 'future' in the form of unallocated gold. A bit like pricing government bonds in terms of the credit of the government chartered central bank, that is the $, where the 'assets' of the central bank are the same government bonds. Meaningless.

The real backwardation is when the 'big players' attempt to redeem their unallocated gold for allocated or even the physical bullion.

Last I looked there was no sign of any premium on allocated gold. Anyway, government & central bank credit has been junk, in gold terms, for decades, yet no backwardation, a completely irrational situation, for decades. There's no saying when it will happen.

Mon, 07/30/2012 - 20:46 | 2663856 Its_the_economy...
Its_the_economy_stupid's picture

Each time I read it, my heart falls further.

Mon, 07/30/2012 - 21:37 | 2663940 fockewulf190
fockewulf190's picture

Tyler, please do the world a favor and KEEP THIS POST HIGHLIGHTED UNTIL COB FRIDAY! I, for one, never saw, nor was aware (but am not really surprised), of the bullshit shenanigans highlighted within this post, and a lot more people need to read this. This needs to go viral.

Mon, 07/30/2012 - 22:13 | 2663995 tekhneek
tekhneek's picture

Agreed and for others -- just look at this (gold) chart real quick:

Now, read the entire article all over again and you'll quickly realize why so many people play/played the paper game instead of the real one.

The smart ones cashed out a long time ago when the gettin' was still good.


Think about it... If you rode that trade day night/for a good while and cashed out into gold... You're just waiting for the exchange rate to tip towards gold and you're getting a stupid multiple of return on your investment on both sides.

One of those -- wish I knew then, what I know now... kind of moments.

Mon, 07/30/2012 - 23:12 | 2664087 Spitzer
Spitzer's picture

How do you know how much they left on the table ? YOu dont.

Tue, 07/31/2012 - 01:57 | 2664226 Bringin It
Bringin It's picture

Spitzer - I have to ask. As a well-known aficionado, I have to ask ...

What's your take on the highs and lows of that Debt-Bomb video?

Mon, 07/30/2012 - 22:28 | 2664003 fockewulf190
fockewulf190's picture

I just have to post this famous exchange between Ron Paul and the Bernank about gold being "a tradition". I'll leave it up to you all who are reading this thread just what kind of tradition the Fed is trying to preserve. No wonder the Chinese are buying gold in stupifying amounts.

Tue, 07/31/2012 - 07:18 | 2664404 4horse
4horse's picture

israeli tradition: not for export

Ven ikh bin Rotshild  .  .  .  na na nana nana na

Mon, 07/30/2012 - 23:37 | 2664113 El
El's picture

What rock have you been hiding under that you have never heard about this before? You have a LOT of catching up to do with what's going on in this country, I think.

Mon, 07/30/2012 - 20:48 | 2663858 Ted Baker
Ted Baker's picture

Spot on ZH on the last thought:- Yet saddest is that the United States no longer pursues strategic goals that are in the best interest of the majority of its citizens, but merely manipulates other, less powerful nations into a servile existence that only provides gain to a very limited subset of the American financial oligarchy.

Mon, 07/30/2012 - 21:55 | 2663966 slewie the pi-rat
slewie the pi-rat's picture

tyler has a smoking gun, BiCheZ!

and the markets are screwed down tight except for batman buying gold...

...and robin is buying coffee...

Mon, 07/30/2012 - 20:51 | 2663861 Muppet of the U...
Muppet of the Universe's picture

Welcome to the Second Great Bull Run in gold.

Mon, 07/30/2012 - 20:54 | 2663865 max2205
max2205's picture

Ps Kunstler said some shit about us posters. Rec we tar him too

"""""3. ZERO HEDGE. The mysterious person(s) behind this massive continuous stream of reports and analysis from the loony bin of Wall Street and beyond has a manic edge but accurately reflects the madness of the current situation. Zero Hedge seems to post virtually around the clock, every day. They are relentless and hugely comical, with exactly the right sharply malicious overtones required in these evil times. The characters who infest their comment section are some of the worst vermin in trolldom.

Mon, 07/30/2012 - 21:13 | 2663901 I think I need ...
I think I need to buy a gun's picture

going against zero hedge is like going against Peter Schiff on CNBC or Jimmy Kimmel publicly, YOU JUST DON'T DO IT!!!!!

Mon, 07/30/2012 - 22:02 | 2663983 slewie the pi-rat
slewie the pi-rat's picture

fringe verminomics + free speech = zH

Mon, 07/30/2012 - 22:29 | 2664032 SWCroaker
SWCroaker's picture

I .... can't recall ever having been referred to as .... vermin.


I kind of like it, in a Stainless Steel Rat sort of way.

Mon, 07/30/2012 - 23:06 | 2664083 spanish inquisition
spanish inquisition's picture

Nice SSR reference.. Reminds me I haven't read the new one. Thx!

Mon, 07/30/2012 - 23:55 | 2664135 CompassionateFascist
CompassionateFascist's picture

"worst vermin in trolldom" - wear it like a Badge of Honor. The KunstlerKike thinks all rural/suburban whites should be herded into the cities ("Peak Oil" and etc.) and brought under the same incipient KosherGulag regime as the blacks/browns and urban whites. Kunstler himself, however, lives on a fuel-swilling farm in the boonies and jetsets about with reckless abandon. With the Tribe, it's always "do as we say not as we do".  

Tue, 07/31/2012 - 02:02 | 2664229 Bringin It
Bringin It's picture

Kunstler's such a sweetheart.  Ask him what he thinks about white phosphorus on Palestinian kids during Operation Cast Lead and find out what a great humanitarian this clown really is.

Controlled opposition in a weird way.

Tue, 07/31/2012 - 04:56 | 2664321 Disenchanted
Disenchanted's picture



"With the Tribe, it's always "do as we say not as we do".  "


+1000  You can take that to the bank!

Tue, 07/31/2012 - 00:48 | 2664187 RockyRacoon
RockyRacoon's picture

Some folk think that coons are vermin.  I'm used to it. 

I just dump over their trash cans... or dump ON their trash cans.

Tue, 07/31/2012 - 01:04 | 2664200 slewie the pi-rat
slewie the pi-rat's picture

raccoons are more bearish than most folk realize

Mon, 07/30/2012 - 22:44 | 2664051 HoofHearted
HoofHearted's picture

Well let us vermin say in one accord, "Fuck you Kuntsler! Maybe you bitchez should stop posting crap and start just c & p'ing ZeroHedge."

Mon, 07/30/2012 - 22:08 | 2663971 johny2
johny2's picture

Does this mean Kunstler is not a fan of Robot trader?


The politicians have sold their countries to the banking elite who control the currency and media. There is only one visible power able to take away their control over the currency, and that is China whose politicians have encouraged chinese population to buy and store gold.

There is also the chance EU break up could start the race to the bottom for the fiat currency. Longer term there is also the petroleum availability to consider. In fact when I think of it better, it is looking like dollar has surely had it, matter of months/years at most.

Mon, 07/30/2012 - 23:53 | 2664137 adhoc99
adhoc99's picture

Why the China love? Isn't this an authoritarian state? Aren't ZHers against authoritarianism?

Tue, 07/31/2012 - 03:48 | 2664291 fnord88
fnord88's picture

chinese leaders are stupid. Our leaders are stupid. One at least learnt some fucking history.....

Tue, 07/31/2012 - 04:12 | 2664305 TPTB_r_TBTF
TPTB_r_TBTF's picture

Dictators who take delivery of physical are cool.

Mon, 07/30/2012 - 22:10 | 2663997 max2205
max2205's picture

TD Any idea why my avitar pic has been changed?!

Mon, 07/30/2012 - 22:12 | 2663999 max2205
max2205's picture

Oh now it's back. Fucking Corizine

Mon, 07/30/2012 - 23:47 | 2664126 TheFourthStooge-ing
TheFourthStooge-ing's picture

max2205 said:

Ps Kunstler said some shit about us posters. Rec we tar him too

Lighten up, dude. Kunstler was giving high marks to ZH. As for his remark re the commenters, read it again:

"The characters who infest their comment section are some of the worst vermin in trolldom."

I mean, come on, you and I both know it's funny because it's true. AnAnonymous, Max Fischer, MillionDollarBonus, RobotTrader.....need I say more?

Tue, 07/31/2012 - 00:17 | 2664154 CompassionateFascist
CompassionateFascist's picture

Kuntsler was referring to all of us, not just the 4 stooges.

Tue, 07/31/2012 - 06:31 | 2664352 fiftybagger
fiftybagger's picture

Kuntsler is just a modern day Paul R. Ehrlich with peak oil replacing the population bomb.  Globalist mind kontrol BS.  Pull up Google maps and check out the thousand mile swaths of Canada, Russia, South America, Australia, and Africa where man's foot has rarely tread.  Then put down your Anglo-Euro-American crack pipe and wake up.

Tue, 07/31/2012 - 22:36 | 2667328 MeelionDollerBogus
MeelionDollerBogus's picture

In Canada we have enough space for a few hardy souls not enough space for new cities. You'd wipe out all our trees, clean water and ecosystem and then we'd be another used up copy-cat of any given region of the USA. No thanks.

The population bomb IS NOT WRONG nor is peak oil. Science and INVENTORY proves it - resources keep reducing per-person, people per square mile keeps going up. One day very soon most will starve but for now it's mostly just the far-end of poor.

Personally I think anyone is a 2-bit crackpot that thinks oil is endless or that people could have 20 billion babies with no harm done.

Tue, 07/31/2012 - 09:30 | 2664774 TheFourthStooge-ing
TheFourthStooge-ing's picture

CompassionateFascist said:

Kuntsler was referring to all of us, not just the 4 stooges.

Impossible. As an illustrative example, take any post by MillionDollarBonus. You have MDB, who is clearly in the realm of trolldom. You have those who angrily respond to MDB and are quite obviously in the trolled group. Then you have those who don't take the bait and can even appreciate the humor MDB applies to his "craft".

There are matters on which I agree with JHK and other matters on which I have strong disagreement. Be that as it may, if you actually take the time to read his blog article from Monday, you'll see that ZH is included in a group of sites that he recommends.

Personally, I think JHK's remark about the ZH commenters is itself a masterful work of trollery. Look how many people took the bait. If you can't see the humor in his remark, YHBT (you have been trolled).

Tue, 07/31/2012 - 22:34 | 2667317 MeelionDollerBogus
MeelionDollerBogus's picture

American trollizenism?

Tue, 07/31/2012 - 07:02 | 2664379 Snidley Whipsnae
Snidley Whipsnae's picture

Kunstler is a rable rouser with writing talent...

He has never lived down his disasterous call on Y2K... According to Kunstler's predictions in articles prior to Y2K the world was going to end on Y2K.

One of my goals is to insure that NO ONE forgets just how wrong Kunstler was. Many were taken in by his cock-sure, wrong headed forecasts... and, he made a considerable amount of dollars with his bs.

Mon, 07/30/2012 - 20:54 | 2663866 fonzannoon
fonzannoon's picture

I don't know. This is way too easy. The fed comes out Wednesday and announces QE3. Then the ECB announces they will blow out their balance sheets too. Gold hits 4k by December and everyone on here becomes mayor of their town and walks around with the purple hat and the cane and the shoes with goldfish in them and we all win pimp of the year.

I just don't see it. This is a war. We may win it. But it won't be that easy.

Mon, 07/30/2012 - 21:02 | 2663880 UP Forester
UP Forester's picture

Troops in cities and cordoning off rural areas long before any victory.

I mean, why put all those EOs, NDAA, PATRIOT Act, NORTHCOM, and police forces with APCs and full auto, not to mention the 400M .40cal rounds for DHS through, except to have a Third Reich-style legal precedent set before the serfs revolt?

Mon, 07/30/2012 - 21:48 | 2663955 engineertheeconomy
engineertheeconomy's picture

 History repeats itself, again and again and again. In the civil war, half the people we're on the wrong side. They we're supporting Slavery even though they didn't profit from it personally. The same thing will happen again soon when we revolt here in America, half the people will be on the wrong side of the battle line, supporting an illegal criminal government even though they are being raped by that very same government... Humans are encouragable

Mon, 07/30/2012 - 21:50 | 2663961 fonzannoon
fonzannoon's picture

i'd be amazed if half the people were playing for the right team when it counts.

Mon, 07/30/2012 - 21:56 | 2663970 engineertheeconomy
engineertheeconomy's picture

You're right. People aren't quite there just yet...

Tue, 07/31/2012 - 00:03 | 2664144 CompassionateFascist
CompassionateFascist's picture

That's "incorrigible" U illiterate idiot.

Tue, 07/31/2012 - 01:11 | 2664203 Floordawg
Floordawg's picture

If you think the U.S. Civil War was fought over slavery... you're definitely drinkin' the fluoridated Kool-Aid.


Tue, 07/31/2012 - 04:18 | 2664308 TPTB_r_TBTF
TPTB_r_TBTF's picture

the boys from the South we[']re supporting state's rights and self-determination; they we[']re not fighting for their rich neighbours "right" to own slaves. 

The boys from the North we[']re drafted, and we[']re not fighting against slavery.

Tue, 07/31/2012 - 06:34 | 2664360 fiftybagger
fiftybagger's picture

incorrigibly encouragable?

Tue, 07/31/2012 - 06:54 | 2664371 francis_sawyer
francis_sawyer's picture

Now the press is all abuzz about the first slave (THE VERY FIRST SLAVE EVER, MIND YOU),  in Obama's family tree (on his mother's side)... [rolls eyes]...


I'd bet gold to donuts that the slave was 'sold into' slavery from Kenyan ancestry...

This bullshit never ends...

Tue, 07/31/2012 - 07:26 | 2664424 ParkAveFlasher
ParkAveFlasher's picture

So what are you saying?  Obama's his own grandpa?

Mon, 07/30/2012 - 21:06 | 2663886 knukles
knukles's picture

Winning Pimp of the Year.


My 8 y/o niece could take me to school for Show & Tell
I could get a SNAP card.
And a Cadillac.
Bottle of MD20/20
A whole bevy of Hostess Ho-Ho's ...

Mon, 07/30/2012 - 21:41 | 2663947 centerline
centerline's picture

Just remember that Mad Dog is best served chilled.  If your going to go pimp, you got to go all the way.

Mon, 07/30/2012 - 22:47 | 2664057 Bohm Squad
Bohm Squad's picture

Stackin' has kept my pimpin' hand strong!

Mon, 07/30/2012 - 21:13 | 2663902 BKbroiler
BKbroiler's picture

Gold hits 4k by December and everyone on here becomes mayor of their town and walks around with the purple hat and the cane and the shoes with goldfish in them and we all win pimp of the year.


awesome.  Can't wait to give Bloomberg the boot and start running shit.

Mon, 07/30/2012 - 21:35 | 2663937 I think I need ...
I think I need to buy a gun's picture

I don't think any move in gold will be allowed disorderly, you will be told once what the new price is,,,,,i have no ideas where silver goes

Mon, 07/30/2012 - 22:06 | 2663989 slewie the pi-rat
slewie the pi-rat's picture

<---< canoeing

<---< to the fuking crimex

Mon, 07/30/2012 - 21:00 | 2663875 francis_sawyer
francis_sawyer's picture

Whip Inflation Now!... #WINNING

Mon, 07/30/2012 - 23:35 | 2664109 Al Gorerhythm
Al Gorerhythm's picture

Why doesn't the FED print up a $million for each of us so that we can get in front of inflation? Ah, to hell with that. A million is so yesterday. Bennie, can you make it a billion?

Mon, 07/30/2012 - 23:50 | 2664131 TheFourthStooge-ing
TheFourthStooge-ing's picture


Why doesn't the FED print up a $million for each of us so that we can get in front of inflation?

You mean a ........million dollar bonus?

Tue, 07/31/2012 - 01:54 | 2664223 Al Gorerhythm
Al Gorerhythm's picture

Yeah, just for passing 10th grade at public school. We deserve a payoff if they want to keep it going.

Tue, 07/31/2012 - 06:57 | 2664374 francis_sawyer
francis_sawyer's picture

Not sure a million dollars is worth a PUBLIC SCHOOL indoctrination/brainwashing... It took me years to get over mine & probably cost me more than that over my lifetime...

Tue, 07/31/2012 - 07:24 | 2664418 Haager
Haager's picture

Bad idea, that would stimulate the economy, people will buy what they need and some extras, they will have the reserves to decide in favour of quality and they will support national products and employments. People could become more independent and they could become interested to educate themselves. They will have enough to overthrow poverty in the US. They will definitely increase the educational level nationwide. They possibly will kick out biased media, they possiby will kick out low-level tv-programme. 

Then they can possibly do a closer look behind the curtain of corporate cronyism, decovering that free market rules only apply to others than the elitist. They will discover shitloads of lies and schism throughout the decades, followed by storms of unrest against the government and the elites, decades of civil war will follow spreading death and disease through the country leaving just the nuke option for the elite which will bomb the nation (and maybe the whole world) back into Pleiocene.


Or short: It doesn't work.


Mon, 07/30/2012 - 21:02 | 2663878 disabledvet
disabledvet's picture
not that gold prices didn't do well the last time we had a food crisis on this scale. perhaps if we all just agreed "sound money is everywhere and always the way to go."

Mon, 07/30/2012 - 21:06 | 2663885 deagle44
deagle44's picture

interesting... all the fed heads seem to have one thing in common

Tue, 07/31/2012 - 00:05 | 2664146 CompassionateFascist
CompassionateFascist's picture

Fetor Judaica.

Mon, 07/30/2012 - 21:06 | 2663889 apberusdisvet
apberusdisvet's picture

Fuck gold; silver is the better play; the GSR is absolutely absurd.  Within 20 years the ratio will be a lot closer to 1:1 than any would imagine. 


btw I own both

Mon, 07/30/2012 - 21:23 | 2663920 geminiRX
geminiRX's picture

20 years....try 3-5 yrs. Peak gold is expected in approx yr 2017

Mon, 07/30/2012 - 21:08 | 2663893 Colonel
Mon, 07/30/2012 - 22:03 | 2663964 engineertheeconomy
engineertheeconomy's picture

We need more Iranians here in this country. HANG THE BANKERS ALREADY!

Tue, 07/31/2012 - 07:29 | 2664427 Haager
Haager's picture

Discover the whole shit network first before killing the wells of evidence.

Mon, 07/30/2012 - 21:08 | 2663894 dick cheneys ghost
dick cheneys ghost's picture

And thus was born the 'petrodollar' oil standard


Article 3(h) - the “Gold Clause” - provided that

''“Any obligation hereunder to pay a specified sum in United States Dollars shall be discharged by the payment of a sum in United States Dollars equal to the official United States Government purchase price in force at the date of payment for such quantity of gold, of the standard and fineness prevailing at the date of the signature hereof, as such specified sum would have been sufficient to purchase at the date of signature of this Agreement at the official United States Government price then in force.The principle underlying this paragraph is that the present value of the United States Dollar shall be maintained throughout the term of this Agreement”.''

Mon, 07/30/2012 - 21:11 | 2663898 monopoly
monopoly's picture

Agree, this has never been easy and it will not play out perfectly for us each day. Just watch the whip saw action. Wed. the inmates babble to us, Thursday, Europe takes center stage and Friday we have the unemployment report.

Tomorrow may be boring but look out for the rest of the week. "Keep that hand on the tiller, stay the course and for all that is right.....No Margin.

Mon, 07/30/2012 - 21:13 | 2663903 Red Heeler
Red Heeler's picture




Invisible transfers, long distance calls,
Hollow laughter in marble halls
Steps have been taken, a silent uproar
Has unleashed the dogs of war
You can't stop what has begun
Signed, sealed, they deliver oblivion
We all have a dark side, to say the least
And dealing in death is the nature of the beast

One world, it's a battleground
One world, and we will smash it down
One world ... One world

- "Dogs of War," Pink Floyd

Mon, 07/30/2012 - 21:16 | 2663908 Robot Traders Mom
Robot Traders Mom's picture

can one buy more gold at $1,600 or at $16,000?


There are obviously three types (and we are all on the same team) of metals buyers: Physical, Options, and a combination of the two. As much as we all hate Blythe Masters, she has given us such a great gift of being able to buy more while we can. If/When we see an inflationary nightmare, we will all be wishing for price supression so we can buy more.


If you are playing the options, good luck. Short term blips can wipe you out and you play into Blythe's hand. Own physical and you will win in the end, whenever that is.

Mon, 07/30/2012 - 21:23 | 2663919 francis_sawyer
francis_sawyer's picture

 If/When we see an inflationary nightmare, there will likely be no physical bullion for sale to the plebes...

Mon, 07/30/2012 - 22:20 | 2664012 tekhneek
tekhneek's picture

Okay but... being the contrarian... $5 says there's a line outside the "Gold for Cash" store (that one of us will probably open...) when the hyperinflation hits.

I really, really do think we've hit that new low.

Not that it'll last forever -- just... long enough to cause a lot of face palming.

Mon, 07/30/2012 - 22:48 | 2664062 HoofHearted
HoofHearted's picture

And $10 says I'm outside of the cash for gold store offering more for the shiny than those bitchez. I'll have my concelaed carry permit with me and a goon or two that I know and can pay off well enough to help me.

Tue, 07/31/2012 - 06:59 | 2664376 BigDuke6
BigDuke6's picture

Those are the sentiments I was keen to see tek.
I've been stacking gold since 2003 and I was an accumulator but now I think it's not difficult to buy the dips.
I went in big between christmas and ny when there seems to be a predictable dump every year
And if you look at yearly charts around now is a good time to buy even without these storms brewing.
I've got that feeling its a good time to go big.... And I thought I was all in before....
Let's be careful out there.

Tue, 07/31/2012 - 07:15 | 2664401 Dr. Sandi
Dr. Sandi's picture


can one buy more gold at $1,600 or at $16,000?

Thanks RTM. I was hoping somebody would pick that up.

I think what Tyler is hinting at is that $1600 gold is yours for the buying. Just trade FRNs for the shiny at a deep discount price. What's not to love? You can buy as much as you can afford.

But at $16,000, there just won't be any available. Nobody is going to part with it at that price, once even the mouthbreathers understand the real value of metals. Which is a major part of how gold can end up at $16,000.

Buy gold cheap while they're giving it away, or forget about it.

Mon, 07/30/2012 - 21:19 | 2663912 DizzySailor
DizzySailor's picture

One word..... SPROTT


Whoops, I mean PHYZ if it were listed.


Mon, 07/30/2012 - 21:19 | 2663914 bnbdnb
bnbdnb's picture

Just my opinion, but if we ever actually NEED physical gold again, I'd rather not be around.

Mon, 07/30/2012 - 21:26 | 2663925 geminiRX
geminiRX's picture

I look forward to exchanging gold for real estate and nice toys

Tue, 07/31/2012 - 07:00 | 2664377 francis_sawyer
francis_sawyer's picture

Which 'toy' do you prefer?... The blonde, or the redhead from the DEBT BOMB video?

Mon, 07/30/2012 - 21:27 | 2663927 Peter Pan
Peter Pan's picture

Well in that case keep enjoying the theft of your freedom and your right to the truth.

Do NOT follow this link or you will be banned from the site!