Home › Forums › 16 to 1 Mine › Gold Enters Major Bull Market
- AuthorPosts
More of a reason for gold ownership.
Days Away From Economic Chaos?
in response to Re: Next week’s US data stream by ESL
posted on Aug 22, 09 05:59PM
Some highlights from Bill Sardi’s revealing article………………..Days Away From Economic Chaos?
America is just a few days away from a possible day of reckoning. I again call attention to this day, August 25, when the Federal Deposit Insurance Corporation issues its 2nd Quarter report for 2009 on the state of health of American banks………………………
The FDIC is required by law to maintain a reserve ratio, or balance divided by insured deposits, of 1.15 percent. It was at 0.27 percent as of March 31. It could be near zero at the current moment. (See 1st Quarter FDIC reserve ratio chart below)………….
Hiding losses
Banks have been slow to foreclose, allowing mortgage holders a few months before their home is deemed in default and giving another 2 years before the property is foreclosed on its accounting books. This practice has been able to temporarily hide most of the banking collapse……………………..
Zombie banks
The FDIC, which claimed only about 300 problem banks in the 1st Quarter of 2009, but hid the fact there were about 2000 total lame banks among its 8400 members,………………
Examination of the following FDIC chart shows geographically that most banks are not making a profit……………..
FDIC’s $13 billion against $220 billion liabilities
So just how much liability does the FDIC bear aggregately for its “problem banks?”
At the end of the 1st Quarter in 2009 the FDIC said that figure was $220 billion. Remember now, the FDIC had only about $13 billion to over these institutions at the time. (See chart below) This figure will likely grow beyond imagination with the issuance of the FDIC 2ndQ report…………..
(ESL comment: The FDIC cannot afford to cover $220 Billion in liabilities for 300 “problem banks” without dipping into Credit Lines at the Treasury. But even that LOC may not be adequate if banks fail to resolve their balance sheet issues, sink too deeply into the red and fold. True liabilities at SIGNIFCANT risk are several $Trillion if 2000 lame banks are included as they should be. To make matters worse the number of problem and lame banks is expected to be much higher in the Aug 25th Q@ FDIC report. Get the picture?)
Banks valued by goodwill and bailout funds
So there, you can see that in addition to goodwill, the bank’s capital was largely increased by bailout funds. So a dose of reality therapy will lead one to conclude that nearly all American banks are essentially insolvent.
If this leaves you feeling a bit queasy, well, you may need to reach for Dramamine when you realize the FDIC is not only broke, but it will probably announce it is tapping into its line of credit at the US Treasury Department, which is also insolvent (America is spending $1.58 trillion more than it collects in taxes this year).
Here is how Bloomberg’s Vekshin says it:
If the fund is drained, the FDIC also has the option of tapping a line of credit ……………… with temporary borrowing authority of $500 billion through 2010.
The mother of all bank runs?
Now if just a small portion of American bank depositors hear that the FDIC had to tap into the US Treasury for funds, and these depositors feel their banked money is at risk and want to withdraw some of it, the mother of all bank runs could ensue. This could create the day of reckoning that many have predicted……………………….
Last on gold is $953.70.
The following is the closing excerpt from the summer edition of The Trends Journal by Gerald Celente. Gerald’s format in trends research is to reach into the future with supporting factual trends and identify the continuing process.
Trendpost: With America deep in denial, any product, service or enterprise that facilitated “escape” would turn a profit. There were two sets of emotions in play simultaneously. Fear and Hope. Although “Hope” was winning campaign slogan for candidate Obama, and still played well in the polls, “Fear” was the dominant underlying emotion playing to the public.
Recognizing that all was not well beneath the surface, anyone selling anything would do well to understand the public’s anxious, confused and depressed state of mind … no matter what the polls were showing. Projecting genuine empathy, compassion and honesty would win over consumers.
Our trend forecasts, unlike those with optimistic outcomes – and even those who don’t buy the “green shoots”- scenario but forecast eventual “recovery” – are for longterm decline and a permanently altered consumer climate. Those planning long-term strategies and product launches should design them to correspond to current and emerging mood/attitude perceptions of targeted market sectors; to have a real world understanding of what prople feel, not just what they say.
Both “escapism and “fear” were overriding long-term trends.
Much of what held true in America would filter abroad. Ironically, although the world blamed America for the economic crisis, it still looked to America to fix it. And although copying the US way of life was a declining trend, America still exerted cultural influence. The trends prevailing in America would have parallels and variations, nation by nation.
In the Summer of 2009, the mass media, Washington and Wall Street were pitching recovery.
NEW INDEX FORECASTS RECESSION’S END
Economic outlook gauge pegs turnaround in SeptemberUSA TODAY, 11 June 2009 – The recession will likley end in September and be followed by a mild recovery, according to the new USA TODAY/IHS Global Insight economic outlook index.
The “all-clear” signal was sounded. The worst of the economic storm was over. By September there would be blue skies and fields of green shoots in flower.
By 2012 that picture looked as inaccurate and as dangerously naive as those official announcements on 9/11 telling people in the World Trade Center to go back (to) their desks, “the fire in the North Tower is under control.”
The worst of the economic storm had not yet hit, and there was a widespread, if unarticulated sense of impending disaster.
When major natural catastrophes threaten, many creatures proact in anticipation of what’s to come. Whether through intuition, instinct or some form of hypersensitivity, some seem to know what has to be done to survive … moving to higher ground, taking flight, finding shelter, etc. Others, possibly as sensitive but less directed, become disoriented. They sense something has to be done but don’t know what.
That was the situation in the Summer of 2009. There were those proacting intelligently in anticipation of “Obamageddon.” There were others, possibly a majority that sensed it, but either did not trust their instincts or didn’t know what to do. And then, of course, there were those didn’t know and didn’t want to know.
“Survival was THE trend. “Depression-Era Self Defense” was the strategy.
CW3343, what is the motive to write what you did?
To the previous contributor concerning “Gold Demand Drops To A Six Year Low??,” it’s nice that you have made an appearence but I think it would be best for other readers if you quote subject article titles accurately.
Instead of the question marks you left out “On Recession.”
What the article said was that jewelry and industrial demand were at a 6 year low.
In the guts of the article was a far more consequential comparison than gold demand being effected by a slower economy. It was the international central banks were net buyers of gold for the first time since 2000.
The questions marks were misleading. Get the facts straight. The reason that gold is not headed lower is that the US is in the midst of a major currency crisis, massive amounts of fiat money being manufactured. The lack of continuing demand for jewelry and industrial usage significantly pales in comparison to this.
The US Mint has suspended on and off the sale of gold and silver coins this year and last because they can not keep up with demand. Jewelry is a luxury item in the western world. If our currency implodes overnight during a “banking holiday,” I would rather have the coins than a box full of jewelry, any day.
Advertised gold jewelry buyers are only paying 60% or so for the metal content. Sellers of gold coins would rarely receive a discount to the spot price.
Gold demand drops to 6 year low???
Per the World Gold Council.
http://www.bloomberg.com/apps/news?pid=20601102&sid=ayr30bHgFXQE
Last on gold is $938.20
An excellent background on who is pulling the financial strings in Washington that’s sending the great majority to the poor house:
Last on gold is $943.10
A quote from Martin Armstrong:
“Democracy died a long time ago. Our politicians are sitting on the otherside of the table, and we are the meal.”
An “Oldie but Goodie”
Home » Daily Dispatches
Peter Millar: Seven-fold increase in gold needed to avert debt depression
Submitted by cpowell on Thu, 2007-02-22 00:14. Section: Daily Dispatches
7p ET Wednesday, February 21, 2007Dear Friend of GATA and Gold:
While it is almost a year old, a study of the enduring importance of gold in the world economic system by R. Peter W. Millar, founder of Valu-Trac Investment Research Ltd. in Scotland (www.valu-trac.com), seems ever more compelling, and Millar graciously has agreed to let it be shared with you.
Millar stresses the periodic upward revaluation of gold as the mechanism for defeating a deflationary debt depression at the end of an economic cycle. Millar writes:(When gold was about $660)
“The first cycle unfolded as follows:
“– Phase 1: Stability under a gold standard until 1914.
“– Phase 2: Inflation until 1921, which resulted in a buildup of debt.
“– Phase 3: Disinflation, which brought stability and allowed asset inflation until 1929, but encouraged a further buildup of debt.
“– Phase 4: Instability after 1929 caused by deflation of assets from overpriced levels and exacerbated by excessive debt levels, leading to depression of economic activity.
“– Phase 5: Monetary reform enabled by a revaluation of gold to overcome deflationary debt depression.
“In the second half of the 20th century we saw a repeat of the first three phases of the same cycle:
“– Phase 1: Stability from 1944 to 1968 under a gold standard.
“– Phase 2: Inflation from 1968 to 1981, which caused and justified another buildup of debt.
“– Phase 3: Disinflation from 1981 until the end of the 20th century, and maybe to the present.
“However, it appears that Phase 4 (instability and ultimately deflation due to excessive debt) may have started. If so, Phase 5 (revaluation of the gold price to raise the monetary value of the world monetary base and hence reduce the burden of debt) becomes likely or inevitable. The extent of that revaluation would need to be major according to our calculations, probably by a factor of at least seven times, possibly up to 20 times the current price of gold.”
The price of gold when Millar wrote his study, in May 2006, was about where it is tonight.
Millar’s study is titled “The Relevance and Importance of Gold in the World Monetary System” and you can find it in PDF format here:
http://www.gata.org/files/PeterMillarGoldNoteMay06.pdf
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.* * *
Help Keep GATA Going
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at http://www.GATA.org. GATA is grateful for financial contributions, which are federally tax-deductible in the United States.
Friday’s gold close $955.40
Significant charts from the Department of Labor.
last of gold is $961.40
The gold cartel digs in its heels and defends a given level. They dump paper gold on the market periodically in defense of the indefensible. The sequence has the strange characteristic of lower highs and higher lows each time. A resolution is demanded. The gold cartel is fast running out of physical gold with which to fill their rifles and artillery cannons. Being shot with a paper bullet from a rifle surely hurts, but the effect to stop a rush of angry investors cannot be stopped by paper gunfire. Beware of upcoming shocks.
Comments by Jim Willie
CB. Editor
Hat Trick Letter
July 29, 2009
USGOVT YUAN BOND THREATLast on gold is $960.60
GoldSeek.com Radio interviewed Jim Sinclair on August 5, 2009 concerning gold.
Check it out and learn:
http://www.radio.goldseek.com/players/sinclairnuggetaug5.php
Last on gold is $948.10
Recent comments from Jim Sinclair:
Gold will take out $1000 on this try with a very temporary retreat before it moves fully through. Gold will move to and through $1224 with a temporary battle. Gold will move toward $1650 but meet serious temporary opposition in the $1400 area.
All of this will occur starting quite soon. Hold on tight to all that is precious metals.
Stay the course.
Last on gold is $937.00
The following was picked up today from the ECU stock page of agoracom.com in Canada. Sorry Mike, an easy link not possible.
Former Assistant Treasury Secretary, Paul Craig Roberts, again pens an excellent article below on the true state of affairs. He even pegs gold manipulation…”The price of one ounce of gold coins is $1,000 despite efforts of the US government to hold down the gold price.”
Nice DOW save – VHF
–
There’s Nothing Left To Recover – What Economy?
Paul Craig Roberts
July 16, 2009
There is no economy left to recover. The US manufacturing economy was lost to offshoring and free trade ideology. It was replaced by a mythical “New Economy.”
The “New Economy” was based on services. Its artificial life was fed by the Federal Reserve’s artificially low interest rates, which produced a real estate bubble, and by “free market” financial deregulation, which unleashed financial gangsters to new heights of debt leverage and fraudulent financial products.
The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans’ wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared.
The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.
And now suddenly Americans can’t borrow in order to spend. They are over their heads in debt. Jobs are disappearing. America’s consumer economy, approximately 70% of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities.
Meanwhile the US government’s budget deficit has jumped from $455 billion in 2008 to $2,000 billion this year, with another $2,000 billion on the books for 2010. And President Obama has intensified America’s expensive war of aggression in Afghanistan and initiated a new war in Pakistan.
There is no way for these deficits to be financed except by printing money or by further collapse in stock markets that would drive people out of equity into bonds.
The US government’s budget is 50% in the red. That means half of every dollar the federal government spends must be borrowed or printed. Because of the worldwide debacle caused by Wall Street’s financial gangsterism, the world needs its own money and hasn’t $2 trillion annually to lend to Washington.
As dollars are printed, the growing supply adds to the pressure on the dollar’s role as reserve currency. Already America’s largest creditor, China, is admonishing Washington to protect China’s investment in US debt and lobbying for a new reserve currency to replace the dollar before it collapses. According to various reports, China is spending down its holdings of US dollars by acquiring gold and stocks of raw materials and energy.
The price of one ounce gold coins is $1,000 despite efforts of the US government to hold down the gold price. How high will this price jump when the rest of the world decides that the bankruptcy of “the world’s only superpower” is at hand?
And what will happen to America’s ability to import not only oil, but also the manufactured goods on which it is import-dependent?
When the over-supplied US dollar loses the reserve currency role, the US will no longer be able to pay for its massive imports of real goods and services with pieces of paper. Overnight, shortages will appear and Americans will be poorer.
Nothing in Presidents Bush and Obama’s economic policy addresses the real issues. Instead, Goldman Sachs was bailed out, more than once. As Eliot Spitzer said, the banks made a “bloody fortune” with US aid.
It was not the millions of now homeless homeowners who were bailed out. It was not the scant remains of American manufacturing–General Motors and Chrysler–that were bailed out. It was the Wall Street Banks.
According to Bloomberg.com, Goldman Sachs’ current record earnings from their free or low cost capital supplied by broke American taxpayers has led the firm to decide to boost compensation and benefits by 33 percent. On an annual basis, this comes to compensation of $773,000 per employee.
This should tell even the most dimwitted patriot who “their” government represents.
The worst of the economic crisis has not yet hit. I don’t mean the rest of the real estate crisis that is waiting in the wings. Home prices will fall further when the foreclosed properties currently held off the market are dumped. Store and office closings are adversely impacting the ability of owners of shopping malls and office buildings to make their mortgage payments. Commercial real estate loans were also securitized and turned into derivatives.
The real crisis awaits us. It is the crisis of high unemployment, of stagnant and declining real wages confronted with rising prices from the printing of money to pay the government’s bills and from the dollar’s loss of exchange value. Suddenly, Wal-Mart prices will look like Nieman Marcus prices.
Retirees dependent on state pension systems, which cannot print money, might not be paid, or might be paid with IOUs. They will not even have depreciating money with which to try to pay their bills. Desperate tax authorities will squeeze the remaining life out of the middle class.
Nothing in Obama’s economic policy is directed at saving the US dollar as reserve currency or the livelihoods of the American people. Obama’s policy, like Bush’s before him, is keyed to the enrichment of Goldman Sachs and the armament industries.
Matt Taibbi describes Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentless jamming its blood funnel into anything that smells like money.” Look at the Goldman Sachs representatives in the Clinton, Bush and Obama administrations. This bankster firm controls the economic policy of the United States.
Little wonder that Goldman Sachs has record earnings while the rest of us grow poorer by the day.
Last on gold is $923.60.
The following link is to a recent interview of Jim Rogers by Fox News. Aside from the interview, how much longer can government revenues shrink while it continues to expand our debt to unprecedented levels? It must be nice to have a printing press in your basement but what will be the ultimate cost to you and I?
http://tipd.com/Videos/youtube–jim-rogers-bailouts-just-throw-good-money-away-1/
I can’t help but notice the parallel between the languishing gold price of the past recent doldrums ten years ago (280-320) and today’s languish of 800-980….
It seems like the pull of the rubber-band: the stronger the pull, the bigger the snap.
Last on gold is $940.20
Last on silver is $13.70
From Agoracom.com in CanadaTerresainte is from Geneva
JPM & Snowwhite
posted on Jul 01, 09 10:18AMThe OCC derivatives report Q1 2009 Table 9 on page 30 shows that the Fed’s conduit, JPM increased its Gold derivatives exposure by $10 Billion in Q1 vs Q4 ’08 to a mindboggling 79% of all outstanding Gold derivative contracts -> $92 billion or 100 million ounces.
In Silver (precious metals) JPM holds 56% of all Silver derivatives ($4.6 Billion or 338 million ounces) vs 48% in Q4. In addition the JPM current net silver short position on the Comex should be approx. 200 million ounces. This vs an annual world-wide supply of 888 million ounces. The paper ETF SLV claims to hold 280’500’000 Silver ounces (8724 tons). The Custodian “Surprise” is JPMorgan. https://ebts.jpmorgan.com/ebtsWebMod/ebts_downloads/BONYBARLIST.PDF
A Conflict of interest between these positions and at the same time being the custodian for the SLV shareholders is manifest. There is no written guarantee whatsoever that SLV’s silver claims on the physical silver inventory is not encumbered by one party or another. One has to be gullible to ignore the coincidence. Manipulating the price of silver with this kind of massive dominance is child’s play.
Barclays, the current ETF owner predicting a silver price of $12 towards the end of the year should not surprise anyone either, they wish to fill their obligations at a discount.
Gold is holding it’s own,with India exporting for the first time?and not importing much with President pushing through a 400 ton IMF sale & all the scrap sales I am surprised gold is not going down.I am still buying miners and doing well with most of them and will continue through the Summer along with some physical gold & silver.
The U.S. does hold the most gold but who’s gold is it & how much do we really have if they will not let audits take place, the people of the United States of America’s gold could already be gone.Blue Jay: The USA holds the largest gold reserve in the World. What do you think will happen to the price of gold when your pinko friend Obama decides to sell this reserve to pay off your national debt? I read what you say and think you are a stupid jack ass.
Last on gold is $934.00
Dear Comrades In Golden Arms,
There is no better proof that we are getting extremely close to the Armstrong/Alf point of lift off than the violence of the shorts in their desire to cover both in paper gold and the long suffering junior gold shares.
The method used is to increase the short position now while we are waiting for the uptick rule to be reinstated all while driving a bulldozer of selling into markets. This selling is not to sell shares as much as it is to make a grandstand play to shake the confidence out of the bulls.
This type of strategy in paper gold today and many of the highly shorted junior gold shares is to ignite the passion of fear in holder’s hands, therein allowing the shorts to make cover.
Call or email your company and inquire about their fundamental position. If it is good, then be sure you are witness to a strategy that is as old as markets themselves. This strategy is used by bulls to run shorts, and shorts to make cover depending on the circumstances.
In my opinion we are very close now to the best and longest move upwards in the gold market.
Gold is going to $1650 and then on to Alf’s numbers.
The US dollar has nowhere to go as its support here has been only algorithms and coordinated statements of support, but actions to the contrary by the BRICs.
Stay the course.
Sincerely,
Jim (Sinclair) http://www.jsmineset.comThe last on gold is $926.50. The banksters are feeling smug today with another manipulative feat. Why does the CFTC permit such a high illegal concentration of current short selling in gold and silver by two or three US banks???? The responsibility to the people by the government to insure fair play in markets was abandoned a long time ago.
The banks involved in setting prices for gold and silver are are criminals with no one in government brave enough to prosecute their own bosses except Ron Paul and possibly, a few others.
I have included a link to a remarkable effort by Martin Armstrong to awaken the people through his recent works in the essay entitled, Anatomy Of A Debt Crisis with special emphasis on the past reforming accomplishments of Julius Caesar during Rome’s financial period of crisis.
Mike and Rick will find the content of Martin’s report quite enlightening as it proves that incompetent judges along with incompetent politicians continue to make matters worse for the people in a historical repeating cycle of greed and lust for power.
Last on gold is $932.30.
I have just finished reading Antal Fekete’s Primer On The Silver Basis. Thanks to Mr. Fekete my education continues to move forward.
The link to the article is:
The last on gold is $938.10.
Homestake and the 30’s depression, will history repeat itself?
Last on gold is $938.30.
Concerning the CFTC’s lack of interest to police the two or three large US banks that are heavily shorting gold and silver, precious metal holders should remain confident that sooner or later, on a daily bssis, this phantom selling campaign will end.
THE CASE FOR GOLD
A RECIPE FOR DISASTER
June 12th, 2009 by Egon von GreyerzTake the following ingredients:
A banking system which is on the verge of collapse
Add a few $ trillion of government liquidity and guarantees
Inject $ 100’s of billions in loans and capital
Keep all the bank management that have caused the crisis
Pay them astronomical bonuses because otherwise they might be snapped up by a bankrupt competitor
Change the method for valuing the banks toxic and worthless assets so that they can publish hocus pocus increases in profits
Construct a stress test that all banks can pass, some with minor capital injectionLet some of the banks repay the government money to make the markets believe that the banking system has been saved and is sound
And what do you get?
A BANKING SYSTEM WHICH:Is still on the verge of collapse
Is leveraged 25-50 times
Will go under with a 2-4% write off of total assets
Has loan books that are deteriorating at an alarming rate
Is not recognising or extrapolating the rapidly rising default rates
Has a high percentage of prime residential mortgages in negative equity
Has not provided for commercial property loan defaults with property values falling 40-50%
Has a high level of personal loans and credit card loans which will never be repaidHas worthless paper assets which are valued at fantasy prices with the blessing of the government
Has $ 100’s of trillions of derivatives for which there is no market and with no reserves for losses
Is too big to failWill soon require more support
Will need $ trillions and probably tens of trillions to survive which governments will of course print
Gold $955.80
Silver $ 15.19You think we have free markets, think again.
Some years back when Warren Buffett started to acquire a large position in silver through a Connecticut broker the shorts in the market cried to the CFTC about a growing concentrated position being manipulative and the CFTC took action. Now with three or fewer banks holding a concentrated and manipulative position in silver and gold the CFTC is fast asleep. I guess we know who is working for whom.
Bad News, Good News
By: Theodore Butler
copied from http://www.silverseek.comThe most recent Commitment of Traders Report (COT) was almost a replay of the prior week’s report. Very little net new speculative buying/dealer selling in silver, massive net speculative buying/dealer selling in gold. As of the close of business June 2, both COMEX gold and silver futures are at the largest total commercial net short position levels since last summer. While the silver concentrated short position is still at world record levels, the concentrated gold short position is more than notable.
According to the COT and the Bank Participation Report issued Friday, the level of concentration on the short side of gold increased dramatically. In fact, the Bank Participation Report indicated that three or fewer US banks held the largest concentrated net short position in COMEX gold futures on record, at over 123,000 contracts (12.3 million oz). Let me repeat that, three or fewer US banks held the largest short position in history. Let me tell you why that’s bad news.
For the umpteenth time, concentration and manipulation go hand in hand. You can’t have manipulation without a concentration. Period. Concentration is also dangerous to everyone; the markets, the regulators, innocent participants, even to the US banks so heavily short. That was the problem with AIG in the credit default swap debacle that almost sunk the financial system. They had too big of a concentrated position. This COMEX gold and silver short position is not on the same scale as AIG’s CDS position, but it is way too big and concentrated. It shouldn’t be allowed, especially by US banks, considering what havoc they have already wrought.
To those who insist that all this concentrated shorting by a very small number of US banks is just some type of aggregation of accounts doing legitimately hedging, let me explain why that is nonsense. The gold concentrated short position increased to a record level in just one month. At the exact same time, the published gold miner hedge position is at its lowest level in a decade. You can’t have a record large concentrated short position being a legitimate hedge when the hedge position is at a record low.
Let’s be honest. This record short position by two or three US banks was put on as an offset to speculative buying by technical hedge funds on the COMEX. It was no hedge, just a plain vanilla speculative short by the 2 or 3 US banks. They sold short because they were convinced they could eventually get the tech fund longs to liquidate at lower price levels and make a profit in the end. Normally, that might not be a problem, just some big speculative bets being made by big money institutions. But these aren’t normal times or normal conditions. The short selling by 2 or 3 big US banks has become so concentrated that it has crossed the manipulation line by a wide margin. Who died and left them the kings of price control?
Transparency is one thing, honesty is something else entirely. It’s laudable that the CFTC is so transparent in publishing the data that I reference. But what good is publishing the data if they are not going to be honest about what the data signifies? It is time for the CFTC to speak out on this issue. They have been investigating this issue of concentration for more than ten months now, their third silver investigation in five years. If they find nothing wrong in silver this time, unfortunately as the odds favor, there will be no additional silver investigations – until the silver market blows up. Then there will be a final silver investigation, trying to uncover why they didn’t see it coming.
That’s why it’s important to bring your concerns to the new chairman of the CFTC, Gary Gensler. Please give him the benefit of any doubt you might have about him fixing this problem. I have studied his public testimony and his background. He looks like the real deal – smart and aware of the important issues, like manipulation and speculative position limits. I just hope he can see that speculative position limits must apply to the big banks as well when they are, in fact, speculating. He is not responsible for the current manipulation in silver and gold and must be given a reasonable amount of time to resolve it. I’m sure he knows, better than anyone, that his time to resolve the problem is not unlimited. At some point fairly soon, if he doesn’t address this issue, it will become his problem.
There was some other interesting data in the recently released CFTC reports over the past three weeks. I was struck by the disparity between the increase in both the total net commercial short position and the concentrated short position of the largest traders in gold, and the lack of increase in both categories in silver. I get the feeling the big boys (JPMorgan) are very reluctant to expand their short position in silver, but have no such qualms in gold. At least, that’s what the data suggest to me. What does this mean?
Again speculating, my sense is that this is no accident. It has become increasingly obvious that the large concentrated short position in silver is manipulative and must be addressed. I can’t know if this has been initiated by JPMorgan or the CFTC or the exchange, but that’s not the important issue. Regardless of who or what may be prompting a move away from more concentrated short selling in silver, the results could be profound. If true, it would signify no less than the end of the manipulation itself.
That’s not to suggest that the big manipulative shorts are about to roll over and play dead. They are still powerful and dangerous and their short positions are large.. If the script plays out as usual, they will try to rig a sell-off and get the tech funds to puke up their long positions. Only this time, the big shorts seem to be relying more on gold price pressure to drag silver lower, rather than to load up on silver short positions to the extent they have in the past. I still don’t know if they will succeed or something may come along and blow up in their faces, but I’m pretty sure what they want to do.
It will be bad news, in one sense, if the big shorts succeed in manipulating gold and silver prices lower, forcing leveraged longs from the market. It’s like bullies in a school yard getting away with beating up the little kids. But it will also be good news if they clean out the tech funds, as it will present us with a low risk entry point, maybe the last one for a while.
Last on gold is $949.20.
A significant meeting will take place on June 16th in Kommersant, Russia between Brazil, Russia, India, and China to discuss the role of the Dollar in the global financial system amoung other issues. The acronym for this group is BRIC.
It’s interesting that along with the emerging Brazil, Russia and China are recent buyers of gold while India’s populace holds much more gold than others.
This upcoming meeting has to have monetary officials in the US spooked. What will be the outcome of the meeting?
In the meantime, gold’s price has been weak for the past few days as these same officials, undoutedly, attempt to suppress its price in an attempt to kill the messenger and to a small degree, effect a lower gold price prior to this meeting.
Games, games and more games, greed is the key word here. How much more smoke and mirror manuevers are US officials still able to conduct? It’s really silly when focusing in on the big picture, China will have the new world’s reserve currency in just a matter of time as they continue to beef-up their gold holdings on weakness in preparation for that reality.
What we have been seeing lately in lower gold prices is just another aggressive attempt by US officials to make our massive debt load look unimportant. Martin Armstrong has stated many times that an increasing monstrous debt load of governments from the past has spelled their demise on a regular basis.
Manipulating gold lower with our heavy load of debt is just historical monetary nonsense and plays directly into the hands of the Chinese.
In the end we will all pay a heavy price for the many years of misguided gold manipulation when the metal is adjusted significantly upward by the market and possibly leaving the American people responsible for an empty Fort Knox and for the replacement of borrowed gold from the vaults of the NY Federal Reserve.
Last on gold is $954.60.
I prefer not commenting too much on daily price events concerning gold as we are in a major bull market and the daily ups and downs don’t mean much. Today was especially interesting, the manipulators in a well planned assault hit gold as the two precious metal indexes, XAU & HUI, were right next to minor chart resistance.
Today’s raid was no more than a psychological stab at investors to make them feel uneasy. The XAU was off 6.75 closing at 150.67, with resistance at 165. The HUI was off 19.20 closing at 367.82, with resistance at 400. Weakness soon developed in the mining shares when the COMEX miscreants started selling gold contracts from $980 all the way down to $957. Near the end of the session gold rallied some to $964 but in after hours trading they hit it again, taking it to a low on the day of about $952.
The Dollar strong advocates in Washington continue to depress gold as it approaches the $1000 level with all their creative smoke and mirror tactics including running up the US Dollar Index some. Unfortunately, we will all pay the ultimate price in more debt or our loss of more wealth resulting from a Dollar price dive when their day of reckoning finally arrives and the piper has to be paid. What do you think would happen if someday the free world had one currency and it was discovered that all our gold was gone? You have to be naive if you think we still have our gold that they say we have in various locations around the US. It wouldn’t surprise me if our Treasury officials have sold some of the custodial gold for other countries that is being held for them in the vaults of the NY Federal Reserve. The greed to control the gold market over the years by these current and past officials may eventually destroy our civilization aided by the the growing possiblility that the government will sooner or later be unable to service the debt payments on our expanding IOU obligations.
Don’t forget, China will buy gold into all declines with their vast reserves as they significantly increase their gold holdings in preparation for their currency becoming the new world reserve currency when the Dollar goes into a major crisis sometime in the near future as a result of too much debt.
I have posted below a link to an interesting article concerning silver ETF’s(exchange traded funds). It’s always been my contention that COMEX gold trading was created to sop up money away from buying physical gold along with the gold miners as well as why the gold and silver ETF’s were created.
The article below points to the fact that ETF’s in America are not to be audited. I believe, again, the silver ETF that was set-up by J.P. Morgan to divert precious metal investments away from physical mrtal and the silver miners.
When Bear Stearns imploded Geithner arranged for J.P. Morgan to take over their silver short position with a public guarantee that if Morgan suffered any losses from that position that the American people through the Treasury Department would cover them. This was all designed to prevent the Bear Stearns silver shorts from being covered while taking the market higher and probably influencing gold’s price as well. It was soon after in the latter part of 2008 that the silver price was forced considerably lower along with gold by US banking interests in the midst of their crisis.
In the past I have mentioned Central Fund of Canada(CEF-ASE) which holds their shareholder funds in 50% physical gold and 50% physical silver. By the way, CEF IS AUDITED.
http://seekingalpha.com/article/141227-will-a-silver-bullet-finally-kill-the-metal-manipulators
Super important clarification: my entry below is a comment on the national debacle in Washington.
(It struck me, after review, that someone new here may have thought I was writing, below, about the mine….explaining to anyone new here: all of us familiar with real assets within the Original Sixteen know how real they are…)
The Original Sixteen to One Mine is in direct contrast to the Federal debacle crap I was writing about below.
Scroll down….
Bluejay is right.
This is debt without asset. It is also by design. The degradation of the dollar is not by accident, but by purpose. As stated, a banana-state (no republic intended) is the focus and intention.
The references cited by Bluejay and Kitco.com are real. It is no longer a fringe topic for a fringe group of “righties” who want Obama to fail. The numbers don’t lie. There is no assest, and there is debt. There is no plan to pay the debt back, and there is a plan to watch the debt take hold of our freedom, personal property and Constitution.
Despite the monetary warning (which I missed last time and stayed in the market, yet knowing that my gut told me to get out and solidify my tiny asset base with hard-holding gold, still didn’t)….this time I will.
Damn, that it is still tomorrow’s task. I keep feeling the cool-aid, but I won’t drink it. Tomorrow I will convert my assets to gold, real-live gold.
Simple Math.
“Honey, I think we’re broke.”
“Great! Let’s go spend while we can!”While we can…time.
Bluejay is right.
This is debt without asset. It is also by design. The degradation of the dollar is not by accident, but by purpose. As stated, a banana-state (no republic intended) is the focus and intention.
The references cited by Bluejay and Kitco.com are real. It is no longer a fringe topic for a fringe group of “righties” who want Obama to fail. The numbers don’t lie. There is no assest, and there is debt. There is no plan to pay the debt back, and there is a plan to watch the debt take hold of our freedom, personal property and Constitution.
Despite the monetary warning (which I missed last time and stayed in the market, yet knowing that my gut told me to get out and solidify my tiny asset base with hard-holding gold, still didn’t)….this time I will.
Damn, that it is still tomorrow’s task. I keep feeling the cool-aid, but I won’t drink it. Tomorrow I will convert my assets to gold, real-live gold.
Simple Math.
“Honey, I think we’re broke.”
“Great! Let’s go spend while we can!”While we can…time.
Last on gold is $980.30, following an early morning low of $960.00.
Copied below are pertinent comments made today b Monty Guild and Tony Danaher at http://www.Guildinvestment.com:
UNFORTUNATELY, THE U.S. HAS NO CHOICE. IT MUST CONTINUE TO PRINT MONEY AND DEBASE THE DOLLAR
China is positioning itself using a panoply of agreements that include allowing Chinese Yuan bond financing by Hong Kong banks, arranging trade related currency swap agreements with Brazil and six other countries, and working with countries and companies all over to world to lock up assets that it will need to run its production machine. China’s purchases include oil, coal, iron ore, nickel, and zinc to name a few. In short, China is buying assets worldwide –including an ever increasing share of the world’s gold supply — to stoke its economic machine in coming years.
China’s lust for gold is significant and deserves note. The fact is that China has been buying much more gold than it is producing. China is buying gold in the open market, willing to take gold off of the hands of the poorly managed IMF and central banks like Britain, who sold most of their gold at about $250 per ounce. Britain, the IMF, and others who have been, or will be, gold sellers appear to us to be operating with an excess of pompous verbiage and a shortage of common sense.
Gold will be an instrumental part of any new monetary system that is created in the world to succeed the current Breton Woods system. When the U.S. turns over power as the world’s reserve currency to China, it will be China’s large holdings of gold and large cash hoard which will make them a new monetary superpower. When that transition takes place, the old cliché about the golden rule, “Whoever holds the gold makes the rules” will be remembered for its wisdom.
On a side note, http://www.jsmineset.com carried an article today that stated household national debt is currently running at $545,688 and on the rise.
Very few people can grasp that our country is on the road to becoming another banana republic. Geithner and Bernanke lead by their financial handlers are selling out Americans. If the people can’t stop them, one of your few hopes is holding gold and silver and the companies that produce it.
Heaven help us all.
Last on gold is $960.90.
The following interesting comments were picked up from the ECU forum page at Agoracom.com this morning:
JW: Hitmen hired to strike at crimex and lbme
posted on May 28, 09 10:59AM
Please read the entire article!http://news.goldseek.com/GoldenJackass/1243519200.php
The HITMEN have been hired, with highly lucrative contracts and wide berth in methods to be put to use. Their assigned task is to castrate the levered family jewels from some of the major players who illegally keep the gold price and silver price artificially low. The targeted victims know their awaited fate, and are presently defecating in their skivvies. A short list of banks facing the firing squad is already known, details for Hat Trick Letter members. Some detailed speculation will be devoted to the June HTL reports, since too controversial. This will be an evolving story, with new chapters soon written. The executions will be sudden. The missing US-UK levers will be immediate. Since last autumn, the global powers have aligned against Wall Street, even if the central bankers have supported it. If one wants to destroy a building, then weaken its pillars, cut a few support beams, then rush in a crowd of people, and wait for a turbulent storm. In the case of the COMEX, the wicked players will crowd the corrupted building. They will sink into ruin and then oblivion. They might become objects of mockery when they make noises from prison. If lucky, they will join Ken Lay from Enron fame in a remote Caribbean island where other favored operators live a secluded life, but a life nonetheless, complete with plenty of sunshine, fresh air, beaches, bikinis, and sailboats, but no intrusive cameras. Please, do not disturb the quasi-dead!
The financial cartel dominated by the United States and United Kingdom is soon to suffer some serious blows. The list of their financial crimes is as magnificent as it is long. Its list of victims is as prominent as it is long. The harbored resentment is great by many global players. They waited patiently for the Obama Admin to install a new group, but the old group remains due to a revolving door from the same smoky club, dominated by Goldman Sachs once more. Their influence, if not bribery, of the USCongress is in continuation, sufficient for unwanted obsequious approval. The regulatory agencies are from the same encrusted chambers replete with stench. The Coup d’Etat of the USGovt financial offices has not changed with Obama, who sounds like a refreshing leader but who is actually a marionette under control by those who selected him, favored him with publicity, then enabled his election. Nothing has changed except the rhetoric of change and the pace on the path to bankruptcy for a few icon firms like General Motors and Chrysler, if not the desperate cries from the 50 states suffering from insolvency. More prominent failures will follow, since nothing has been remedied. The channeled funds directed to Wall Street firms continue unabated. The bread crumbs to Main Street and the people continue unabated. Even the war continues unabated. Forget not that Marie Antoinette once said “Let them eat cake” before the French Revolution and the Storming of the Bastille. Today, the Bastille is the entire USEconomy where insolvent Americans are stuck.
Last on gold this Memorial Day is $957.60
Jim Sinclair’s(jsmineset.com) Commentary
I have not read a better encapsulation of conditions nor have I seen a better reason to get insured immediately if you are not in gold. If you are not insured, prepare to suffer the extraordinary loss of lifestyle you are accustomed to, if not your existence itself.
Let’s call our writer “CIGA Pedro the Informed.”
A View From Abroad by an American in Brazil
We are witnessing the end of a very long phase in history. As a result there is a mass insecurity amongst the dominant nations of the past 300-years that is bordering on hysteria. This insecurity manifests itself in many different ways and markets are reflecting this. Gold prepares to soar, reflecting this insecurity, as gold is a barometer of fear.
Within the English-speaking world it is evident that “foreigners” are to blame. In the UK it is both the Poles and the “Pakis”. In America it is initially revealed via a general population viewing the Kyoto Protocol as a Chinese-led trick to destroy our economy. Then it is the belief that Mexicans are “invading” and Arabs are trying to kill us all. One has to stop and ask what the root of this paranoia really is.
As the American power structure tries to prepare for “inevitable conflict” with world Islam (c.f. Huntington, Clash of Civilizations) it also tries to hide its obsequious relationship with the Saudi Royal Family, which is incestuous at best, and perhaps more symbiotic than most would want to know. The financial population cannot reconcile this anymore than they can the fact that (perhaps apart from Jim) the accurate, unblended analysis of this crisis seems to have been foreshadowed by a two people with names: Nouriel Roubini and Naseem Taleb. People remain confused by the fact that the American power structure lacks patriotism and seems to favor its own interests over the interests of the country. They lash out at everyone, including, now, their own leaders. People don’t know whether to “blame” Obama’s socialism or Bush’s self-serving capitalism. Their foreign policies seem different but the rest appears the same. Major banks appear to have more control than we thought….even while teetering on bankruptcy.
This is reflected in markets. Currencies gyrate wildly. As Jim has noted many times, anybody trying to fathom the FX markets and trade them is likely to be carried out of the pit on the proverbial trader’s stretcher with a coronary. First the Euro is finished – its break-down elucidating thoughts of its demise – but then the belief that jettisoning the PIGS (Portugal, Italy (Ireland?), Greece, Spain) might be causing it to rise. The markets are schizophrenic. They don’t know what to think. The dollar and sterling take the brunt. There are reasons for this.
This is a system headed for breakdown. The established historical order is drifting to a close, and nothing can stop it. Changes in policy are manifestations of history – alter it they cannot. Gold’s rise becomes inevitable as countries who have ruled the Imperial phase of history try and resist their diminishment in status. Markets are manipulated as they try and hold on to power, while history shifts under their feet. China and Brasil cut deals that don’t include the USA and UK…the UAE starts to view separate currency arrangements with Russia, foregoing overtures by Saudi Arabia for a Gulf wide (GCC-led) monetary regime. Riyadh’s relationship is too close to Washington. Washington is yesterday’s news. (So much for the conspiracy of Islam.)
The end of an era is upon us. That is the era of the Global hegemon. The first phase took place in Britain, the second in the Soviet Union, and the third in America. Fukayama’s theory of history’s end is immolated on its very alter. The debacle of Iraq, as well as Afghanistan stand as testimony. The dominant powers simply cannot draw borders they way they did at San Remo in 1920 or via the Red-lines which economically created Kuwait. We seem to be unsure if we should break Iraq up, or let it be unified. Is it even our business, or has history out-run us and we have failed to acknowledge it? As the global hegemon is characterized through the Imperial phase of history, now draws to a close, people stand confused and amazed. The rulers of the dominant nations appear ready to sell them out…and this appears as “news” to educated observers.
Nobody can be sure of any currency regime any longer. The markets gyrate wildly. As fear and insecurity mount, Gold prepares for take off.
For the time being, the Allegany gold production has peaked as well. The many many thousands of ounces of gold broght to the surface had much more of a chance to be discovered back when the oppressive forearms of anti-freedom statists weren’t held so tightly to our throats….
These oppressive demamgogue statists, who believe they are the country and not the other way around, weren’t around when the shackles allowed the spirits of miners to flourish.
This is the only conclusion I can draw regarding the reluctance and nervous posture of investor potential.
All shareholders will recall when the CDAA threw a dagger into the mix, breaking laws and ignoring facts, and scared everyone away…and Mike Miller brought the issue forth during that year’s shareholder meeting: what was the sentiment and what were the consequences of doing nothing compared to fighting back?
History is always hindsight, but I believe the history of that protracted fight and subsequent railroading by yellow-bellied court crooks in the appellet court tells the story very well: the back-bone of virtue, freedom, inovative discovery and persistance is written in the record.
Bloomberg TV is showing a last cash sale for gold of $957.35.
Supplied below is a link to an informative report on gold relating to world production and the prominent regional producers. The writer, Thomas Chaize, has been stressing over recent years that world gold production has peaked.
The article has been translated to English from its orginal French format.
Last on gold is $952.00
“Gold cannot decline from its highs as it will be incorporated into the national and international monetary systems at that time.”
–Alf Fields, May 20, 2009Now do you have any questions why Fund Wizard Paulson just got long a few billion dollars worth of Gold ETFs and a few major gold producers?
Finally a major event has taken place that is a US dollar milestone.
The financing and extremely important event is the arrangement between China and Brazil displaces the dollar as China becomes the major trading partner with Brazil. Since then the Rial has been celebrating and the dollar has been depressed.
This is a once in approximately a century replacement of a trading currency that has always meant a dethronement of the deposed and coronation of a new currency king.
The last time this happened was when the US dollar supplanted the British Pound as the major trading currency and entity with Brazil 79 years ago.
It took the Brits 300 years to supplant the Portuguese Escudo with the British Pound.
Only twice has this occurred in 379 years. This is obscure to most but not to Mr. Paulson the hedge wizard. Obscure to most, but not to our gang at JSMineset.
The dollar died in Rio and that means everywhere.\
The dollar is in for a very cold winter.
There is one thing that is absolutely certain and that is Gold is now headed to at least $1650 and in all probability much higher. This is happening NOW!
What more do you need to know?
Gold closed the week at $930.90
Evidently, the Telegraph took a lot of heat from Washinton concerning the recent article entitled “Geithner Enriches Speculators in “Sham Bank” Bail-Outs and took the story down from their website.
The truth will set you free.
Fraudonomics
The interaction between government, the media, and Wall Street.Thursday, May 14, 2009
Geithner enriches speculators in “sham” bank bail-outs – TelegraphUpdate (May 15): The article that was linked to this posting has been taken down by the newspaper. So, now you will not only not hear about it on CNBC, it is not in the press anywhere.
Original post:
At the Qatar Global Investment Forum, Mark Patterson shed some light on Geithner’s Wall Street giveaway plan. This is not new information to Fraudonomics readers, but it is nice to have someone who is participating in the scheme tell the truth for a change. His words would cut like a knife if anyone in the government gave a damn about anything other than enriching the friends of Timmy and Ben.Notice that the story is being carried by a British newspaper. I doubt if you will hear about it on CNBC. Enjoy!
Geithner enriches speculators in “sham” bank bail-outs – Telegraph: “The US Treasury’s effort to stabilise the banking system through the TARP programme is a hopelessly ill-conceived policy that enriches speculators at public expense, according to the buy-out firm supposed to be pioneering the joint public-private bank rescues.
“The taxpayers ought to know that we are in effect receiving a subsidy. They put in 40pc of the money but get little of the equity upside,” said Mark Patterson, chairman of MatlinPatterson Advisers.
The comments are likely to infuriate Tim Geithner, the US Treasury Secretary, because MatlinPatterson took advantage of the TARP’s matching funds to buy Flagstar Bancorp in Michigan. His confession appears to validate concerns that the bail-out strategy is geared towards Wall Street.
Under the convoluted deal agreed earlier this year, MatlinPatterson has come to own 80pc of the shares while the US government has ended up with under 10pc.
Mr Patterson said the US Treasury is out of its depth and seems to be trying to put off drastic action by pretending that the banking system is still viable.
“It’s a sham. The banks are insolvent. The US government is trying to sedate the public because they are down to the last $100bn (£66bn) of the $700bn TARP funds. They think they’re doing this for the greater good of society,” he said, speaking at the Qatar Global Investment Forum.
Mr Patterson said it would be better for the US to bite the bullet as Britain has done, accepting that crippled lenders must be nationalised. “At least the British are not hiding the bail-out,” he said.
MatlinPatterson said private equity and hedge funds were deluding themselves in hoping to go back to business as usual after the trauma of the last 18 months.
“This is not a normal recession and there will be no V-shaped recovery. The crisis has destroyed leveraged companies. We’re going to see a catastrophic increase in the number of LBO’s (leveraged buyouts) going into default because they’re knee-deep in debt and no solution exists since they can’t refinance,” he said.
“Alfa hedge funds have been making their money by gambling with excessive leverage, so the knife that cuts off leverage is going to cut off their heads as well,” he said.
Like many bears, Mr Patterson expects the great crunch to end in deliberate inflation, deemed a lesser evil than outright depression.
“The US government has thrown 29pc of GDP at this crisis compared to 8pc in the early 1930s. The Fed’s balance sheet has risen from $900bn to $2.7 trillion to bail out the system. America has to do it because the only way out is to debase the currency, but that is going to lead to some very high inflation three years down the road,” he said.
Matlin Patterson, however, has missed the Spring rebound, the most powerful rise in equities in over 70 years. “We shorted the equity rally because we thought it was lunatic. We’ve kept adding positions seven times, and we’re still holding,” he said. Ouch!”
Last of gold is $915.00.
The following submitted excerpts of a longer report were written by Mr. Murry Pollitt who is president of Pollitt & Company in Toronto.
Usually I provide a link but since these copied excerpts were from Agoracom.com it wouldn’t have been easy to access, so no link.
Most interesting which you don’t see often is Mr. Pollitt’s questioning the accuracy of GFMS’s(formerly Gold Fields Mineral Services) reporting and why? Otherwise, the excerpts are an excellent presentation of the truth concerning the lengths that some groups will go to to keep gold’s price depressed and why those efforts are becoming strained.
Murray Pollitt: The gold monetization scheme is ending
By Murray Pollitt
Pollitt & Co., Toronto
Thursday, April 30, 2009The G8 appears finished but their policymakers continue to try to bend the G20, and the world, to their will. The establishment, the Fed, the Bank of England, the Bank for International Settlements, the same gang that has been setting policy for decades, is still at it. They appear to remain in charge (with nary a whimper of criticism about the trillions of dollars’ worth of damage their policies have caused) but, when it comes to gold, they are slowly losing their grip.
Besides setting the stage decades ago for sub-prime paper, CDSs, and so on, it appears policymakers embarked on a scheme, at more or less the same time, to monetize the hundreds of billions of dollars’ worth of gold lying sterile in central bank vaults. The temptation was too much. One-percent income on gold for a central bank was better than nothing, so the argument ran, and for the Lehman types borrowing gold (and selling it) provided lots of money (capital) to play games with.
It was so easy. Besides, the gold carry trade involved selling lots of gold into the market and this helped keep the price down (and hopefully the dollar up), a subject near and dear to policymakers.
It also led to: a) huge mine hedging with the two biggest miners, each with a link to Morgan, together short over 30 million ounces (“making money on gold in the ground” was the argument) and b) significant outright central bank sales, which may have been interventionist or may have been for portfolio diversification, however ill-advised.
And if banks and markets didn’t always follow the script, there was always high-level intervention. To illustrate the mindset, in 2004 one William White, advisor to the BIS, talked about the need for “international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful.” The idea of rigging markets is as old as the hills, and if the government is on your side. …
Anyway, the great gold monetization (mobilization?) scheme appears to have started in the 1980s and the following events that, in part, characterize it are not necessarily in sequence.
1) Goldman bought gold dealer J. Aron.
2) In an early gold carry trade, Drexel borrowed hundreds of tonnes of gold from Portugal.
3) All the big swinging banks sought to get into the gold game and they bought all the London gold dealers except Rothschild, which was definitely in on the game on its own.
4) Mine hedging was pushed very hard, to a peak of about 120 million ounces.
5) Greenspan and others dropped broad hints that central Banks stood “ready” to supply gold to the market.
6) Drexel went broke and it apparently took Portugal five years to recover its gold.
7) Two long-term gold players, Republic and Safra, each with a somewhat checkered past, had a shotgun wedding. Later Mr. Safra was fried to death in his Monte Carlo apartment, presumably for nonrepayment of gold.
8) Two of the largest American players, JP Morgan and Chase, also had a shotgun wedding and now carry more gold derivatives than can be imagined.
9) Much of the Drexel brain trust apparently went to work for AIG, which promptly started boasting about mine hedging.
10) HSBC (often advised by Paul Volcker) bought Midland Bank (which had earlier bought bullion dealer Samuel Montagu) and, in another shotgun wedding, bought Republic, transactions that made HSBC one of the major gold players. HSBC’s U.S. subsidiary is now the custodian for the SPDR ETF.
11) When the gold price started to move up, Rothschild said enough and sold its “book” (at a loss?) to Barclays.
12) Finally there was recently a shotgun wedding between Dresdner bank and Commerzbank.
Crisp details are rare, but the past generation has seen hundreds of millions of ounces of gold bled into the market. Canadian and Australian gold reserves are gone; Britain, Switzerland, and many others are down by two-thirds.
But this doesn’t count the gold that has been lent. In general it seems that the same sort of banks that got into trouble investing in high-yield, low-quality sub- prime paper have also taken short positions in low-yield, high-quality gold. Too many favorite-son banks are on the wrong side of the market for policymakers to be rational. Given the option between common sense and helping a bank, well, the record is clear. This is probably the main reason the establishment remains anti-gold today — the old ideological reasons are not that relevant.
So once again they trot out the idea of International Monetary Fund gold sales. What rubbish. The IMF hasn’t sold gold since the 1970s, but every year the idea is advanced to frighten the gold market. Why would the IMF sell $10 billion of gold when central banks are printing $10 billion of new money every day? Gold is the only IMF asset worth 100 cents on the dollar — everything else is junk.
As well the establishment hammers on the idea that the gold price is high, and GFMS continues its weird forecasts.
Well, the gold price is not high. Oil and several other commodities have outperformed gold since World War II. A good underground gold mine may grade 5 parts per million (ppm) while a good open pit may grade 1 ppm.
Nobody who has said the gold price is high has ever spent a nine-hour shift drilling rock — it’s a tough business. God only knows the blood-to-gold ratio for old Roman mines in Spain or Spanish mines in Peru, and getting the gold from mine to home base was often not easy. Much Victorian gold went from Ashanti by caravan through Timbuktu, the Sahara, and on to Europe — the Brits were hardly keen to auction it off then.
Gold mine production is down about 12 percent from the 2001 peak (and still falling) and Barrick shares have barely moved in a decade. Much of the industry’s cash flow is attributable to accounting magic, and the long years, even decades, of gold price suppression have taken their toll. There are few major new mines on the horizon, and lots of old ones on the way out.
Notwithstanding, GFMS has consistently forecast rising production for the past eight years (even though it has consistently fallen), raising the question: Why?
Our guess is that GFMS’ big clients are the very banks we refer to above, the ones on the wrong side of the market, and for them Ms. Rosy Scenario needs the healthy, and expanding, industry model that GFMS gives them.
What are companies like Commerzbank and Societe Generale doing sponsoring GFMS anyway? Neither Germany nor France has any gold mining industry at all.
One would have to be barking mad not to see the benefits a higher gold price would have on vast chunks of the global economy. Even long-suffering Zimbabwe would be a huge beneficiary, and more wealth in Africa and Latin America would mean more exports of Fords and Cats from the United States. The establishment may not care, but that won’t stop G20 members (and others) from connecting the dots and following China’s lead in increasing gold weighting in monetary reserves.
Gold is again becoming a preferred central bank asset and the great monetization scheme is coming to an end. Western policymakers and banks have pushed their game too far for too long and the combination of the shift of power from G8 to G20, plus the reduced availability of gold, will turn the tide. You can sell gold only once, although, in the new wondrous world of derivatives, maybe somebody has actually sold it twice.
—-
Murry Pollitt is president of Pollitt & Co., a brokerage firm in Toronto, and a veteran of mining industry finance. This essay is excerpted from his latest letter client letter and reprinted by permission.
Gold’s last is $915.10.
The US dollar looks like its months of recent strength are nearing a close. In today’s activity the dollar is quite weak against the Euro and Cando. The Loonie is up 1.52% at .8682 and continues to advance against the sagging dollar. Overall, the Dollar Index if off 0.62 today at 83.21. For some past weeks it had found support at the 84 level.
I guess George Soros knew what he was doing by selling the dollar in the 85.00 to 86.00 zone and above recently. It was fairly easy to pick this up from a recent Bloomberg interview of him when he was asked the question, What do you think of the dollar? Soros’ comment was, “No comment.” To me, that meant that he was in the midst of a US dollar currency positioning operation.
Chosing whether he was buying or selling was, also, not too complicated. Was the dollar at a international public orientented top or bottom? Easy guess, a top.
With the dollar breaking recent support at the 84.00 level, this event is expected to be mirrored in the time ahead with a rising gold price. Yes, it is time for us to show the world our hidden and elusive gold.
I always enjoy reading Dave’s and Rick’s well thought out comments.
Gold closed the week at $916.20, up about $16.
The dollar(USDX) closed out the week at 82.41, off about 2.50.
One last entry on the US Dollar from Jim Sinclair tonight at http://www.jsmineset.com:
My Dear Friends,
Under USDX .8200 the wheels of hyperinflation start turning.
Under USDX .7200 the impact of hyperinflation is visible to anyone who can see.
Under USDX .6200 the Quantitative Easing madness hits the fan
Under USDX .5200 Zimbabwe economics now being practiced become a US dollar condition moniker.
PROTECT YOURSELF PLEASE!
Respectfully yours,
JimLast on gold is $916.20.
The following remarks concerning the Dollar were made by an agoracom.com poster.
Terresainte is from Geneva
Dollar on retreat today -1.8% vs euro, -2.2% vs swissie
posted on May 08, 09 02:53PM
Would this be the beginning of the managed dollar takedown, e.g. vs hard currencies gold, silver? a hidden tax on dollar denominated holdings and purchasing power, no legislation or anything required. For foreign currency holders precious metals would get more attractive.
Warren Buffet: “With political leaders showing little inclination to raise taxes, one sure way to pay for excess spending is to inflate the value of the currency, Buffett said. The biggest losers in a surge of inflation, he added, would include holders of bonds and other fixed-income assets.
I haven’t had my taxes raised,” said Buffett, “My guess is the ultimate price will be paid by a shrinkage of the value of the dollar.”
Jim Sinclair and Martin Armstrong have said the next contact with gold at $1,000 which makes it its third attempt, pushes it through for good. From here on out, it’s China versus the COMEX boys.
I vote with the guy who holds almost 2$ trillion in foreign reserves.
- AuthorPosts
- You must be logged in to reply to this topic.