The 10/1 Bank Participation Report

After giving it some thought, I've decided to publicly release this post from yesterday. The information here would seem to be pretty important and I don't see many other "analysts" talking about it.

The latest BPR was released back on Friday. Though the information is old and stale, it still tells us quite a bit about where prices are likely headed in the short term.

Because of the U.S. government shutdown, the survey for the latest BPR was taken on Tuesday, October 1 but the data wasn't compiled and released until last Friday, the 25th. Yikes! Certainly a lot has changed in the intervening 24 days...however...the report is still instructive as to the positioning of the big U.S. banks, namely JPMorgan.

Recall that, since time immemorial, all of the banks have been NET SHORT Comex gold futures. While some of this is due to their hedge books for producers, the vast majority of these shorts are placed utilizing leased gold from the central banks, with the intention of suppressing and controlling price. This has gone on for decades and, if you don't believe this, then you obviously haven't read Ferdinand Lips' book: http://www.tfmetalsreport.com/blog/5151/gold-wars

Lately, though, something amazing has happened. While the non-U.S. banks surveyed for the BPR have remained NET SHORT, the U.S. banks have moved NET LONG. Several things to note before we go on:

  1. The report summarizes, without naming names, the positions of the 4 largest U.S. banks and the 20 largest non-U.S. banks.
  2. The Gorilla in the U.S. bank space is JPMorgan. They are joined at times by the likes of BoAML, Citi, MorganStanley and Goldman.
  3. The non-U.S. banks are firms such as Scotia, Barclays, HSBC, Deutsche et al.

Now, you also need some history. QE∞ was originally announced by The Bernank back in September of 2012. There had been a BPR survey taken earlier that month and it looked like this:

                               GROSS LONG             GROSS SHORT              NET POSITION

U.S. Banks                    37,571                               122,154                                 -84,583

Non U.S. Banks           10,710                                64,144                                  -53,434

So, right before ∞ was announced, the entire global bullion banking cartel was NET SHORT 138,017 contracts of Comex gold. That's 13,801,700 paper ounces or 429 paper metric tonnes.

As you might expect, that announcement of QE∞ sparked quite a bit of interest in buying gold (real and paper). Over the next 90 days, The Cartel tried desperately to contain the rally and protect their shorts. However, by the time The Bernank confirmed QE∞ in December, it was clear that they were in a losing battle. Below is the BPR dated 12/4/12:

                               GROSS LONG             GROSS SHORT              NET POSITION

U.S. Banks                    37,790                              144,183                                 -106,393

Non U.S. Banks           35,326                              80,033                                   -44,707

Though the non-U.S. banks had actually trimmed their NET position by tripling their GROSS longs, the U.S. banks were seen to double down, increasing their NET SHORT position by over 25% over just these three months. One week later, on 12/12/12, The Bernank confirmed that QE was indeed to infinity. Desperate, the banks knew they had to act....fast!

On December 12 of last year, gold closed at $1728. It then almost immediately began a counter-intuitive selloff that continued for nearly six months before bottoming at $1180 on June 28 of this year. Let's take a moment and see how the banks' positions have changed over that time period. Let's first look at the BPR from March 5, 2013 when price had "survived" a very nasty February raid but had already declined nearly $150 since December to rest at $1581.

                                GROSS LONG             GROSS SHORT              NET POSITION

U.S. Banks                     40,685                              86,924                                 -46,059

Non U.S. Banks             29,219                              72,545                                  -43,326

Well, what do we have here? In just three months, the U.S. banks (again, mainly JPM) had managed to trim their NET SHORT position by nearly 60%! The non-U.S. banks apparently failed to get the memo. Notice that their NET position has barely budged.

As you most certainly know, the most brutal part of the scheme was enacted in April and the selling it engendered culminated with the final bottom on June 28. Another BPR was taken the next week and what do you suppose it revealed? The numbers are below. Again, this survey was taken on 7/2/13 with price at $1246, down 28% from the announcement of QE∞ six months earlier.

                                 GROSS LONG             GROSS SHORT              NET POSITION

U.S. Banks                      69,656                             24,939                                  +44,717

Non U.S. Banks             34,904                             58,656                                  -23,752

Holy Toledo!! Let's see if we've got this straight. On 12/4/12, one week before The Bernank confirms QE∞, the U.S. banks (namely JPM) are NET SHORT 106,393 Comex gold contracts. That's 331 metric tonnes of paper obligation. Just six months later, after a massive and counter-intuitive selloff that ripped over 30% out of price and "costing" investors worldwide BILLIONS of dollars, the U.S. banks are now NET LONG 44,717 contracts or 140 metric tonnes of paper gold. WOW! (Again note that the non-U.S. banks have apparently been cut out of the deal. Yes, they've trimmed their NET SHORT position by 50% but their still NET SHORT 23,752 contracts.)

On balance, price rallied through July but, by the time the next BPR survey was taken on August 6, the change was not that great. From 7/2 to 8/6, price only moved $36 higher, closing at $1282. On the August BPR, we saw that the U.S. banks utilized this time to increase their NET LONG position by another 30%.

                                GROSS LONG             GROSS SHORT              NET POSITION

U.S. Banks                    90,949                              31,476                                    +59,473

Non U.S. Banks           25,957                               47,996                                    -22,039

Again, notice that the non-U.S. banks are still clueless. They just keep trudging along with their shorts. The U.S. banks however are now NET LONG 185 metric tonnes of paper gold. Now, from the initiation of QE∞, the U.S. banks have made a NET move of 516 metric tonnes. Simply incredible!

At this point, with price oversold and persistent negative GOFO indicating extreme physical tightness, gold was bound to rally and it did, moving higher through August and peaking at $1434 on August 28. The next BPR survey was taken on September 3 and what did it reveal?

                               GROSS LONG             GROSS SHORT              NET POSITION

U.S. Banks                    69,510                              24,604                                  +44,906

Non U.S. Banks           23,626                              60,350                                  -36,724

Obviously, the non-U.S. banks are oblivious to what's going on. The U.S. banks (JPM) used the rally in August to ring the register on a portion of their NET LONG position. In order to help cap the rally, the non-U.S. banks were adding shorts all month, increasing their NET SHORT position by over 50%.

So this brings us to the latest BPR. Again, the survey was taken four weeks ago today, with price again at $1286. What does it reveal? Well, at least as of 10/1, the U.S. banks (JPM) were right back to where they were in August, prior to the rally.

                               GROSS LONG             GROSS SHORT              NET POSITION

U.S. Banks                     80,735                              22,638                                 +58,367

Non U.S. Banks             24,296                             57,665                                  -33,369

A few other key points here:

  • Price was, of course, raided the first 10 days of October (Comex delivery month) in order to inspire liquidations (provide rhetorical cover) from the GLD. Price bottomed on the 15th at $1251 and closed that day at $1273.
  • No doubt this time was used to increase the NET LONG position of the U.S. banks even more.
  • Price has since rallied nearly $100 so it is likely that the current positions of the U.S. banks mirror the positions from the survey taken on 10/1.

THIS NEXT SECTION IS CRITICAL. Feel free to disregard it, argue with it...whatever...but this is what I think and this is how I decided that JPM has cornered Comex gold on the LONG side.

  • Note how the non-U.S. banks consistently maintain a ratio of about 1:2 gross long vs gross short. Certainly it varies month to month but, on balance, it's safe to summarize it as a policy of 1:2.
  • I think that the other U.S. banks (those NOT named JPMorgan) maintain a similar policy. Using this methodology and by allocating nearly all of the GROSS shorts to the other three U.S. banks, this supposes an "other three" U.S. banks GROSS long position of about 11,000 contracts.
  • This leaves the balance of the GROSS LONG position in JPM accounts.
  • Subtracting 11,000 or so from 80,735 and you get a JPM NET LONG position of 70,000 but, in reality, is likely anywhere from 65,000 to 75,000 contracts.

And now here's where it really gets fun...

The total open interest for Comex gold stands at 397,000 contracts, of which 227,000 (57%) resides in the front (delivery) month of December 2013. If I'm right and JPM is NET LONG about 70,000 Comex gold contracts, how many of those are Dec13s? 40,000? 50,000?? All of them??? And what's going to happen to this position as we approach First Notice Day and deliveries begin at the end of November? Will JPM simply roll the position into Feb14 and April14 or will they stand for delivery? And if they stand for delivery, how many contracts will they seek to have delivered?

Either way, as we've clearly established over the past few months, price is only raided during delivery months where JPM is issuing deliveries. In August, when JPM was taking delivery (stopping), price rallied. Since JPM is clearly NOT going to be issuing in December, should we expect a rally? ABSOLUTELY! This is why I've been telling you for weeks that price would bottom again in mid-October and then rally through the end of the year. This latest BPR, though dated and stale, nonetheless confirms this forecast.

Keep calm and stack on. The next two months are going to be very, very interesting.

TF

__________________________________________________________________________________________

10:00 am Wednesday UPDATE:

It dawned on me yesterday that we should also look at these numbers on a ratio basis and we discussed them in yesterday's podcast. For this updated post today, I thought I should include them here.

Note that the numbers above indicate a NET LONG position for the U.S. banks as of 10/1 that was equivalent to their net position back in August. However, numbers can be slightly deceiving when they stand alone. Because of the always-changing open interest, I've often found it helpful to look instead at the ratio of long:short. This gives me a better overall feel for position changes. In this case, we need to divide the GROSS LONG position by the GROSS SHORT position of each month in order to derive a NET LONG RATIO. So let's do just that and see what is revealed.

MAY: U.S. Banks still NET SHORT but the ratio had declined to just 1.28:1

JUNE: For the first time, the U.S. Banks are NET LONG with a ratio of 2.09:1

JULY: The NET LONG ratio has grown to 2.79:1

AUGUST: A little higher at 2.89:1

SEPTEMBER: A little lower at 2.82:1

OK, let's pause here for a moment. Go back and look at the NET POSITION CHANGES listed in the body of this post. Note that the July U.S. bank NET LONG POSITION was 44,867. In August, it rose to 59,473 but, in September, it fell back to July levels at 44,906. That's a pretty big swing of over 30% but note that the NET LONG RATIOS barely changed over that time period.

Now let's look at the October 1 numbers. If we divide the 80,735 GROSS LONG position by the 22,368 GROSS SHORT position, we get a U.S. Bank NET LONG RATIO of 3.61:1 and this is considerably more bullish than any of the summer months. 

Perceived from this point of view, the October Bank Participation Report only serves to increase my optimism and bullishness. Prepare accordingly.

TF

116 Comments

Dr Jerome's picture

Where is everyone this morning?

So I have decided to begin trading again--options on commodity futures--a totally manipulated market, but manipulations that are predictable to a higher degree than I am able to forecast using my own egregious charting skills. Just a small account that will keep me interested. Besides, I hesitate to put any fiat into real estate.

Souls like this might be a good time to add to the stack as well. I have been waiting for another pullback the past week, but seems that Turd thinks we may not see one in the next 30 days.

Turd Ferguson's picture

Doc

MODERATOR

There will always be "pullbacks". Currently, we're running in a pattern of 2 UP days followed by 1 down day. If you think I'm right about prices short-term, just BTFD.

p.s. I just checked and there are a total of 90 folks currently on the site. Don't worry, this is a public post. I'm sure we'll be overrun with trolls and naysayers any minute now...

Mr. Fix's picture

Good luck with that Dr. Jerome,

I wish I had your confidence that the game could continue, in a predictable manner.

I'm just going to spend the next few days doing a long-overdue restoration project on my old Mustang, and bring it back to “everyday car status”.

The outcome is predictable, because I have a say in it.smiley

The markets? Not so much.

Now, I better get out of the way of the onslaught of trolls, I would  not want to get caught in the stampedewink

Have a nice day.yes

silver66's picture

Money Managers view on gold

Just got this e-mail in from a PM money manager thought I would share

Price of Gold

What contributed to the correction?

  • Much of 2012 and 2013 witnessed significant headwinds for gold due to:
    • Growth in global liquidity declined
      • US Fed balance sheet flattening out – Markets discounted an end to Quantitative Easing
      • ECB balance sheet contracted (Draghi’s actions did not reflect promises)
      • China intervened less in FX markets – they let FX reserves continue to grow
    • The US dollar went up
      • As a consequence had a strong run, reflecting the lower gold price
      • Starting to see the early stages of a reversal
    • Investment demand weakened
      • Sell-off in ETFs in Q2 & Q3 2013

Global Liquidity

  • Money supply drives gold
    • More recently there is a disconnect between advances in global liquidity and the price of gold
    • Growth rate in FX reserves declined sharply in recent quarters
  • US Federal Reserve’s balance sheet flat lined in 2012…
    • This is why the market was stagnant with the gold price, but he does believe that the balance sheet will continue to expand
    • Remember that there has been a tripling of assets since the crisis
  • …with ECB’s rolling over

China Intervened Less in FX Markets àDip in FX reserves rise did not help gold

Real Interest Rates

  • Real interest rates below zero supportive, but are creeping upwards
  • Negative real rates are positive for gold, but in recent days has started to reverse – sees this going forward

The US Dollar

  • Rally of US dollar did not help gold prices
  • Seeing a renewed weakness of the US dollar…in Canada the CAD/Gold Price is more relevant and the weakness of the CAD has added to this gold price weakness for us

Investment Demand

  • Selling in ETF market was dramatic in Q2 2013
  • Selling off of gold ETFs has added additional pressure on the price of gold

Price of Gold

Some bullish factors supporting gold’s outlook

  • Global debt crisis has many years to run – monetary policy a cause for volatility
  • Certain central banks will continue buying gold
  • Gold is not expensive
  • Commodity price cycles typically run for years – what we are seeing is a god behavior for all commodities, as monetary assets and not so much as commodities
  • Global imbalances require devaluation of US dollar
  • Mine supply will stabilize and/or decline – not a significant contributor
  • Consumer demand will remain elevated in Asia

Global Debt Crisis àDeveloped countries likely to have high debt/GDP ratios for years to come

  • Greece, Italy, Spain are hot spots
  • Sees trouble in Greece in 2014 as they are “Technically bankrupt” – will have to extend a need for liquidity

Central Banks àBanks holding the largest FX reserves likely to seek Insurance

  • If the commodity is not held by a central bank, it does get bought by manufacturers, this is a fact he has identified for the commodity

Gold’s Relative Value

  • Oil to gold – 1970 average to date: 15.10, on a relative basis these two commodities correlate quite well in rising price markets, and if this range were to break down to a single digit range then significant cost pressures would become apparent in the industry
  • Copper to gold – 1970 average to date 337.26
  • Gold to silver – 1970 average to date 54.81 – this is more a barometer of supply than an indication of relative behavior, there are thresholds for the strength of the price of gold when this falls below 50 even euphoric) – currently 59:1

Precious Metals Sector

  • Margins still healthy for senior producers
  • Gold & cyanide: Input prices tracking gold
    • Cyanide prices do not trade on a daily basis lag gold prices) – but nevertheless there is a strong correlation, as this chemical is key to the production costs in mining – these profit margins do not get compressed/expand as quickly as investors think with these price movements
  • Capital expenditures in gold & dollars: Detour Lake Mine
    • Between 2009 to present: CAPEX has expanded
    • Construction in ounces of gold (CAPEX in Ounces) is able to be expressed relative to the price of gold

Our Two Precious Metals Funds

Cap weights and allocation:

  • Dynamic Strategic Gold Class: Bullion currently accounts for 56 of this fund
  • Dynamic Precious Metals Fund: 23 companies - High conviction and high concentration

Base Metals

  • International interest rate arbitrage swaps contributing to buoy metals prices
  • Copper inventory restocking in China
    • Production of copper semi-fabricated products up 4% versus August 2013 and up 20% for the January-September period
    • This is a key measure of end demand for copper in China, a country that accounts for 8.1 tonnes of 41% of world demand

Silver66

P.S.  4th baby!!

Turd Ferguson's picture

Watching the bond market?

MODERATOR

Turd Ferguson's picture

This is terrific!

MODERATOR

Everyone should take the time to scroll through:
 

http://www.gata.org/node/13185

ArtL's picture

7th

7th

tyberious's picture

good stuff from Stu

http://www.silverdoctors.com/stewart-thomson-t-bonds-suggest-increased-qe/

  1. There are numerous measurements of the supply of money, and the Federal Reserve Bank of St. Louis has charts for most of them.
  2. These charts should be of particular interest to gold price enthusiasts, because they can indicate whether deflation or inflation is the major theme in play.
  3. Please click here now. This “MZM” (Money Zero Maturity) chart is especially interesting, because it excludes large time deposits.
  4. MZM is a comprehensive money supply measure designed to represent money that is immediately available for spending by consumers, and it has been declining since gold peaked in 1980.
  5. Please note the red bullish wedge pattern that I’ve highlighted. I believe it is hinting that three decades of “deflationary rule” may be coming to an end.
  6. Even with that wedge in place, it’s likely going to take some time for the transition from deflation to inflation to occur, mainly because so mainly OTC derivative contracts were marked to “model” during the 2008 – 2009 economic collapse.
  7. It’s almost impossible for regular investors to get much accurate information about the quantity of OTC derivatives debt that still exists, and how much has been marked to market, by the Fed and the large commercial banks.
  8. In the meantime, it’s very important for gold investors to focus on key intermediate term highs on the gold chart. Gold may or may not have bottomed in the $1180 area, but until it rises above some of these highs, there is no real uptrend in play.
  9. The late August highs in the $1430 area must be exceeded before the current price action can be called a real uptrend.
  10. Please click here now. You are viewing the daily gold chart. Note the fan lines marked F1, F2, and F3.

Lots of trading charts!

silver66's picture

Re:This is terrific

Holy cow Turd, that is an outstanding article. The amount of info is breathtaking. I have bookmarked the page and sent the link to several in my contact list.

The link to the November 4th 1943 memo is really eye opening. I have sent that to a couple of friends who are world war 2 buffs.

It is a keeper

Silver66

Turd Ferguson's picture

You're right

MODERATOR

The 1943 stuff is remarkable. For everyone, read here: http://www.gata.org/node/10457

Response to: Re:This is terrific
bullion only's picture

Santa gives interview to Greg

Santa gives interview to Greg Hunter on USA watch. $3200-3500 by 2016.

50k by 2020.

RT

bullion only's picture

Santa

30 Oct 2013 | No Comments

Gold Expert Jim Sinclair: $50,000 Gold, US Dollar Collapse, Hyperinflation and MoreBy Greg Hunter’s USAWatchdog.com 

Renowned gold expert Jim Sinclair says financial calamity is just around the corner for America.  Sinclair contends,“We are facing the annihilation of currency.  We are facing the shift of America as the leading and most influential nation of the world to some form of banana republic. . . . If it wasn’t for food stamps, we would be facing long lines of people waiting for free food.” (more…)

rl999's picture

Trading

I've been reading the news and watching markets for years, and I chose to start trading today.

A lot of the naysayers say TA is dead. I think it is still highly relevant, and it works well. One simply has to be aware that the cartel can throw a giant FUTF into the charts at any time. I will remain aware of that, and look for opportunities where they could do the most damage, and be more cautious at those moments.

AQG @ 22.45 - We are breaking through a pennant today and there are more to come. I want to capitalize on this.

I drew a rough chart (pen and paper) using the #'s TF provided in this post yesterday.

Left axis total tons negative, right axis gold price. There was a pattern or correlation, however not a big enough sample for me to learn anything that TF didn't already say.

meegoreng1's picture

Didn't Santa give a prediction....

a couple years ago for gold to hit around $2500-$3000 by 2013?

So is this prediction about gold going up to $3500 by 2016 another guess that came out of his rear end?

Hey, I hope he is right but he has lost lots of credibility.

bullion only's picture

I believe Santa would have

I believe Santa would have been correct on his predictions had we not had the criminal and blatant smack down from $1900. Just criminal but what can anyone do in a corrupt society. So gold should be 3500 by 2016 but who knows.
It is not Santa that has lost credibility, it is our own government.
RT

rl999's picture

breaking pennant / trend line

silver - oct 30 - breakout - macd

Silver is breaking one pennant and close to breaking through even more important ones. The MACD settled after it’s climb in the first half of August and is just getting positive – I think it has enough space to run. That is why I purchased today.

Arrow #1 references the first line drawn from the August highs. I interpret it as having acted as resistance and then turning into support

Arrow #2 references 3 things.

1) Is todays large blue candle where it is bouncing off the original August highs trend line.

2) Is the rapidly rising line – obviously that trend will be broken fairly soon, but it has already taken us above the MA and broken the down trend line from the August highs.

3) Is the middle line (or off-center line in the “pitchfork”, if you will), which seems like a realistic expectation for silver’s near future.

Robespierre's picture

Jeffrey Christian attacks Gatta....

Last week, Silver Investing News (SIN)provided a rundown on what to expect from Silver Summit 2013 presentations from CPM Group’s Jeffrey Christian and Bill Murphy of the Gold Anti-Trust Action Committee (GATA). 

The reason for their importance? Christian, who is the founder of CPM Group as well as a managing partner at the company, commented prior to the event that he would be using his presentation to “methodically and factually … [show] the extent to which [GATA] misrepresent[s] what people have said” — just as his firm has done in other years.

In response, GATA said in a statement that “GATA Chairman Bill Murphy will be present to disagree [with Christian] and to note that if the gold and silver markets are not manipulated, they may be the only such markets these days.”

Now that the conference has come and gone, SIN is back to take a stab at answering the key question raised by their posturing  — who came out on top?

Christian comes on strong

Christian, who spoke on the morning of October 24, ended his presentation with a sharp stab at GATA. His claim? Andrew Maguire, who in 2010 came forward to tell the Commodity Futures Trading Commission (CFTC) and GATA that he could prove ”that gold and silver prices are manipulated by the likes of JPMorgan Chase,” in fact has no background as a metals trader. That’s a startling allegation considering Maguire “has been frequently portrayed by GATA as [having] more than three decades of experience in metals trading,” as per Mineweb.

According to Christian, who said he was given the information by Maguire’s ex-wife, Maguire’s background is in fact in car leasing — he started a company called Custom Lease Capital in 1989; it ultimately failed about six years later. Kitco states that at that time, Maguire “took and passed the Canadian Securities Course and started day-trading his own money,” though if his former spouse is to be believed, he was about as successful at that as he was in the car business.

The news lines up with Christian’s first impression of Maguire. He told Kitco at the Silver Summit, “[w]hen [Maguire] came forward in 2010 — I said this guy doesn’t sound real.” Christian also commented, “[h]e came out with outrageous claims, but offered no proof of any of them. He sounded like an attention-seeking fraud to us at the time, and we said so.”

Even so, Christian said he has not taken Maguire’s ex-wife at her word; he claims to have fact-checked her information and found it accurate. And, he said, it’s not as though he went looking for her — she contacted him, not the other way around.

Murphy responds

Speaking to Kitco’s Daniela Cambone later that day, Murphy stood by his man. “As far as I know, what [Maguire] told me is true. If he is faking it, he is awfully good at it,” he said. He also referred to Maguire as a “delightful man” and a “class act.”

Murphy did, however, admit that he did not look into Maguire’s background when he first came forward with evidence of silver manipulation.

Kitco was unable to reach Maguire himself, and Bart Chilton, commissioner of the CFTC, said only that he currently has “no further comments on the silver market or anything related to it.”

The verdict

While Christian seems to have got one over on Murphy this time around, it’s unlikely that he’s had the last word — Kitco states that CPM Group and GATA first clashed in 2011, and with that history it seems guaranteed that it’s only a matter of time before GATA comes forward with a stronger rebuttal.

Hopefully those keeping an eye on the debate will not have to wait until next year’s Silver Summit for further developments.

S

Dr Jerome's picture

Thanks for nothin, Bart

no further comments on the silver market or anything related to it.

My enduring hope is that prostituted regulators and their banker pimps have all their ill-gotten gains stashed in paper assets as this system crumbles.

If we all discover they have been stacking right along with us after fiat burns, then I should not be held responsible for my actions. I just might scream! or something.

wildstylechef's picture

GATA Article is awesome!!

Well that's an  incredible article that finally explains the entire belief of gold manipulation from concept, time line, motivation and evidence. Sweet

For there are many official admissions of gold market rigging.

These include statements by four former chairmen of the U.S. Federal Reserve Board (Alan Greenspan, Paul Volcker, Arthur Burns, and William McChesney Martin); the minutes of the Federal Open Market Committee; declassified U.S. Central Intelligence Agency and State Department memoranda, including one that cites the necessity for the U.S. government to remain "the masters of gold"; statements by central bankers from other countries, including three officials of the Bank for International Settlements; and documents from the BIS and International Monetary Fund.

For example:

-- In testimony to Congress in July 1998, Federal Reserve Chairman Alan Greenspan declared that "central banks stand ready to lease gold in increasing quantities should the price rise." Thus Greenspan confirmed that the purpose of gold leasing was not what was usually claimed -- to earn central banks a little money on their supposedly dead asset in their vaults -- but rather to suppress the monetary metal's price:

http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm

-- At GATA's prodding in January 2012 former Federal Reserve Chairman Paul Volcker admitted to a financial journalist that central banks need to suppress the gold price to stabilize exchange rates at what he called a "critical point":

http://www.gata.org/node/10923

Volcker already had written in his memoirs that in 1973 as a U.S. Treasury Department official he advocated gold price suppression:

http://www.gata.org/node/8209

http://www.gata.org/files/VolckerMemoirs.pdf

-- In 2009 a remarkable 16-page memorandum was discovered in the archive of the late Federal Reserve Chairman William McChesney Martin. The memorandum is dated April 5, 1961, and is titled "U.S. Foreign Exchange Operations: Needs and Methods." The memo is a detailed plan of surreptitious intervention by the U.S. government to rig the currency and gold markets to support the U.S. dollar and to conceal, obscure, or even falsify U.S. government records and reports so that the rigging might not be discovered. This document remains on the Internet site of the Federal Reserve Bank of St. Louis:

http://fraser.stlouisfed.org/docs/historical/martin/23_06_19610405.pdf

It is also posted at GATA's Internet site:

http://www.gata.org/files/Martin-WilliamMcChesny-MarketManipulationPlan....

-- In a letter to President Gerald Ford in June 1975, Federal Reserve Chairman Arthur Burns reported a secret agreement with the German Bundesbank to obstruct market pricing for gold. Burns wrote to the president: "I have a secret understanding in writing with the Bundesbank, concurred in by Mr. Schmidt" -- Helmut Schmidt, West Germany's chancellor at the time -- "that Germany will not buy gold, either from the market or from another government, at a price above the official price of $42.22 per ounce."

Burns added, "I am convinced that by far the best position for us to take at this time is to resist arrangements that provide wide latitude for central banks and governments to purchase gold at a market-related price."

woofwoof's picture

T minus 1 day to mass silver buy-in Let’s vote with our wallets

T minus 1 day to mass silver buy-in

Let’s vote with our wallets.

Wizard's picture

From End Of Last Thread

Thought is was wierd enough statement to bring it along to new thread, Sorry if I am wrong

Motley Fool Said in last Thread

"Yet this retarded sphere of the gold market continues to be blindly ignorant to this. A trade ratio of 100 to 1, is not leverage."

All I can think is WOW What Kind Of Stuff Is Being Shoveled

W

Turd Ferguson's picture

Did he offer any ideas of

MODERATOR

Did he offer any ideas of what it was if it is not leverage? 

Definition of 'Leverage'

1. The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment.

2. The amount of debt used to finance a firm's assets. A firm with significantly more debt than equity is considered to be highly leveraged.

Leverage is most commonly used in real estate transactions through the use of mortgages to purchase a home.

Investopedia Says

Investopedia explains 'Leverage'

1. Leverage can be created through options, futures, margin and other financial instruments. For example, say you have $1,000 to invest. This amount could be invested in 10 shares of Microsoft stock, but to increase leverage, you could invest the $1,000 in five options contracts. You would then control 500 shares instead of just 10.
 

Wizard's picture

Actually Yes An Idea and Example

Motley Response

"My god.

Let's take the auto industry for example. Let us say the manufacturer sells a car on to a large dealership, who in turn offloads it onto a smaller subsidiary, which then passes it on the a local small mom and pop dealership, after which some person buys it.

Since the car changed hands 4 times obviously 4x leverage was applied?

Just. What."

Another WOW

W

Patrancus's picture

Thar's gold i sees

in them new hundred dolla bills, maybe I should have a few kerns of that shinny jingle in ma trouser pocket just in case.

th?id=H.4784440128767277&w=236&h=183&c=7

Kansascrude's picture

Wonder how many of those JPM

Wonder how many of those JPM long contracts are being sold after the FOMC to keep a lid on the gold price?  Love what you do Turd but I still am unconvinced that the long position is not just an insurance policy for all those freaking derivatives being used to manage the interest rate risks......thats where the shat hits the fan....

Still hoping you are correct and not me!

Spartacus Rex's picture

Re: This Is Terrific (It Sure Is)

Chris Powell: Gold Price Suppression -- Why, How, and How Long?

Powell Chris CNBCGATA's Chris Powell shared the text of his presentation at the Mines and Money Australia Conference and two other venues down-under.  His thoughtful offering begins:  

Most financial journalism and academic teaching maintains that gold is at best a quaint antique. I'm here to argue that gold not only remains money but may again be the best and most important money -- to argue that, even more than this, gold is in fact the secret knowledge of the financial universe.

Gold already is so important that Western central banks -- particularly the U.S. Treasury and its Exchange Stabilization Fund, the Federal Reserve, and allied central banks -- rig the gold market every day, even hour by hour, to control and usually suppress gold's price.

Why do Western central banks rig the gold market?

Gold Coins Bars Austrailia big pileIt's because gold is a powerful competitive international currency that, if allowed to function in a free market, will determine the value of other currencies, the level of interest rates, and the value of government bonds. Gold's performance is usually the opposite of the performance of government currencies and bonds. Hence central banks fight gold to defend their currencies and bonds.

The problem is that central bank tactics in this fight affect more than gold; they affect markets generally and eventually destroy markets generally. This destruction of markets now has a name, a name used even by former members of the Federal Reserve Board. That name is "financial repression."

There is much academic literature confirming gold's influence on currencies, interest rates, and government bonds throughout history. Prominent in this literature is the study written by Harvard economics professor Lawrence Summers and University of Michigan economics professor Robert Barsky and published in August 1985 by the National Bureau of Economic Research, a study titled "Gibson's Paradox and the Gold Standard." As with all the documents I'll cite today, the Summers and Barsky study is posted at my organization's Internet site, GATA.org:

http://www.gata.org/node/1373

Summers went on to become deputy treasury secretary and then treasury secretary of the United States and president of Harvard University and recently almost became chairman of the Federal Reserve Board, so his study of gold's influence on currencies, interest rates, and bond prices may be good authority. The Summers and Barsky study implied that governments could achieve their ideal of low interest rates and strong government bond prices by getting control of the price of gold.

As it turns out, controlling the currency markets generally long has been the most efficient mechanism of imperialism. There is much history of this as well.

Rigging the currency markets was the primary mechanism by which Nazi Germany expropriated occupied Europe during World War II. Expropriation by force of arms was actually only a small part of the Nazi conquest. The rigging of the currency markets -- that is, the gross distortion of exchange rates in Nazi Germany's favor -- turned every citizen of an occupied country into an agent of the occupation every time he used money. This currency market rigging directed all production in the occupied countries into Nazi Germany and blocked any return flow of production. It enabled Nazi Germany to run without consequence the same sort of fantastic trade deficit run in recent years by the United States.

The United States learned all about the Nazi expropriation of Europe through currency market rigging because it was documented by the November 1943 edition of the U.S. War Department's monthly intelligence letter, Tactical and Technical Trends:

http://www.gata.org/node/10457

Nazi Germany's manipulation of currency markets is also described in detail in the 2005 history "Hitler's Beneficiaries" by Gotz Aly:

http://llco.org/hitlers-beneficiaries-2005-by-gotz-aly/

How do Western central banks and particularly the U.S. government rig the gold market?

They used to do it conventionally and in the open by dishoarding their gold reserves at strategic moments, and then by dishoarding their gold reserves regularly, more often, even every day, as the United States, United Kingdom, and seven of their Western European allies did during the 1960s through a public operation called the London Gold Pool. The London Gold Pool held the gold price at $35 per ounce until it collapsed in March 1968 under rising demand that drained the U.S. gold reserve from 25,000 tonnes down closer to the 8,100 tonnes officially reported today:

http://en.wikipedia.org/wiki/London_Gold_Pool

After the collapse of the London Gold Pool the United States and its allies regrouped to figure out how to rig the gold market surreptitiously -- not just with dishoarding but also with the so-called leasing of gold; with the issuance of gold derivatives, including futures and options; and, more recently, with high-frequency trading undertaken through investment houses that are happy to serve as government's intermediaries in the gold market, since they can front-run government trades. When the rigging is done surreptitiously like this, much less central bank gold has to be dishoarded and the dishoarding that is done has far more suppressive influence on the price.

But Western central bank market rigging goes far beyond gold.

In an essay published in 2001 and titled "The Debasement of World Currency -- It Is Inflation, But Not as We Know It" --

http://www.gata.org/node/8303

Warburton Peter economist UK-- the British economist Peter Warburton discerned that central banks were using investment banks to issue derivatives throughout the commodity futures markets to siphon away money that was seeking a hedge against inflation. That is, derivatives siphon money away from the hoarding of real goods, hoarding that would drive up consumer price indexes and make inflation even more obvious to the markets and the public. Most of these derivatives are essentially naked short positions that cannot be covered. (Image left: Peter Warburton, Economic Perspectives, UK)

Warburton concluded that the prerequisite of a hedge against monetary debasement would have to be some asset that was not associated with a futures market. He suggested good farmland and clean water supplies. For as the saying goes: "The futures markets are not manipulated; the futures markets are the manipulation."

This market rigging by central banks and their intermediaries explains the great disparagement of gold today: that, despite its tremendous price increase over the last decade, gold has not kept up with inflation since the metal's last great rise around 1980. Somehow no one who disparages gold asks why it has not kept up with inflation. The answer is that gold derivatives have created a vast imaginary supply of gold for which delivery has not been demanded, since most gold investors choose to leave their gold purchases on deposit with the bullion banks that sold them the imaginary gold.

As a result the world now has a fractional-reserve gold banking system that is leveraged in the extreme.

Yes, all commodity futures markets have created paper promises of supply that could not be covered by real product and have always been settled in cash. But most commodity markets are for goods that eventually are delivered and consumed to a great extent.

Gold is different, for gold is not consumed but rather hoarded, as a means of exchange, as money, even as most gold purchased in the futures markets is never delivered at all but rather left on deposit with those financial institutions that purport to sell it. This system has produced a very disproportionate amount of imaginary, elastic, but undeliverable supply, even as people buy gold precisely because they assume that its supply is not elastic, that its supply is limited to total past production plus annual mine production.

That assumption is a terrible mistake.

While the principle of most gold investment analysis is "You can't print gold," "paper gold" can be printed to infinity just like regular government currency -- and indeed has been printed practically to infinity.

JP Morgan Chase toumbstoneYou can get an idea of the vast imaginary supply of gold by reviewing the incomprehensibly huge gold and interest rate derivative positions attributed to the U.S. investment bank JPMorganChase in the reports of the U.S. Comptroller of the Currency. These derivative positions are almost certainly not JPMorganChase's own positions at all but, as GATA consultant Rob Kirby of Kirby Analytics in Toronto has written, rather U.S. government positions effected through MorganChase:

http://news.goldseek.com/GoldSeek/1249407911.php

After all, the U.S. Treasury Department's Exchange Stabilization Fund is expressly authorized by law, the Gold Reserve Act of 1934, as amended, to trade secretly in all markets, including the gold market, on the U.S. government's behalf. And the law expressly exempts the ESF from answering to anyone but the treasury secretary and the president:

http://www.treasury.gov/resource-center/international/ESF/Pages/esf-inde...

Christian Jeffrey smallGold market expert Jeffrey Christian of CPM Group testified to a hearing of the U.S. Commodity Futures Trading Commission on March 25, 2010, that the ratio of "paper gold" to real metal in the so-called London physical market may be as high as 100 to 1:

http://www.gata.org/node/8478

Last January a report by the Reserve Bank of India estimated the ratio of paper gold to real gold at 92 to 1:

http://www.gata.org/node/12088

Christian provided a similar account of the manufacture of "paper gold" in his essay "Bullion Banking Explained," published in 2000:

http://www.gata.org/node/8627

Some international investment houses are on the short end of this enormous leverage and are existentially vulnerable to a short squeeze. It is highly unlikely that they would put themselves in such a position without assurances of emergency support from central banks -- and indeed the investment houses have received such assurances many times in public statements by central bankers.

For there are many official admissions of gold market rigging.

These include statements by four former chairmen of the U.S. Federal Reserve Board (Alan Greenspan, Paul Volcker, Arthur Burns, and William McChesney Martin); the minutes of the Federal Open Market Committee; declassified U.S. Central Intelligence Agency and State Department memoranda, including one that cites the necessity for the U.S. government to remain "the masters of gold"; statements by central bankers from other countries, including three officials of the Bank for International Settlements; and documents from the BIS and International Monetary Fund.

For example:

Greenspan Alan 2012 pointing up-- In testimony to Congress in July 1998, Federal Reserve Chairman Alan Greenspan declared that "central banks stand ready to lease gold in increasing quantities should the price rise." Thus Greenspan confirmed that the purpose of gold leasing was not what was usually claimed -- to earn central banks a little money on their supposedly dead asset in their vaults -- but rather to suppress the monetary metal's price:

http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm

-- At GATA's prodding in January 2012 former Federal Reserve Chairman Paul Volcker admitted to a financial journalist that central banks need to suppress the gold price to stabilize exchange rates at what he called a "critical point":

http://www.gata.org/node/10923

Volcker already had written in his memoirs that in 1973 as a U.S. Treasury Department official he advocated gold price suppression:

http://www.gata.org/node/8209

http://www.gata.org/files/VolckerMemoirs.pdf

Martin William McChesney Fed Yale photo-- In 2009 a remarkable 16-page memorandum was discovered in the archive of the late Federal Reserve Chairman William McChesney Martin. The memorandum is dated April 5, 1961, and is titled "U.S. Foreign Exchange Operations: Needs and Methods." The memo is a detailed plan of surreptitious intervention by the U.S. government to rig the currency and gold markets to support the U.S. dollar and to conceal, obscure, or even falsify U.S. government records and reports so that the rigging might not be discovered. This document remains on the Internet site of the Federal Reserve Bank of St. Louis:

http://fraser.stlouisfed.org/docs/historical/martin/23_06_19610405.pdf

It is also posted at GATA's Internet site:

http://www.gata.org/files/Martin-WilliamMcChesny-MarketManipulationPlan....

-- In a letter to President Gerald Ford in June 1975, Federal Reserve Chairman Arthur Burns Burns Arthur Fed Chairmanreported a secret agreement with the German Bundesbank to obstruct market pricing for gold. Burns wrote to the president: "I have a secret understanding in writing with the Bundesbank, concurred in by Mr. Schmidt" -- Helmut Schmidt, West Germany's chancellor at the time -- "that Germany will not buy gold, either from the market or from another government, at a price above the official price of $42.22 per ounce." (Image right: Arthur Burns, Fed Chairman 1970 - 1978)

Burns added, "I am convinced that by far the best position for us to take at this time is to resist arrangements that provide wide latitude for central banks and governments to purchase gold at a market-related price."

The Burns letter is posted at GATA's Internet site here:

http://www.gata.org/files/ArthurBurnsLetterToPresidentFord-June1975.pdf

-- In June 2004 the deputy chairman of the Bank of Russia, Oleg Mozhaiskov, told a conference of the London Bullion Market Association in Moscow that he suspected that the United States was suppressing the gold price. Mozhaiskov mentioned the Gold Anti-Trust Action Committee, the only words he spoke in English, though at that time GATA had never had any contact with anyone in Russia:

http://www.gata.org/node/11723

-- A president of the Netherlands Central Bank who was also president of the Bank for International Settlements, Jelle Zijlstra, wrote in his memoirs that the gold price was suppressed at the behest of the United States:

http://www.gata.org/node/11304

-- William R. White, the director of the monetary and economic department of the Bank for International Settlements, the central bank of the central banks, told a BIS conference in Basel, Switzerland, in June 2005 that a primary purpose of international central bank cooperation is "the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful":

http://www.gata.org/node/4279

-- The Bank for International Settlements actually advertises to potential central bank members that its services include secret interventions in the gold market:

http://www.gata.org/node/11012

http://www.gata.org/files/BISAdvertisesGoldInterventions.pdf

-- Indeed, according to its annual report this year, the BIS functions largely as a gold banking and gold market intervention service for its member central banks. On Page 110 of the report the BIS BIS logosays: "The bank transacts foreign exchange and gold on behalf of its customers, thereby providing access to a large liquidity base in the context of, for example, regular rebalancing of reserve portfolios or major changes in reserve currency allocations. The foreign exchange services of the bank encompass spot transactions in major currencies and Special Drawing Rights (SDR) as well as swaps, outright forwards, options, and dual currency deposits (DCDs). In addition, the bank provides gold services such as buying and selling, sight accounts, fixed-term deposits, earmarked accounts, upgrading and refining, and location exchanges." The only point of central banks trading in gold derivatives is to affect the price. See:

http://www.gata.org/node/12717

-- Secret gold market interventions by the BIS have been going on for a long time. A long article in Harper's magazine in 1983, based on a seemingly unprecedented interview with BIS officials, disclosed that the BIS was constantly intervening in the gold market in secret:

http://www.gata.org/node/8773

IMF logo-- Perhaps most incriminating is the secret March 1999 staff report of the International Monetary Fund that GATA obtained in December 2012. The secret report says Western central banks conceal their gold swaps and loans to facilitate their secret manipulation of the gold and currency markets:

http://www.gata.org/node/12016

http://www.gata.org/files/IMFGoldDataMemo--3-10-1999.pdf

-- The participation of the United States in this market manipulation was confirmed by a member of the Board of Governors of the Federal Reserve System, Kevin M. Warsh, in a letter written in September 2009 denying GATA's request for access to the Fed's gold records. Warsh wrote that among the records denied to GATA were records of gold swap arrangements between the Fed and foreign banks:

http://www.gata.org/node/7819

http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf

In commentary published in The Wall Street Journal in December 2011 Warsh wrote about what he called "financial repression" by governments. "Policy makers," Warsh wrote, "are finding it tempting to pursue 'financial repression' -- suppressing market prices that they don't like." Warsh added, "Efforts to manage and manipulate asset prices are not new."

http://www.gata.org/node/10839

I later reached Warsh by e-mail and asked him if he had learned about "financial repression" through his service on the Federal Reserve Board and if he would identify those asset prices under manipulation by policy makers. He cordially wished me a nice day.

And the government of China knows all about the gold price suppression scheme. The U.S. State Department diplomatic cables obtained by the Wikileaks organization and published in 2011 included cables from the U.S. embassy in Beijing to the State Department in Washington that were translations of reports from the Chinese government-controlled news media. These translations included stories and commentaries about gold price suppression by the United States.

For example, the Chinese newspaper World News Journal wrote: "The United States and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or euro. Therefore, suppressing the price of gold is very beneficial for the United States in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries toward reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the renminbi."

So not only does the Chinese government know all about the gold price suppression scheme -- the U.S. government knows that China knows:

http://www.gata.org/node/10380

http://www.gata.org/node/10416

There are many more records about the official policy of gold price suppression, including minutes of government agency meetings, interviews with government officials, and declassified intelligence agency memoranda. They are posted in the "Documentation" section of GATA's Internet site:

http://www.gata.org/taxonomy/term/21

These documents are not mere speculation and "conspiracy theory." They are the records of decades-long government policy conducted almost entirely in secret.

Then there is the evidence of the market itself.

GATA also has exposed gold market manipulation by examining trading data, most notably in a study by our late board member and market analyst Adrian Douglas showing that the gold price during trading in the London market went down steadily for 10 years even as the world gold price went up steadily in that time. Anyone buying gold on the opening of the London market and selling it on the close every day over the last decade would have lost a huge amount of money even as the gold price rose steadily:

http://www.gata.org/node/8918

That is, the London Gold Pool of the 1960s suppressing the price continues to operate today, only with different mechanisms.

In the last year attacks on the gold price have become frequent and obvious, like the strange dumping of paper gold in the futures markets on April 12 and 15, where the nominal equivalent of maybe a quarter of annual gold mine production was sold in two days even though there was no special gold-related news. Many similar dumps are undertaken at particularly illiquid times as someone tries to pound the gold price down for psychological effect.

On October 1, as the U.S. dollar index broke below 80 and the government of the world's only superpower, the issuer of the world reserve currency, was incapacitated and half shut down by political turmoil, the gold price suddenly fell by 5 percent under an avalanche of futures selling, sometimes at a rate of many thousands of contracts per second. Only an entity with access to infinite money can accomplish something like that.

There was another such brazen bombing of the gold futures market on October 11.

It was a good thing for gold investors that the United States had not just been destroyed in a nuclear war, for then the gold price might have been driven down by 20 percent.

These attacks on the gold market out of the blue are almost certainly incidents of government intervention. Nothing else can plausibly explain them.

Indeed, central banks refuse to explain their involvement in the gold market.

Federal Reserve BuildingIn 2009 GATA sued the Federal Reserve in U.S. District Court for the District of Columbia seeking access to the Fed's gold records. Technically we won the case in 2011, as the court ordered the Fed to disclose one record, the minutes of the G-10 Gold and Foreign Exchange Committee meeting in April 1997. Those minutes showed Western central bank and treasury officials conspiring to control the gold price. The Fed was ordered to pay GATA court costs, which it did. But the court allowed the Fed to conceal all its other gold records:

http://www.gata.org/node/9917

Since that time GATA has peppered Western central banks with specific questions about their gold activities, which is something financial journalism, mining companies, or any ordinary investor could do. The central banks largely maintain a guilty silence.

For example, in July the Bank of England reported on its Internet site that it was vaulting about 1,200 tonnes of gold less than it had listed in the bank's annual report in February. This raised suspicion that the departed gold had been used in the smashing of the gold price in April. So GATA asked the Bank of England to explain the discrepancy.

The Bank of England replied only that the data posted on its Internet site for the public was "deliberately non-specific." But it had been fairly specific, and had given a number quite different from the number in the annual report. Sensing its vulnerability, the Bank of England concluded its brief statement arrogantly and defensively: "The bank will not be offering any further comment on this matter."

http://www.gata.org/node/12859

The specific questions that GATA has raised and that have been deflected by central banks are posted at our Internet site and remain available to any serious financial journalist or gold investor:

http://www.gata.org/node/11661

As long as central banks refuse to answer some basic questions about their involvement in the gold market, it must be concluded that they have much to hide.

Why does all this matter? How and when will it end?

It matters because the rigging of the gold market is the rigging that facilitates the rigging of all markets -- part of a much broader scheme by which a secretive and unelected elite in the United States controls the value of all capital, labor, goods, and services in the world -- controls the value of everything and impairs or destroys all markets everywhere and thus hinders humanity's progress.

This is an utterly totalitarian and parasitic system. It is also just the latest manifestation of the everlasting war of the financial class against the producing class, only it is hidden well enough that the producing class hasn't yet figured it out.

This system may end in various ways.

First it's a question of world politics at the highest levels.

The system may end at the insistence of the developing world with an official worldwide revaluation of gold and gold's formal restoration to the international monetary system.

Or the system may end when one country pulls the plug on it, exchanging U.S. government bonds for more gold than is available.

Or the system may end as part of a plan by central banks to avert the catastrophic debt deflation that now threatens the world.

For example, a 2006 study by the Scottish economist Peter Millar concluded that to avert such a catastrophic debt deflation, central banks would need to raise the gold price by a factor of seven to 20 times in order to reliquefy themselves and devalue their currencies and society's debts generally:

http://www.gata.org/node/4843

In May 2012 the U.S. economists and investment fund managers Lee Quaintance and Paul Brodsky published a report speculating that central banks likely are already redistributing gold reserves among themselves in preparation for just such an upward revaluation of gold and gold's return as formal backing for currencies:

http://www.gata.org/node/11373

Or the system may end chaotically as the London Gold Pool ended in 1968 when the gold the Western central banks were prepared to lose simply ran out even as those central banks were not yet ready with an alternative gold price control system.

That's why the system's end is also an arithmetical question, a question of how much real gold is left among the central banks in the price suppression scheme. Some metal is always draining away to support the gold derivatives system, and it seems lately that more is draining away every year than is being mined. How much do the gold-suppressing central banks really still have left? How much is gone through swaps and leases? They're not telling.

The system's end is a question of education and publicity, a question of whether central banks that are not part of the gold price suppression scheme and investors alike will ever realize that as much as 90 percent of the world's investment gold, supposedly being held in trust for its owners, may not exist. If there is ever such a realization and delivery is demanded, gold will rise to multiples of its current price.

While that prospect excites gold investors, will governments let them keep the resulting extraordinary gains, or will governments impose windfall profits taxes or even try to confiscate gold?

If the gold price soars, will governments let mining companies keep taking metal out of the ground at current royalty rates? Will governments even let private companies keep mining gold at all?

On the other hand, if there is no general realization of the fraud of "paper gold," gold price suppression and the destruction of markets generally may go on forever.

Central banks are formidable enemies because of their power to create infinite money and debt. But that power is not their biggest advantage in the gold suppression scheme and the scheme to defeat markets generally.

For the scheme cannot work without deception, surreptitiousness, and misunderstanding.

And therefore to be overthrown the scheme needs only to be exposed, since when people realize that a market is rigged, they will not take the losing side of the trade.

That's why the biggest advantage of central banks here is not their power of money and debt creation but rather the complicity of the financial news media and the gold mining industry itself.

Financial journalists -- so far at least -- won't press the vital questions, will never put a critical question to a central bank and report the inadequate answers.

And the gold mining industry, seemingly unaware of the monetary nature of its product and the way the price of its product is suppressed, will not yet do anything to defend itself.

Will that ever change? Well, GATA is working on it.

Until that changes, and as long as a piece of paper is considered as good as a piece of metal, the gold mining industry has no future. And until free markets are restored, humanity itself won't have much of a future either.

If you'd like more information about this issue or can't locate one of the documents I've mentioned, please e-mail me at CPowell@GATA.org. I'll be glad to try to help.

Thanks for your kind attention today.

Source: GATA

http://www.gata.org/node/13185

GGR comment: Open source images added by staff. The numerous links in the speech above are more than just hyperlinks and deserve attention by intrepid researchers, academics and those genuinely interested in the many subjects Powell covers.  

http://www.gotgoldreport.com/2013/10/chris-powell-gold-price-suppression-why-how-and-how-long.html#more

Clarki Stomias's picture

Whamo

Gold and silver smash in progess.  like freekin' clockwork.  My toddler could recognize these correlations with the FOMC announcements. 

Where's Bart?  I may have him sit down with my kid and get a lesson in the obvious.

TomMack's picture

loading up?

looks like there will be a sale in place for the big load up tomorrow.  i am in for 5 trying to stretch it to 10  but going paycheck to paycheck will be challenging.  i may have to skip drinking for a day.  priorities be damned!

Galearis's picture

We are all only human....@ bullion only

Jim has the same accuracy as most pundits with these timing predictions...They all know it is fraught, but they still can't resist.

I for one have been better at it than most because I generally predict what gold and silver prices WON'T do rather than what they WILL DO or SHOULD DO.

I am not bragging; I am just stating a fact. And a fact that angers me even as I type this: partly because of pundits making timing statements based on technicals.

Fact: Every bullish chart pattern for over two years has been defeated - even in the face of ever improving fundamentals. For me the suppression of metal prices has been a work of art, pure slimy genius, and logical given the stakes (golden ones through the heart of the fiat system). I have always asked: what do the banksters need to happen to protect the system? Can they do this given improved weaponry (aglos, flash trades, hyperinflation of contracts, control of media, LIBOR shenanigans,,,etc. etc. etc. puke....)? How much gold is left for them to ship to China? (From GLD and COMEX - gives a hint.) With the COMEX system approaching a "deliveryless" contract - and very probable defaults on deliveries out of GLD (for investors), why does everyone expect a bull market in COMEX contracts and forwards out of London? While all of this is going on, does the USD need more or less control of paper prices out of the COMEX?

In conclusion: the paper markets must die before there is a gold bull market in the real stuff. Why is this ignored? Why get excited when paper gold and paper silver spikes a bit?  I'll keep watching for signs of failure.

And yes, I have disagreed with TA pundits with vigorous candor.  Why have most of these folks forgotten that paper markets like the COMEX were allowed/created by the system to be gamed and to control prices (Feteke some years ago)? I say this with a nod to the best of them, like Turd here, who has delivered some very impressive thinking about the inner workings of these markets. And I do not mind getting ignored and shat upon for speaking my mind because I consider it appropriate to do so.  And we listen to folks like Jim Sinclair tell us to GOTS but keep buying mining shares????? The bail-in risk, yes? How does one actually do that?

And how does one buy gold (metal) and maintain a Western gold bullion bull market while being out of the system?  (And yes, I did ask Jim Sinclair this, and there was no answer.) In fact NOBODY has answered this question on forums? Is it politically incorrect to do so? Afraid of peer pressure? Will Turd get annoyed with this post. Probably. But we are all adults here.

I could go on in litany but you get the general gist.

Just be patient like me. Sorta patient anyway. We have some more annoying waiting in front of us; and more stacking to do.. All my years of watching this stuff tells me that this system will stagger along far longer than anyone could ever believe possible...

FWIW,

G.

Patrancus's picture

all this rigging

is fine and dandy and only works long term if the malcontented power hungry progressive gooberment officials could keep their grubby stinking hands out of the peoples pocketbook. 

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