More on Gold

Further to previous post:

The US CFTC hearing on COMEX position limits over the past couple of weeks seems to have  set a cat among the pigeons. No idea how it will all shake down but it is satisfying to watch the authorities squirm if nothing else.

A series of posts from Zero Hedge linkable from the latest one here, provides a good run down of what is going on.

The following (tongue-in-cheek) press release from GATA is timely and sums up the deeply patronising, obsessively secretive, smoke and mirrors world of the paper-chase that characterises what we are assured (with straight, earnest faces) is a genuine honest free market in gold.

The Gold Anti-Trust Action Committee today offered to sell 191.3 tonnes of gold, tonnage equal to that remaining to be sold by the International Monetary Fund, on the same terms offered by the IMF except $100 per ounce below the London PM gold fix price on the day prior to purchase.

GATA Chairman Bill Murphy said his organization could provide a better price for the metal because it recently had received a gift of expensive hundred-year-old certificate paper originally intended for use as Chinese railroad bonds and because, in selling the gold, the organization, unlike the IMF, would not employ a large staff of publicists to tout the sale to news media throughout the world every day for months in advance.

Except for the discounted price, GATA's gold sale terms will match the IMF's:

• After selling the gold, GATA will present the buyers with certificates of ownership while continuing to store the gold using vaults in the United States, Britain, France, or India whose locations are known only to GATA.
• The gold will be audited by auditors chosen by GATA whose reports will be available only to GATA.
• The gold may be resold through GATA as long as it does not leave GATA's vaults.
• GATA will use some of the gold sale proceeds to assist developing or financially troubled nations but exactly how much is used for that purpose and what's done with the remainder will be nobody's business.
• GATA's sales will be structured to minimize any effect on the world gold market and to this end they will be announced only this once.
• For an additional $250 GATA will have a buyer's gold certificate tastefully framed.
• Buyers of gold in the amount of $100 million or more will be invited to GATA's annual Christmas party.

Purchasers should send certified checks payable to GATA in care of your secretary/treasurer at the address below.

Where's all the Gold?

Gold in the news again - Questions about those gold sales by Chancellor Brown back in 1999-2002 being reported in the UK papers and evidence from 'ZeroHedge' of what was really behind them.

Since retiring from my trading activities  I have not followed the markets as closely as before. However, I have remained  a keen student of Gold and its role in economic and monetary affairs. I haven't posted on it recently but have digested a constant drip of credibly sourced articles and commentary, attaining pretty much the status of received insider wisdom, which in summary suggests that the amount of paper claims against ALLOCATED gold, allegedly held by the Banksters, is in the ball-park of 50 times the bullion actually stored in their vaults.

(Allocated gold you understand is defined as gold which is identifiable by serial number as belonging to a named individual or other owner and which is stored and insured in a particular vault at some charge to the owner).

If this is correct, then everyone who THINKS they own some gold and that it is stored on their behalf in this or that vault - makes no difference where in the Western World - actually only has a claim against the institution that issued them with their paperwork - forget serial numbers, they mean diddly-squat

The situation is similar to the standard fractional reserve fiat system except that, in the case of ALLOCATED gold, it is illegal (but who among the banksters cares a toss for legal niceties unless they can be used to their advantage?). To symplify, suppose that all allocated gold were stored in the same vault and all those to whom it is 'allocated' were to want to view it - you know, do a sort of audit - on the same day; each viewing could take no more than about 30 minutes in a round the clock operation (10 minutes for an eight hour day) because each viewer would be shown the same physical stuff - serious problems with the logistics of keeping them apart too eh? - and that of course is the nub of the matter. It all rests on the rather naive belief on the part of the 'owners' that they're dealing with honest institutions - oh dear.

The situation is magnified and complicated by 'non-allocated' gold accounts where it is admitted that the account holder merely has a paper claim and the assets backing it are indeed used in a 'fractional reserve' fashion. The shenanigans here probably dwarf the 50:1 allocated ratio because it involves the Comex and other futures and paper trading operations. And when you factor in credible  estimates of 'Black Gold'  well, the mind boggles. But, so long as the 'owners' do not demand personal physical delivery the fraud will continue. It sure does appear to be creaking at the seams right now though.

As for Gordon Brown, I have no doubt whatsoever that his gold sales were deeply mired in precisely these considerations. The 'official narrative' - as always - is just so simplistically absurd. Which is why that Telegraph article is careful to point out that there is no question of allowing all the paperwork to be made public - weasel-words from the leader of the opposition notwithstanding. If Cameron doesn't know the score by now (highly unlikely in view of his parroting of all the other 'official narratives') it looks like he damn soon will - and anyway, for obvious reasons he can be relied upon to assist in the demolition of Brown who appears to be stumbling into the role of fall-guy. He's privy to some very dangerous knowledge though. His personality type must be worrying to some very powerful interests and I wonder if elevation to a peerage will really be enough shut him up.

His health isn't looking so good these days either. Hmmm

Gallows Humour

Hilarious, wry, black humour - US style. The general principles illustrated being equally applicable to the UK.

In the teeth of self-evidently unsustainable, fossil-fuelled, exponential economic and population growth on a finite planet, and with the real implications of 'peak-oil' becoming unsettlingly clear, this video encapsulates many of the State's instinctive responses; not to mention the true nature of its government.

I particularly liked 'Democracy at gunpoint', Celebrating uniformity of speech', 'One media - one voice', 'Fighting terrorism by creating it', 'Lest they forget - we'll remind';

and my favourite: 'Financial security through financial insolvency' which of course is the established (but teetering on the brink of collapse) first principle of Western globalised economics.

And ........ with all coins minted in depleted uranium - what else?

oh! - and watch for the 'a proportion of every Halliburton purchase is donated to.....' bye-line at the end - priceless !

The Gordon Brown Gold Indicator

Otherwise known as 'The Brown Bottom'

This courtesy of USA Gold:

Recently, with gold pressing $700, Britain's Chancellor of the Exchequer Gordon Brown, on cue, renewed his push for International Monetary Fund gold sales. There was a time when Brown's antics were cause for alarm in the gold market, but no more. As it turns out, one of the more reliable indicators of an impending spike in the gold price is Gordon Brown pressuring the IMF to sell its gold.

Just prior to the Bank of England sales in 1999, Brown pressured the IMF to sell a portion of its gold. When that sale failed to materialize, he prevailed upon the Bank of England to sell instead. Gold hit a bottom shortly thereafter at $280 and then sharply rallied to $450 per ounce, the beginning thrust of the current bull market. Then again in 2005, Brown was knocking on the IMF's door trying to persuade it to sell, and again he was turned back. Gold, which had been stalled in the low-$400s, promptly found new life this time rising to over $700 per ounce -- the second leg in the bull market.

Brown's latest attempt to persuade the IMF to sell gold suggests that the bullion banks are still having difficulty finding physical gold, and if that is the case, they are likely to bid up the price to meet whatever obligations are on the table. If the past is an indicator, Gordon Brown's new call for IMF gold sales might be predicting another explosive move upward.

Brown's latest IMF call was not widely reported in the UK press. He made it at an IMF Committee meeting during his trip to Washington last week.

Addendum to the earlier precious metals piece

Here is another piece on pm price suppression shenanigans. It's by Rob Kirby who inspired my piece on Peak Oil and dollar hegemony on 15th June.

Some thought provoking insights into what those who believe our financial markets are 'free and fair' are up against.

Gold/Silver investors beware - Part II

Updating my 2nd June piece

Well, we duly got those COMEX price movements beyond the fluctuation limits that were scrapped effective 4th June. In my opinion it won't be the last time either, not by a long chalk. On 12th June Gold - $42 (7%), silver -$1.69 (13%!!) ranges - practically all of it to the downside. Enough to scare the pants off most weak longs and panic them out of leveraged positions. Bet there were more than a few margin liquidation sales too.

Arch derivatives player Henry K Paulson - latterly CEO of Goldman Sachs has since been appointed US Treasury Secretary (Like other GS execs before him). One clear message this sends (among others) is that the the US monetary authorities - and by extension their sidekicks at the BOE are deadly serious about keeping some sort of cap on PM's prices - and particularly gold. It is the creative use of derivatives that is Goldman and Paulson's real forte and you can be sure both will be put to good use by the US government.

Couldn't possibly go into the detail of why; far too archane, murky and conspiricy theory sounding. But for anyone interested in the u-t-d position regarding pm's market price manipulation and its motovation - widely acknowledged to be self-evident among the pm's pros, here are are two must-read articles:

1. On Gold Price suppression
2. On Silver & gold open interest at the COMEX

Among the more startling facts about the pm's: 4 or fewer institutions (could therefore be just one) hold a COMEX net short position in silver greater than the entire annual global production and similarly 45% of annual global gold production. That's totally unheard of until very recently. How could they possibly deliver if all longs required delivery? A rhetorical question of course; they couldn't; but hundreds of thousands of longs on the other side WON'T seek delivery, leveraged at 100-1, they haven't got the money and those (that) big officially backed institution KNOWS they haven't.

Bottom line: If you get involved in pm trading believing that all market participants are there to enter and exit contracts in pursuit of profit, then you are a lamb to the slaughter. The BIGGEST players (by definition those with both the ear of Government and Official -ie Central Banking - interests at heart) do not give a toss about profiting from rising pm prices, it is price suppression/capping/rise-slowing - at almost any cost that they are there for.

I personally still regard gold as a solid investment on an 18 month view - should at least break the 4 figure dollar barrier by then. However, it is only a total collapse of the dollar, and with it probably the entire global monetary system currently based on it, that will 'send gold to the moon'. You can bet your last penny that TPTB will use every trick in the book to prevent that happening. High on that list of tricks is action which will punish anyone foolish enough to go blindly into leveraged long positions in the pm's.

You have been warned.

Gold/Silver investors beware

Gold, silver, copper or aluminium investor? Think you've seen major price action already this past 12 months?

Well, you ain't seen nuthin yet!

Why? - because NYMEX has just announced that, effective Sunday 4th June for electronic trading and Monday 5th June for the pit-traded contracts, the COMEX division will operate WITHOUT price fluctuation limits. That's right WITHOUT PRICE FLUCTUATION LIMITS!

The NYMEX statement went on to say:

"This change was made in order to better facilitate the core functions of price discovery and hedging provided by COMEX products,"

Oh! is THAT what it's for? I see.

Hmmm. After 3 no-notice increases to margin requirements for silver this year, together with startling physical inventory movements in both silver and gold - plus price increases which are hurting - I mean REALLY hurting the enormous 'establishment' short position in the PM's. Something is clearly afoot. TPTB are clearing the decks; so if you dabble in PM futures, you'd better watch out.

Call me a cynic but the most likely reason that I can see is to facilitate further 'orderly' unwinding of the Silver/Gold carry trades with a little coordinated help from TPTB. Expect wondges of selling (backed by offical physical holdings materialising from wherever), resulting in collapsing prices, allowing the shorts to buy back at bearable losses; pushing prices back up again - and so on.

If you like trading volatility, that IMHO is what you're going to get from next week on - for a while - and there's likely to be serious coordination between London, Tokio (remember that rule change on naming open interests a couple of months back?) and NY too.

Novices beware!