Stellar performance of $45bn gold supergroup
These 100 selected gold stocks have risen by an average of 468% since late in 2008; the top runner has climbed more than 10,000%.
Author: Barry Sergeant
Posted: Wednesday , 22 Jul 2009
JOHANNESBURG -
Most of the world's bigger gold stocks look like serious plodders compared to some of the spectacular stock price increases put in by smaller gold stocks, not least Ventana Gold, which has risen by more than 10,000%. A selection of the 100 "hottest" performing listed gold stocks around the world indicates a rise of 468%, on a value-weighted basis, from stock price lows, typically seen during the closing months of 2008.
The 100 stocks, which carry an aggregate value of $45.12bn, contain a good number of names that can hardly be rated as "penny stocks". Seen as a grouping, these 100 stocks boast the highest return over the past while, among any known global subgrouping. A far broader measure of gold stocks, with an aggregate value of $292bn, have "bounced" from lows by a more modest 171%, measured on a weighted average basis.
The latter number outpaces somewhat the value-weighted 142% bounce recorded by the world's 100 most valuable miners. The broader logic from the numbers confirms that bigger gold names weigh down the average; the 14 Tier 1 gold diggers have recorded an average bounce of 145% from lows, with Barrick, the biggest by value and production, lagging with 106%.
STOCK GROUPS
Value
From
From
USD bn
high*
low*
Top 100 global miners
1417.90
-37.4%
141.9%
100 hottest gold stocks
45.12
-18.9%
467.9%
Silver stocks
21.13
-35.2%
261.4%
Oil stocks
2412.96
-29.1%
54.4%
S + P 500 Energy
1051.53
-36.8%
41.7%
Zinc stocks
30.79
-22.5%
252.1%
Copper stocks
105.21
-35.8%
249.4%
Gold stocks
292.22
-25.4%
171.4%
Gold ETFs
47.58
-16.0%
30.9%
Uranium stocks
27.76
-30.0%
159.0%
Paper stocks (60)
58.90
-41.1%
106.9%
Shipping stocks (32)
36.14
-59.0%
105.8%
World banks (80)
2837.86
-38.8%
120.4%
Dow Jones Industrial
3000.37
-28.8%
44.6%
* 12-month
Source: market data; analysis by Barry Sergeant
Looking at the "hottest" list, an immediate word of caution is that speculators (and perhaps the odd investor) which dabble in and around this subsector confirm an eternal fickleness, where loyalty is forever yesterday's jaded drumstick. Take Novagold, which owns world class deposits, including Alaska's Donlin Creek, a 50:50 joint venture with Barrick. While a decision to build this mine remains pending, the venture's current 29.3m ounce reserve base indicates a life, according to a feasibility study, of at least 20 years, with gold production for the first 12 full years averaging nearly 1.5m ounces a year, a number achieved by few gold mines anywhere.
Novagold's stock price fell to half a Canadian dollar late in 2008, 95% below its earlier high of CAD 10.00 a share, and more than that from levels of CAD 20.00 a share seen in both 2006 and 2007. While the stock price recently made CAD 6.00 a share, a 12 times multiple from recent lows, the price has now moved below CAD 5.00 a share. A number of top performing gold stocks that fall into the Novagold type category - through each has its own story -include Frontier Mining, New Dawn, Colombia Goldfields, Azteca Gold, Mano River, Appleton Exploration, Trilliant, Yukon-Nevada Gold, High River, Oroco Resource, PanAust, Luiri Gold, Elray Resources, Reunion Gold and Midway Gold.
These stocks are not for widows and orphans. There has even been some recent net selling of Ventana Gold, which this year has published a series of high grade drill intercepts from the La Mascota mineralized zone on its flagship La Bodega gold property in Colombia. At least one analyst has mentioned a price target of C$10.00 a share for Ventana, not least on the back of a projection of 550,000 ounces of gold production a year at total cash costs of just $295 an ounce.
This could turn out to be another proverbial ship in the night; Greystar, which has long proven up a resource of more than 10m ounces of gold, and more than 60m ounces of silver, at Angostura, also in Colombia, is languishing 44% below its stock price highs. Greystar carries a market value of $172m, considerably less than the $375m carried by Ventana.
Either Greystar is undervalued, or Ventana is overvalued, but not both. Ventana's market value is close to half the number alongside Novagold's name. The roving bubble-herd mentality, and sometimes what seems like temporary insanity, sometimes grips junior gold stocks and was seen classically this week, when Ventana announced that it had "not sold any common shares" in Ventana to 63X Master Fund, of Grand Cayman; 63X had earlier announced that it had bought just over 10% of the issued shares in Ventana from Ventana itself. Press pause and replay?
Top notch drilling results remain, as always, a consistent theme among the pecking order of "hottest" gold stocks; in Australia, Sandfire Resources has seen a gain of nearly 4,000% in its stock price on the back of drill results at DeGrussa prospect, part of the 100%-held Doolgunna project. DeGrussa may be primarily copper, but it has associated gold, silver, zinc and palladium. In Canada, Queenston Mining has also moved substantially on drill results, including recent news from its 100% owned Upper Beaver property in Kirkland Lake, Ontario. Shield Mining, busy in Mauritania, also fits into the great drill results category.
Another strong theme has continued to emerge with the rise of gold stocks active in Africa, after last month's bid by Red Back for Moto Goldmines was last week countered by a joint bid of nearly $500m from Randgold Resources and AngloGold Ashanti. African and Africa-related names that have put in sterling performances this year include La Mancha Resources, Pelangio, PMI Gold, Avion Resources, Shield Mining, Ampella Mining, Sunridge Gold, Keegan Resources, Cluff Gold, Gryphon Minerals, Nevsun, Helio Resource, African Queen, Adamus Resources, and Golden Star.
Names involved in potential or actual corporate activity tend to rank among top performers; beyond Moto, the likes of Klondex Mines and Paramount Gold can be mentioned; likewise, potential favourite takeover targets that have risen to the top include Seabridge, San Gold, Allied Nevada, Lake Shore Gold, Osisko, Medusa, US Gold Corp., West Timmins, and Norseman Gold, not to forget evergreen favourite Andean.
A more recent trend, supported by broad Chinese stock market indices such as the CSI 300 and Shanghai Composite riding at 12-month highs, has seen Chinese miners turning in excellent performances, in the gold arena, in the shape of the likes of Shandong Gold, Zhongjin, Zhaojin, and Canada-listed Mundoro. There have also been some stellar recoveries in prices for stocks operating in the Russian region, as seen in the case of JSC Polymetal, and Peter Hambro, and also in the Asian region, as seen in the cases of Centerra and East Asia Minerals.
100 SELECTED GOLD SUPER-PERFORMERS
Stock
From
From
Value
price
high*
low*
USD bn
Ventana Gold
CAD 5.16
-18.1%
12800.0%
0.375
Sandfire Resources
AUD 2.02
-1.0%
3940.0%
0.139
Frontier Mining
GBP 0.05
-63.3%
3500.0%
0.031
Norseman Gold
GBP 0.37
-8.7%
2350.0%
0.104
La Mancha Resources
CAD 0.78
-27.8%
1850.0%
0.100
New Dawn
CAD 0.92
-50.3%
1740.0%
0.024
Century Mining
CAD 0.16
-44.6%
1450.0%
0.024
Pelangio
CAD 0.37
-14.9%
1380.0%
0.029
Australian Solomons
CAD 0.35
-28.1%
1280.0%
0.040
West Timmins
CAD 1.67
-4.0%
1184.6%
0.202
Underworld
CAD 1.58
-40.2%
1115.4%
0.040
PMI Gold
CAD 0.11
-47.6%
1000.0%
0.012
Novagold
CAD 4.81
-51.9%
912.6%
0.795
East Asia Minerals
CAD 1.14
-13.0%
850.0%
0.052
Avion Resources
CAD 0.33
-28.3%
842.9%
0.062
Golden Odyssey
CAD 0.18
-25.0%
800.0%
0.008
Colombia Goldfields
CAD 0.09
-85.0%
800.0%
0.009
Romarco
CAD 0.80
-13.0%
788.9%
0.198
San Anton Resource
CAD 0.27
-30.3%
783.3%
0.025
Regis Resources
AUD 0.55
-14.1%
773.0%
0.110
Evolving Gold
CAD 1.17
-13.3%
735.7%
0.089
Shield Mining
AUD 0.15
-21.1%
733.3%
0.008
Moto Goldmines
CAD 5.47
-2.0%
728.8%
0.539
US Gold Corp.
USD 3.04
-0.3%
700.0%
0.319
Oceanagold
AUD 1.20
-15.5%
700.0%
0.158
Ampella Mining
AUD 0.34
-14.1%
679.1%
0.035
Azteca Gold
CAD 0.16
-72.3%
675.0%
0.025
JSC Polymetal
USD 7.60
-17.8%
660.0%
2.394
Laurentian Gold
CAD 0.19
-32.1%
660.0%
0.004
Mirasol Resources
CAD 0.30
-20.0%
650.0%
0.008
Sunridge Gold
CAD 0.45
-40.8%
650.0%
0.025
Mano River
CAD 0.08
-60.5%
650.0%
0.022
Olympus Pacific
CAD 0.30
-18.1%
637.5%
0.067
Keegan Resources
USD 2.64
-34.0%
632.7%
0.075
Appleton Exploration
CAD 0.15
-78.4%
625.0%
0.004
PC Gold
CAD 0.79
-21.0%
618.2%
0.021
Centerra
CAD 6.40
-17.5%
611.1%
1.358
Zhaojin
HKD 13.08
-11.7%
603.2%
0.738
Tanami Gold
AUD 0.04
-20.5%
600.0%
0.101
Trilliant
USD 0.35
-86.0%
600.0%
0.032
Greystar
CAD 3.61
-44.0%
581.1%
0.172
Archipelago
GBP 0.14
-49.1%
575.0%
0.068
Queenston Mining
CAD 4.98
-3.1%
555.3%
0.259
Klondex Mines
CAD 1.95
-8.0%
550.0%
0.047
Paramount Gold
USD 1.43
-25.5%
550.0%
0.119
Yukon-Nevada Gold
CAD 0.13
-88.5%
550.0%
0.037
Coral Gold
CAD 0.64
-36.0%
540.0%
0.014
Colossus Minerals
CAD 2.74
-25.5%
537.2%
0.143
Fresnillo
GBP 5.88
-20.7%
531.7%
6.906
Medusa
AUD 2.59
-6.5%
531.7%
0.355
Zhongjin
CNY 64.58
-4.2%
523.1%
7.475
St Andrew Goldfields
CAD 0.40
-31.0%
515.4%
0.117
Guyana Goldfields
CAD 3.75
-13.8%
514.8%
0.221
High River
CAD 0.25
-85.1%
512.5%
0.144
Oro Gold Resources
CAD 0.70
-33.3%
508.7%
0.038
Claude Resources
USD 0.72
-25.0%
500.5%
0.070
Carpathian Gold
CAD 0.30
-14.3%
500.0%
0.063
Brazauro
CAD 0.60
-18.9%
500.0%
0.046
Moneta Porcupine
CAD 0.15
-21.1%
500.0%
0.014
Golden Star
USD 2.32
-13.8%
480.0%
0.496
Plexmar Resources
CAD 0.15
-32.6%
480.0%
0.021
Temex Resources
CAD 0.26
-58.1%
477.8%
0.018
Catalpa Resources
AUD 0.11
-12.5%
452.6%
0.100
Cluff Gold
GBP 0.56
-12.2%
443.9%
0.107
Gryphon Minerals
AUD 0.32
-12.3%
442.4%
0.043
Mundoro
CAD 0.80
-5.9%
433.3%
0.028
Molycor Gold
CAD 0.08
-36.0%
433.3%
0.005
Nevsun
CAD 1.85
-9.3%
428.6%
0.215
Orocobre
AUD 0.72
-10.0%
421.7%
0.039
Helio Resource
CAD 0.78
-22.0%
420.0%
0.046
Silver Lake Resources
AUD 0.67
-24.7%
415.4%
0.084
Anglo Swiss Resources
CAD 0.34
-28.7%
415.4%
0.034
Anfield Ventures
CAD 1.80
-29.1%
414.3%
0.041
Osisko
CAD 7.05
-6.6%
403.6%
1.661
Oroco Resource
CAD 0.15
-63.4%
400.0%
0.004
Western Copper
CAD 1.01
-36.9%
392.7%
0.066
Iamgold
USD 10.74
-6.7%
383.8%
3.940
African Queen
CAD 0.29
-27.5%
383.3%
0.010
PanAust
AUD 0.38
-56.7%
380.8%
0.716
Lake Shore Gold
CAD 2.88
-7.1%
380.0%
0.555
Luiri Gold
CAD 0.12
-67.6%
380.0%
0.005
Shoreham Resources
CAD 0.19
-53.7%
375.0%
0.009
Chalice Gold
AUD 0.33
0.0%
371.4%
0.020
Shandong Gold
CNY 61.48
-6.3%
365.8%
6.404
Elray Resources
USD 0.23
-84.7%
360.0%
0.013
Intrepid Mines
AUD 0.37
-13.1%
356.3%
0.127
Allied Nevada
CAD 9.23
-9.1%
348.1%
0.478
Radius Gold
CAD 0.16
-44.6%
342.9%
0.008
Reunion Gold
CAD 0.11
-73.8%
340.0%
0.005
Rubicon Minerals
USD 3.06
-6.7%
337.1%
0.453
Andean
AUD 1.85
-13.6%
335.3%
0.772
Alexco Resources
CAD 2.25
-28.3%
332.7%
0.088
Seabridge
CAD 32.44
-4.6%
332.5%
1.097
Imperial Metals
CAD 4.00
-50.9%
330.1%
0.116
Adamus Resources
AUD 0.43
-10.4%
330.0%
0.059
San Gold
CAD 2.45
-4.3%
329.8%
0.570
Dragon Mining
AUD 0.06
-33.3%
328.6%
0.036
Golden Goose
CAD 0.30
-36.2%
328.6%
0.013
Midway Gold
CAD 0.77
-57.2%
327.8%
0.054
Peter Hambro
GBP 6.61
-41.4%
323.7%
1.854
Averages/total
-29.1%
791.3%
45.117
Weighted averages
-18.9%
467.9%
* 12-month
Source: market data; table compiled by Barry Sergeant
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=86560&sn=Detail
Showing posts with label gold.. Show all posts
Showing posts with label gold.. Show all posts
12 July 2009
Fraud in the Gold Pits of the Comex revealed...
Commodity exchanges can dump gold debts on ETFs
Submitted by cpowell on 10:11AM ET Saturday, July 11, 2009. Section: Daily Dispatches
1p ET Saturday, July 11, 2009
Dear Friend of GATA and Gold:
GATA board member Adrian Douglas discloses in the report below, titled "The Alchemists," that the New York and Tokyo commodity exchanges have been permitting their gold futures contracts to be settled not in real metal but in shares of gold exchange-traded funds (ETFs). This essentially allows the gold shorts (and the exchanges themselves, which guarantee futures contracts) to transfer their obligations to third parties that may not have the metal they claim to have and that, in any case, are operated by the investment banks running major short positions in gold.
Thus it is likely that the paper claims to the world's supply of gold are greater than even GATA has suspected -- that the gold supply is even more oversubscribed and that "paper gold" is being created at an ever more frantic rate to suppress gold's price.
The ability to offload futures contract gold obligations to the ETFs could become the principal mechanism of the gold price suppression scheme. GATA asks its supporters to call Douglas' report to the attention of financial journalists, market regulators, and elected officials everywhere.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
The Alchemists
By Adrian Douglas
Saturday, July 11, 2009
In the Middle Ages alchemists toiled in vain to transmute lead into gold. One wonders why they used such an expensive starting material, such as lead, when modern alchemists in the gold world have succeeded in transmuting paper into gold. This article reveals the anatomy of a scam that has been perpetrated on investors and goes a long way to explain and tie together developments in the precious metals markets in recent years.
As many readers may know, I have recently been reporting on how delivery notices at the COMEX cannot be reconciled with movements of metals from and into the warehouse. Clearly these are not going to match on a daily basis, just as orders into a factory will not match shipments out on any given day, as there is a time lag. But when averaged over a month, the "flow" of metal inventory should be comparable to the delivery notices issued. This is just basic accounting. But I have observed that reconciliation is almost impossible with the COMEX data. The only explanation I could think of is that settlement of contracts must be bypassing the warehouse. But how could this be possible, as I thought all contracts had to be delivered via a COMEX registered warehouse?
The COMEX states:
- - - -
Delivery:
Gold delivered against the futures contract must bear a serial number and identifying stamp of a refiner approved and listed by the Exchange. Delivery must be made from a depository licensed by the Exchange."
This seems unequivocal until you find this exception:
Exchange of Futures for Physicals (EFP)
The buyer or seller may exchange a futures position for a physical position of equal quantity. EFPs may be used to either initiate or liquidate a futures position.
- - - -
The COMEX trading rulebook clarifies further:
- - - -
104.36 Exchange of Futures for, or in Connection with, Product (Physical)
(A) An exchange of futures for, or in connection with, product (EFP) consists of two discrete, but related, transactions; a cash transaction and a futures transaction. At the time such transaction is effected, the buyer and seller of the futures must be the seller and the buyer of a quantity of the physical product covered by this Section. The quantity of physical product must be approximately equivalent to the quantity covered by the futures contract.
- - - -
So what this means is that contracts can essentially be settled without going through the COMEX warehouse. Futures contracts and a physical commodity equivalent can be exchanged outside of the exchange and an EFP form can be filed to the clearing department at the COMEX. What's more, the physical commodity doesn't have to meet the specification of the COMEX Gold Contract of being a 100 troy ounce bar or three 1Kg bars of .995 fineness.
So what can be delivered as the physical gold commodity?
This is where it gets very interesting. On February 18, 2005, the NYMEX, parent of the COMEX, issued this announcement:
- - - -
http://www.cftc.gov/files/submissions/rules/selfcertifications/2005/rul0...
Exchange Rule 104.36, which governs exchange of futures for physicals ('EFP') transactions on the COMEX Division, refers to a 'physical commodity' as one of the required components of an EFP transaction but also indicates that the physical commodity need only be substantially the economic equivalent of the futures contract being exchanged.
The purpose of this Notice is to confirm that the Exchange would accept gold-backed exchange-traded funds ('ETF') shares as the physical commodity component for an EFP transaction involving COMEX gold futures contracts, provided that all elements of a bona fide EFP pursuant to Exchange Rule 104.36 are satisfied.
Thus, acceptable gold-backed and exchange-traded ETF funds include, but are not limited to, the iSharesCOMEX Gold Trust (ticker: IAU), which began trading on the American Stock Exchange on January 28, 2005.
The trust is an exchange-traded fund that provides a means of obtaining a level of participation in the gold market through the securities market. The trust shares are intended to constitute a means of making an investment similar to an investment in gold. Each trust share represents a fractional undivided beneficial interest in the trust's net assets which consist primarily of gold held by a custodian on behalf of the trust. The shares of that trust are expected to reflect the price of gold less the trust's expenses and liabilities.
- - - -
So the gold ETF with the symbol IAU started trading on January 28, 2005, and three short weeks later the shares of IAU became equivalent to real physical gold in the eyes of the COMEX for delivery against futures contracts in an EFP transaction! I
If that doesn't blow your socks off, I don't know what will.
Also note that the ETF mentioned is a COMEX product! How convenient!
Where are the regulators? This ETF is not equivalent to gold. Note the description: "Each trust share represents a fractional undivided beneficial interest in the trust's net assets which consist primarily of gold."
All that is being guaranteed is that each share is a fraction of the ETF assets. The net assets could be 1 oz of gold while the face value of the total shares sold could be 100 million ounces!
The notice does not restrict which gold ETFs are eligible, so clearly the infamous GLD is also eligible to be considered as good as physical gold in an EFP transaction.
Right from the inception of the gold ETFs GLD and SLV, the Gold Anti-Trust Action Committee has deduced from studies of the ETF prospectuses that these funds very likely do not hold gold and silver to fully back the issued shares because the prospectuses don't categorically require it. (See footnotes 1 and 2.) In fact, the ETFs may have no gold or silver at all.
What seemed bizarre to GATA at the time was that the two mega-short anti-gold investment banks, JPMorgan and HSBC, would be involved in the launch and operation of precious metal investments that, on the face of it, would create huge investor demand for the very metals in which the banks hold massive and clearly manipulative concentrated short positions.
Now all becomes clear. The system is the ultimate alchemy. If ETF shares are NOT backed by gold but are accepted by the COMEX as equivalent to physical gold ... presto! You have turned paper into gold -- and paper is a lot cheaper than lead.
A futures market is supposed to provide price discovery for a commodity. In the gold market this notion has been hijacked because settlement can be made with a derivative instrument, such as an unbacked or partially backed ETF share. If that derivative instrument is not backed by gold on a 1:1 basis the scheme allows an artificial apparent increase in the supply of gold and so distorting price discovery toward lower prices.
Such a scam would be in grave danger of becoming exposed if anyone knew the true inventory condition of the vaults of the ETFs. That problem is easily solved by having HSBC be the custodian of GLD and JPMorgan be the custodian of SLV.
I have not found anywhere that COMEX accepts ETFs as an equivalent to physical silver for an EFP transaction, which probably explains why silver warehouse movements are much larger than those of gold, and perhaps may indicate that physical silver is the cartel's Achilles heel.
We have all wondered how GLD could have amassed a stunning 1,100 tons of gold in less than five years without the gold price exploding. This represents buying 10 percent of all global gold output each year. What's more, in the last nine months the ETF holdings almost doubled, adding approximately 500 tonnes or 23 percent of annual global production. And this when the signatories to the second Washington Agreement on Gold have reduced their gold sales to a trickle, from 500 tonnes per year. If the GLD shares are unbacked or only partially backed by gold, the alleged 1,100-tonnes gold holding would be easy to achieve with just the use of a printing press for the share certificates.
In looking at COMEX reports the EFP transactions are reported under "Other Volume." This category is huge compared to delivery notices. For example, on July 8, 2009, the gold price fell by $20. Looking at the relevant COMEX report --
http://www.cmegroup.com/trading/energy-metals/files/cmxopint070809.pdf
-- on Page 4 "Other Volume" is 9,540 contracts or 954,000 ounces, while the much more visible delivery notices were only 17 contracts or 1,700 ounces! Judging from many reports the "Other Volume" category is orders of magnitude larger than the delivery notices.
What I don't know is how many of these trades are settled with the COMEX-approved gold equivalent ETFs or even if any are. I have sent an email to the COMEX to ask them. I won't hold my breath for a reply. My guess is that a lot of EFPs are settled this way, which would account in part for the meteoric issue of GLD shares. But the COMEX should be transparent; it should be required to publish exactly what is being traded as "Other Volume." In fact if the COMEX wants to be above suspicion it should insist in its rules that EFPs must be settled with gold that meets exactly the COMEX gold contract specification. The EFP then would facilitate delivery instead of facilitating a change in delivery obligations.
Why was it necessary to introduce a mechanism to exchange ETF shares in lieu of physical gold? Where there is smoke there is fire.
What I don't know is how many of these trades are settled with the COMEX-approved gold equivalent ETFs. I have sent an email to the COMEX to ask them. I won't hold my breath for a reply. My guess is that a lot of EFPs are settled this way, which would account in part for the meteoric issue of GLD shares.
Adding credence to this supposition is that GLD has gained wide acceptance with mutual funds, pension funds, and university endowment funds. Many sophisticated investors believe ETFs to be equivalent to investing in bullion. This makes this fiat paper bullion scam easy to perpetrate.
It would appear that the COMEX gold warehouse is merely a window dressing displaying an almost static 2.5 million ounces of dealer-owned gold inventory. But it would appear the vast majority of settlement occurs out of the average investor's view AND, therefore, out of the view of the regulators.
This means that the COMEX is not what it seems. Delivery for an EFP only needs to be "substantially the economic equivalent" of the deliverable commodity! A default could occur at any time if this sorcery of swapping paper for paper suffered a serious setback.
The members of the Gold Cartel must be very proud of themselves for succeeding where the ancient alchemists failed. In fact, they are so proud they decided they didn't need to limit the scam to the COMEX. They have implemented it on the Tokyo Commodity Exchange too.
On October 29, 2008, the TOCOM made the following announcement:
- - - -
Based on the Memorandum of Understanding signed in January this year, The Tokyo Commodity Exchange (TOCOM) and Tokyo Stock Exchange (TSE) have launched 'Inter-market Cooperation Workshop' in efforts to improve convenience for participants of both markets, and studied to reinforce cooperation between the commodity market and the stock market.
In light of the study at the workshop, TOCOM has added a 'physically backed commodity ETF' as a possible physical for EFP (Exchange of Futures for Physicals) transactions at the exchange, which allows seller and the buyer, who holds agreement for physical transactions, to conclude the contracts in the commodity futures market without continuous trading of physicals.
Therefore, the SPDR Gold Shares, physically backed commodity ETF listed on the TSE, which has a correlation with the gold spot price, can now be used as a physical for EFP transaction on TOCOM's gold market.
Thanks to this new arrangement, it is expected that the link between TSE's SPDR Gold Shares market and the TOCOM gold market will be strengthened and that the price reliability, as well as the liquidity of both markets, will be enhanced.
For inquiries about this news release, please contact:
Planning Department, The Tokyo Commodity Exchange
http://www.tocom.or.jp/news/2008/20081105-1.html
- - - -
Notice the comment that the "liquidity of both markets will be enhanced." There can be little doubt about that! They can print as many ETF shares as they want and they can then settle as many EFPs as they want ... and guess what happens to the price of gold with such an apparent increase in liquidity. Yes, it will be suppressed. As they said in the release, "the price reliability will be enhanced."
Now that reminds me of Alan Greenspan, who said, "Central Banks stand ready to lease gold in increasing quantities should the price rise." But why get the central banks to lease the real stuff when an ETF can print up an IOU that the unsuspecting investor will accept to be as good as gold?
Does this mean that the alchemists of the Gold Cartel have discovered the Elixir of Life for their gold suppression scheme so that it will go on forever?
No, absolutely not. Faith in anything paper is going out of fashion. California is shortly going to discover that people don't like IOUs. Central banks outside of the G7 countries are buying gold, and I am sure they know about this alchemy. I doubt that the Chinese will accept GLD shares for settlement of futures contracts.
If you want an investment in bullion, then make sure you have an investment in bullion. In my opinion what I have presented here, and what other analysts have written, indicate that GLD and SLV are not investments in bullion. They are mere IOUs in bullion. Take physical delivery of gold and silver from the COMEX. They have only 2.5 million ounces of the real stuff in the gold inventory. That is a paltry $2.3 billion at today's price.
The Gold Cartel is desperate to suppress gold and keep the dream of a "strong dollar" alive along with maintaining low interest rates by using a mechanism described by Professors Summers and Barsky in their research paper "Gibson's Paradox and the Gold Standard." The London Gold Pool used real gold to try to suppress the gold market, and it failed. The paper IOU is going to be even less successful. Imagine what will happen to the gold price when the holders of the paper IOUs go looking for physical gold instead. The Gold Cartel has built a dam on the river of physical gold demand, thinking that it is clever enough to defy the laws of supply and demand. Wait until the dam bursts to experience gold fever such has never been seen before.
Buy real gold and silver before the dam bursts!
* * *
References
[1] "The Paper Game" by James Turk
http://www.financialsense.com/editorials/turk/2007/0305.html
[2] "Unanswered Questions about the Silver ETF" by James Turk
http://goldismoney.info/forums/showthread.php?t=125607
-----
Adrian Douglas is a market analyst and CEO of the Market Force Analysis newsletter (http://www.marketforceanalysis.com). He graduated in 1980 from Cambridge University, England, in natural sciences. For 20 years he worked in the oil and gas industry, where he held senior management positions in marketing and sales. He now runs his own consultancy and has been contracted by the largest companies in the oilfield services sector. His study of enterprise pricing and commercial markets led to his interest in the market pricing mechanisms of financial assets. As a result he developed a unique algorithm and methodology for analyzing financial futures markets and in particular for identifying appropriate entry and exit points. The technique has been named "market force analysis" and two patents have been filed on his techniques. He has a particular interest in the precious metals markets and serves on the Board of Directors of the Gold Anti-Trust Action Committee.
Submitted by cpowell on 10:11AM ET Saturday, July 11, 2009. Section: Daily Dispatches
1p ET Saturday, July 11, 2009
Dear Friend of GATA and Gold:
GATA board member Adrian Douglas discloses in the report below, titled "The Alchemists," that the New York and Tokyo commodity exchanges have been permitting their gold futures contracts to be settled not in real metal but in shares of gold exchange-traded funds (ETFs). This essentially allows the gold shorts (and the exchanges themselves, which guarantee futures contracts) to transfer their obligations to third parties that may not have the metal they claim to have and that, in any case, are operated by the investment banks running major short positions in gold.
Thus it is likely that the paper claims to the world's supply of gold are greater than even GATA has suspected -- that the gold supply is even more oversubscribed and that "paper gold" is being created at an ever more frantic rate to suppress gold's price.
The ability to offload futures contract gold obligations to the ETFs could become the principal mechanism of the gold price suppression scheme. GATA asks its supporters to call Douglas' report to the attention of financial journalists, market regulators, and elected officials everywhere.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
The Alchemists
By Adrian Douglas
Saturday, July 11, 2009
In the Middle Ages alchemists toiled in vain to transmute lead into gold. One wonders why they used such an expensive starting material, such as lead, when modern alchemists in the gold world have succeeded in transmuting paper into gold. This article reveals the anatomy of a scam that has been perpetrated on investors and goes a long way to explain and tie together developments in the precious metals markets in recent years.
As many readers may know, I have recently been reporting on how delivery notices at the COMEX cannot be reconciled with movements of metals from and into the warehouse. Clearly these are not going to match on a daily basis, just as orders into a factory will not match shipments out on any given day, as there is a time lag. But when averaged over a month, the "flow" of metal inventory should be comparable to the delivery notices issued. This is just basic accounting. But I have observed that reconciliation is almost impossible with the COMEX data. The only explanation I could think of is that settlement of contracts must be bypassing the warehouse. But how could this be possible, as I thought all contracts had to be delivered via a COMEX registered warehouse?
The COMEX states:
- - - -
Delivery:
Gold delivered against the futures contract must bear a serial number and identifying stamp of a refiner approved and listed by the Exchange. Delivery must be made from a depository licensed by the Exchange."
This seems unequivocal until you find this exception:
Exchange of Futures for Physicals (EFP)
The buyer or seller may exchange a futures position for a physical position of equal quantity. EFPs may be used to either initiate or liquidate a futures position.
- - - -
The COMEX trading rulebook clarifies further:
- - - -
104.36 Exchange of Futures for, or in Connection with, Product (Physical)
(A) An exchange of futures for, or in connection with, product (EFP) consists of two discrete, but related, transactions; a cash transaction and a futures transaction. At the time such transaction is effected, the buyer and seller of the futures must be the seller and the buyer of a quantity of the physical product covered by this Section. The quantity of physical product must be approximately equivalent to the quantity covered by the futures contract.
- - - -
So what this means is that contracts can essentially be settled without going through the COMEX warehouse. Futures contracts and a physical commodity equivalent can be exchanged outside of the exchange and an EFP form can be filed to the clearing department at the COMEX. What's more, the physical commodity doesn't have to meet the specification of the COMEX Gold Contract of being a 100 troy ounce bar or three 1Kg bars of .995 fineness.
So what can be delivered as the physical gold commodity?
This is where it gets very interesting. On February 18, 2005, the NYMEX, parent of the COMEX, issued this announcement:
- - - -
http://www.cftc.gov/files/submissions/rules/selfcertifications/2005/rul0...
Exchange Rule 104.36, which governs exchange of futures for physicals ('EFP') transactions on the COMEX Division, refers to a 'physical commodity' as one of the required components of an EFP transaction but also indicates that the physical commodity need only be substantially the economic equivalent of the futures contract being exchanged.
The purpose of this Notice is to confirm that the Exchange would accept gold-backed exchange-traded funds ('ETF') shares as the physical commodity component for an EFP transaction involving COMEX gold futures contracts, provided that all elements of a bona fide EFP pursuant to Exchange Rule 104.36 are satisfied.
Thus, acceptable gold-backed and exchange-traded ETF funds include, but are not limited to, the iSharesCOMEX Gold Trust (ticker: IAU), which began trading on the American Stock Exchange on January 28, 2005.
The trust is an exchange-traded fund that provides a means of obtaining a level of participation in the gold market through the securities market. The trust shares are intended to constitute a means of making an investment similar to an investment in gold. Each trust share represents a fractional undivided beneficial interest in the trust's net assets which consist primarily of gold held by a custodian on behalf of the trust. The shares of that trust are expected to reflect the price of gold less the trust's expenses and liabilities.
- - - -
So the gold ETF with the symbol IAU started trading on January 28, 2005, and three short weeks later the shares of IAU became equivalent to real physical gold in the eyes of the COMEX for delivery against futures contracts in an EFP transaction! I
If that doesn't blow your socks off, I don't know what will.
Also note that the ETF mentioned is a COMEX product! How convenient!
Where are the regulators? This ETF is not equivalent to gold. Note the description: "Each trust share represents a fractional undivided beneficial interest in the trust's net assets which consist primarily of gold."
All that is being guaranteed is that each share is a fraction of the ETF assets. The net assets could be 1 oz of gold while the face value of the total shares sold could be 100 million ounces!
The notice does not restrict which gold ETFs are eligible, so clearly the infamous GLD is also eligible to be considered as good as physical gold in an EFP transaction.
Right from the inception of the gold ETFs GLD and SLV, the Gold Anti-Trust Action Committee has deduced from studies of the ETF prospectuses that these funds very likely do not hold gold and silver to fully back the issued shares because the prospectuses don't categorically require it. (See footnotes 1 and 2.) In fact, the ETFs may have no gold or silver at all.
What seemed bizarre to GATA at the time was that the two mega-short anti-gold investment banks, JPMorgan and HSBC, would be involved in the launch and operation of precious metal investments that, on the face of it, would create huge investor demand for the very metals in which the banks hold massive and clearly manipulative concentrated short positions.
Now all becomes clear. The system is the ultimate alchemy. If ETF shares are NOT backed by gold but are accepted by the COMEX as equivalent to physical gold ... presto! You have turned paper into gold -- and paper is a lot cheaper than lead.
A futures market is supposed to provide price discovery for a commodity. In the gold market this notion has been hijacked because settlement can be made with a derivative instrument, such as an unbacked or partially backed ETF share. If that derivative instrument is not backed by gold on a 1:1 basis the scheme allows an artificial apparent increase in the supply of gold and so distorting price discovery toward lower prices.
Such a scam would be in grave danger of becoming exposed if anyone knew the true inventory condition of the vaults of the ETFs. That problem is easily solved by having HSBC be the custodian of GLD and JPMorgan be the custodian of SLV.
I have not found anywhere that COMEX accepts ETFs as an equivalent to physical silver for an EFP transaction, which probably explains why silver warehouse movements are much larger than those of gold, and perhaps may indicate that physical silver is the cartel's Achilles heel.
We have all wondered how GLD could have amassed a stunning 1,100 tons of gold in less than five years without the gold price exploding. This represents buying 10 percent of all global gold output each year. What's more, in the last nine months the ETF holdings almost doubled, adding approximately 500 tonnes or 23 percent of annual global production. And this when the signatories to the second Washington Agreement on Gold have reduced their gold sales to a trickle, from 500 tonnes per year. If the GLD shares are unbacked or only partially backed by gold, the alleged 1,100-tonnes gold holding would be easy to achieve with just the use of a printing press for the share certificates.
In looking at COMEX reports the EFP transactions are reported under "Other Volume." This category is huge compared to delivery notices. For example, on July 8, 2009, the gold price fell by $20. Looking at the relevant COMEX report --
http://www.cmegroup.com/trading/energy-metals/files/cmxopint070809.pdf
-- on Page 4 "Other Volume" is 9,540 contracts or 954,000 ounces, while the much more visible delivery notices were only 17 contracts or 1,700 ounces! Judging from many reports the "Other Volume" category is orders of magnitude larger than the delivery notices.
What I don't know is how many of these trades are settled with the COMEX-approved gold equivalent ETFs or even if any are. I have sent an email to the COMEX to ask them. I won't hold my breath for a reply. My guess is that a lot of EFPs are settled this way, which would account in part for the meteoric issue of GLD shares. But the COMEX should be transparent; it should be required to publish exactly what is being traded as "Other Volume." In fact if the COMEX wants to be above suspicion it should insist in its rules that EFPs must be settled with gold that meets exactly the COMEX gold contract specification. The EFP then would facilitate delivery instead of facilitating a change in delivery obligations.
Why was it necessary to introduce a mechanism to exchange ETF shares in lieu of physical gold? Where there is smoke there is fire.
What I don't know is how many of these trades are settled with the COMEX-approved gold equivalent ETFs. I have sent an email to the COMEX to ask them. I won't hold my breath for a reply. My guess is that a lot of EFPs are settled this way, which would account in part for the meteoric issue of GLD shares.
Adding credence to this supposition is that GLD has gained wide acceptance with mutual funds, pension funds, and university endowment funds. Many sophisticated investors believe ETFs to be equivalent to investing in bullion. This makes this fiat paper bullion scam easy to perpetrate.
It would appear that the COMEX gold warehouse is merely a window dressing displaying an almost static 2.5 million ounces of dealer-owned gold inventory. But it would appear the vast majority of settlement occurs out of the average investor's view AND, therefore, out of the view of the regulators.
This means that the COMEX is not what it seems. Delivery for an EFP only needs to be "substantially the economic equivalent" of the deliverable commodity! A default could occur at any time if this sorcery of swapping paper for paper suffered a serious setback.
The members of the Gold Cartel must be very proud of themselves for succeeding where the ancient alchemists failed. In fact, they are so proud they decided they didn't need to limit the scam to the COMEX. They have implemented it on the Tokyo Commodity Exchange too.
On October 29, 2008, the TOCOM made the following announcement:
- - - -
Based on the Memorandum of Understanding signed in January this year, The Tokyo Commodity Exchange (TOCOM) and Tokyo Stock Exchange (TSE) have launched 'Inter-market Cooperation Workshop' in efforts to improve convenience for participants of both markets, and studied to reinforce cooperation between the commodity market and the stock market.
In light of the study at the workshop, TOCOM has added a 'physically backed commodity ETF' as a possible physical for EFP (Exchange of Futures for Physicals) transactions at the exchange, which allows seller and the buyer, who holds agreement for physical transactions, to conclude the contracts in the commodity futures market without continuous trading of physicals.
Therefore, the SPDR Gold Shares, physically backed commodity ETF listed on the TSE, which has a correlation with the gold spot price, can now be used as a physical for EFP transaction on TOCOM's gold market.
Thanks to this new arrangement, it is expected that the link between TSE's SPDR Gold Shares market and the TOCOM gold market will be strengthened and that the price reliability, as well as the liquidity of both markets, will be enhanced.
For inquiries about this news release, please contact:
Planning Department, The Tokyo Commodity Exchange
http://www.tocom.or.jp/news/2008/20081105-1.html
- - - -
Notice the comment that the "liquidity of both markets will be enhanced." There can be little doubt about that! They can print as many ETF shares as they want and they can then settle as many EFPs as they want ... and guess what happens to the price of gold with such an apparent increase in liquidity. Yes, it will be suppressed. As they said in the release, "the price reliability will be enhanced."
Now that reminds me of Alan Greenspan, who said, "Central Banks stand ready to lease gold in increasing quantities should the price rise." But why get the central banks to lease the real stuff when an ETF can print up an IOU that the unsuspecting investor will accept to be as good as gold?
Does this mean that the alchemists of the Gold Cartel have discovered the Elixir of Life for their gold suppression scheme so that it will go on forever?
No, absolutely not. Faith in anything paper is going out of fashion. California is shortly going to discover that people don't like IOUs. Central banks outside of the G7 countries are buying gold, and I am sure they know about this alchemy. I doubt that the Chinese will accept GLD shares for settlement of futures contracts.
If you want an investment in bullion, then make sure you have an investment in bullion. In my opinion what I have presented here, and what other analysts have written, indicate that GLD and SLV are not investments in bullion. They are mere IOUs in bullion. Take physical delivery of gold and silver from the COMEX. They have only 2.5 million ounces of the real stuff in the gold inventory. That is a paltry $2.3 billion at today's price.
The Gold Cartel is desperate to suppress gold and keep the dream of a "strong dollar" alive along with maintaining low interest rates by using a mechanism described by Professors Summers and Barsky in their research paper "Gibson's Paradox and the Gold Standard." The London Gold Pool used real gold to try to suppress the gold market, and it failed. The paper IOU is going to be even less successful. Imagine what will happen to the gold price when the holders of the paper IOUs go looking for physical gold instead. The Gold Cartel has built a dam on the river of physical gold demand, thinking that it is clever enough to defy the laws of supply and demand. Wait until the dam bursts to experience gold fever such has never been seen before.
Buy real gold and silver before the dam bursts!
* * *
References
[1] "The Paper Game" by James Turk
http://www.financialsense.com/editorials/turk/2007/0305.html
[2] "Unanswered Questions about the Silver ETF" by James Turk
http://goldismoney.info/forums/showthread.php?t=125607
-----
Adrian Douglas is a market analyst and CEO of the Market Force Analysis newsletter (http://www.marketforceanalysis.com). He graduated in 1980 from Cambridge University, England, in natural sciences. For 20 years he worked in the oil and gas industry, where he held senior management positions in marketing and sales. He now runs his own consultancy and has been contracted by the largest companies in the oilfield services sector. His study of enterprise pricing and commercial markets led to his interest in the market pricing mechanisms of financial assets. As a result he developed a unique algorithm and methodology for analyzing financial futures markets and in particular for identifying appropriate entry and exit points. The technique has been named "market force analysis" and two patents have been filed on his techniques. He has a particular interest in the precious metals markets and serves on the Board of Directors of the Gold Anti-Trust Action Committee.
2 July 2009
Gold Market manipulation ~ items.~ comments~thoughts
In commentary posted yesterday, Brad Zigler, managing editor of the Hard Assets Investor Internet site, has done GATA the service of taking us seriously enough to answer us specifically in some respects. Zigler's commentary is headlined "Gold Manipulation Redux" and can be found at Hard Assets Investor here:
http://www.hardassetsinvestor.com/features-and-interviews/1/1642-gold-manipulation-redux.html
Zigler seems to accept that central banks intervene in the gold market, openly and surreptitiously. He seems interested mainly in asserting the integrity of the futures markets.
He writes that since gold has been rising for quite a while now, any gold price suppression scheme could not be working. GATA argues that the scheme indeed is working by substantially slowing gold's rise.
Zigler acknowledges that a few U.S. banks have hugely disproportionate short positions in the futures markets in gold and silver but he does not consider these positions manipulative. Further, he writes, "No tenable scenario has been offered to explain how these institutions would actually profit from the supposed suppression of gold prices. The banks' relationship to the Federal Reserve is often posited as evidence of a collusion of some sort, but the mechanics remained unspecified."
Zigler is entitled to his own definition of "tenable," but GATA has suggested many times that if central banks are implementing their gold suppression policy through bullion banks and mining companies that hedge, as Barrick Gold acknowledged central banks to be doing, even claiming to be an agent of the central banks itself --
http://www.gata.org/files/BarrickConfessionMotionToDismiss.pdf --
then huge profits could be made by hedged miners, bullion banks, and their associated firms executing and front-running the trade orders of central banks. Surely Zigler would acknowledge that there are constant private communications among the Treasury, Fed, and financial houses. Many of the latter are official U.S. government agents, primary dealers for government bond sales. Does Zigler really think that no information of trading value is ever conveyed in these communications? Maybe Zigler would not be offended by this favoritism, but others would be -- and are.
Blanchard Coin & Bullion's federal antitrust lawsuit against Barrick, which elicited Barrick's confession to the gold price suppression scheme, maintained that Barrick had access to so much central bank gold obtained through its bullion bank, J.P. Morgan Chase & Co., that the mining company could run the gold price up or down at will. There would be a lot of profit in that. And GATA Chairman Bill Murphy has written and spoken often about how bullion banks could profit enormously by suddenly shorting gold in huge amounts, causing crashes, creating panic among investors, and covering short positions as the panic grows before allowing the price to rise again. Any firm with access to enough borrowed central bank gold could profitably manipulate not just the gold market with central bank approval but nearly every other market. And there's no denying that huge amounts of central bank gold have been leased and made available for just such purposes.
GATA has been formally refused access to U.S. Treasury Department and Federal Reserve records about the U.S. gold reserve. Anyone who believes in the integrity of the futures markets should have some curiosity about this, for it is an indication that the gold reserve indeed has been put in play in ways similar to those suggested by GATA. How much does Zigler want to bet that there never have been and are no records of communications among the Treasury Department, the Fed, and Morgan Chase involving gold?
Zigler disputes silver market analyst Ted Butler's assertion that the U.S. bank short positions in silver are unprecedented. He says there are bigger bank short positions in Australian dollar futures. But Butler was talking about the U.S. commodity markets, not foreign currency markets.
Zigler attributes the disproportionate U.S. bank short positions in gold and silver to legitimate hedging by producers and marketers rather than to manipulation by those banks. Since details of those short positions are kept confidential by the U.S. Commodity Futures Trading Commission, we can't yet know. But GATA thinks that this information should be made public, perhaps with a modest delay to provide some protection to current trading positions. Since hedging by precious metals miners has fallen dramatically, we do not think that most of the bank short positions in gold and silver is legitimate hedging. And while GATA argues for more transparency, Zigler, like the big shorts in the precious metals, seems to prefer continued concealment. Presumably Zigler trusts the CFTC to be doing its job -- just as Bernie Madoff's investors trusted the Securities and Exchange Commission to be doing its job. GATA doesn't trust any of the regulatory agencies.
But again let it be noted that, unlike most of GATA's critics, Zigler has had the courage to confront some of our specifics, and we're grateful for that and commend his commentary to you.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
\
\
\
Market manipulation obvious to CNBC analysts
Submitted by cpowell on 03:41PM ET Tuesday, June 30, 2009. Section: Daily Dispatches
6:40p ET Tuesday, June 30, 2009
Dear Friend of GATA and Gold:
For five minutes Monday morning CNBC market analysts discussed how obvious U.S. government manipulation of the financial markets has become. If manipulation is obvious to CNBC analysts now, soon even some mainstream gold market analysts may have trouble denying it. You can watch the CNBC segment here:
http://www.cnbc.com/id/15840232?video=1167028705&play=1
Mr. Ziegler has an agenda. The the manipulation of gold has been going on a long time-and all unsuccessfully in the long run-take a look at the London gold pool, for example-or better still read TIME magazine:
Mr. Ziegler-it certainly appears Mr. Volker was selling gold out of Fort Knox and official parties were gravely concerned...I know-these conspiracy folks like Volker and Time magazine are tedious Mr. Zigler.
“Shrinking Role for US Money”
Oct. 15, 1979 (TIME Magazine)
“Frenzy in the gold and currency markets heightens an urgent issue.
“From the harried canyons of Wall Street to the outwardly calm boardrooms of Zurich, the world’s financial centers experienced a whiff of panic last week. In two days of frantic trading, the price of gold on the London exchange soared a breathtaking $50 per oz. to $447 at one point; then it plunged back down almost as steeply, closing the week at $385. Silver, platinum and copper also gyrated wildly. Said a New York bullion trader: ‘The market’s gone bananas.’
“The madness, as usual, was not over precious metals so much as money—specifically the battered US dollar. Once again greenbacks were being sold off heavily in world markets in exchange for more robust currencies. Struggling to keep the buck from plunging further, which would hurt West German exports, the Bundesbank spent $1.2 billion in deutsche marks to buy up unwanted dollars last week. By happenstance, as the buck was worrying down again, central bankers, finance ministers and some 6,000 other leading moneymen were gathering in Belgrade, Yugoslavia, for the annual meeting of the 138-nation International Monetary Fund. Treasury Secretary G. William Miller and Federal Reserve Chairman Paul Volcker had hardly arrived when they were besieged with calls for US action to stem the panic.”
(note:Twenty years before GATA and conspirational gold manipulation theories appeared, real live gold manipulation occurred out in the open, with Volcker in the lead)
More from TIME:
“Volcker promptly returned to Washington to draft plans for what could be the second massive dollar-rescue program the US has had to mount in eleven months. Among the steps under discussion:
“LARGER GOLD SALES. The 750,000 oz. of Fort Knox bullion the US now sells monthly might be doubled, in hopes that this might help drive prices down. Hinting at such a strategy, Under Secretary of the Treasury Anthony Solomon said last week that the gold boom was ‘extremely unhealthy for the world economy.’”
Perhaps, that is why Fort Knox has not been audited since Eisenhower, GLD has unlimited sub custodians that can never be audited? Credit Agricole-far higher rated in Europe than Goldman Sachs or JPM in research agreed in 20o7 that GATA was correct. Read there ad in the WSJ-all of what they say is in the public record-in particular look into Barrick's gold claiming to act on behalf of Central Banks-with a 15 year evergreen agreement-meaning they never have to return the gold, until they receive formal notice-and then...the 15 year clock strikes-it has been 10 years and no letter has been delivered-and the money keeps earning 5%-now that's an arms length transaction-by the people who brought you CDO's and derivatives-I suggest anyone do there own due diligence and take Mr. Ziegler's piece with a grain of salt until then.
Wednesday, 01 July 2009 15:15 EST - Posted by Bill
I believe the powers that be WANT a higher gold price. A huge dollar devaluation against gold would work just fine for an indebted country.
I believe the OBVIOUS manipulation is designed to stop spikes causing embarrasment, not to cap permanently. They want an orderly devaluation over several years, not a colapse.
But please Mr. Zeigler, don't deny manipulation. Anyone that has traded gold futures sees 'them' turn up and sit on the bids all day long. Sometimes they let it go, sometimes they sit on it all day. Sometimes it starts in London. Sometimes in New York. But don't tell me the huge sell orders that fly in at key resistance, and just beyond it, is just noise. they show their hand and it is a firm hand. No other market will see sellers just ABOVE resistance. That is a way to go bankrup and all traders know it. But gold has them hit it so hard on breakouts some days it has to be BIG boys manipulating. Any one who sees it and then doesn't acknowlege it seems strange is not paying very close attention to their market or is in denial.
http://www.hardassetsinvestor.com/features-and-interviews/1/1642-gold-manipulation-redux.html
Zigler seems to accept that central banks intervene in the gold market, openly and surreptitiously. He seems interested mainly in asserting the integrity of the futures markets.
He writes that since gold has been rising for quite a while now, any gold price suppression scheme could not be working. GATA argues that the scheme indeed is working by substantially slowing gold's rise.
Zigler acknowledges that a few U.S. banks have hugely disproportionate short positions in the futures markets in gold and silver but he does not consider these positions manipulative. Further, he writes, "No tenable scenario has been offered to explain how these institutions would actually profit from the supposed suppression of gold prices. The banks' relationship to the Federal Reserve is often posited as evidence of a collusion of some sort, but the mechanics remained unspecified."
Zigler is entitled to his own definition of "tenable," but GATA has suggested many times that if central banks are implementing their gold suppression policy through bullion banks and mining companies that hedge, as Barrick Gold acknowledged central banks to be doing, even claiming to be an agent of the central banks itself --
http://www.gata.org/files/BarrickConfessionMotionToDismiss.pdf --
then huge profits could be made by hedged miners, bullion banks, and their associated firms executing and front-running the trade orders of central banks. Surely Zigler would acknowledge that there are constant private communications among the Treasury, Fed, and financial houses. Many of the latter are official U.S. government agents, primary dealers for government bond sales. Does Zigler really think that no information of trading value is ever conveyed in these communications? Maybe Zigler would not be offended by this favoritism, but others would be -- and are.
Blanchard Coin & Bullion's federal antitrust lawsuit against Barrick, which elicited Barrick's confession to the gold price suppression scheme, maintained that Barrick had access to so much central bank gold obtained through its bullion bank, J.P. Morgan Chase & Co., that the mining company could run the gold price up or down at will. There would be a lot of profit in that. And GATA Chairman Bill Murphy has written and spoken often about how bullion banks could profit enormously by suddenly shorting gold in huge amounts, causing crashes, creating panic among investors, and covering short positions as the panic grows before allowing the price to rise again. Any firm with access to enough borrowed central bank gold could profitably manipulate not just the gold market with central bank approval but nearly every other market. And there's no denying that huge amounts of central bank gold have been leased and made available for just such purposes.
GATA has been formally refused access to U.S. Treasury Department and Federal Reserve records about the U.S. gold reserve. Anyone who believes in the integrity of the futures markets should have some curiosity about this, for it is an indication that the gold reserve indeed has been put in play in ways similar to those suggested by GATA. How much does Zigler want to bet that there never have been and are no records of communications among the Treasury Department, the Fed, and Morgan Chase involving gold?
Zigler disputes silver market analyst Ted Butler's assertion that the U.S. bank short positions in silver are unprecedented. He says there are bigger bank short positions in Australian dollar futures. But Butler was talking about the U.S. commodity markets, not foreign currency markets.
Zigler attributes the disproportionate U.S. bank short positions in gold and silver to legitimate hedging by producers and marketers rather than to manipulation by those banks. Since details of those short positions are kept confidential by the U.S. Commodity Futures Trading Commission, we can't yet know. But GATA thinks that this information should be made public, perhaps with a modest delay to provide some protection to current trading positions. Since hedging by precious metals miners has fallen dramatically, we do not think that most of the bank short positions in gold and silver is legitimate hedging. And while GATA argues for more transparency, Zigler, like the big shorts in the precious metals, seems to prefer continued concealment. Presumably Zigler trusts the CFTC to be doing its job -- just as Bernie Madoff's investors trusted the Securities and Exchange Commission to be doing its job. GATA doesn't trust any of the regulatory agencies.
But again let it be noted that, unlike most of GATA's critics, Zigler has had the courage to confront some of our specifics, and we're grateful for that and commend his commentary to you.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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\
\
Market manipulation obvious to CNBC analysts
Submitted by cpowell on 03:41PM ET Tuesday, June 30, 2009. Section: Daily Dispatches
6:40p ET Tuesday, June 30, 2009
Dear Friend of GATA and Gold:
For five minutes Monday morning CNBC market analysts discussed how obvious U.S. government manipulation of the financial markets has become. If manipulation is obvious to CNBC analysts now, soon even some mainstream gold market analysts may have trouble denying it. You can watch the CNBC segment here:
http://www.cnbc.com/id/15840232?video=1167028705&play=1
Mr. Ziegler has an agenda. The the manipulation of gold has been going on a long time-and all unsuccessfully in the long run-take a look at the London gold pool, for example-or better still read TIME magazine:
Mr. Ziegler-it certainly appears Mr. Volker was selling gold out of Fort Knox and official parties were gravely concerned...I know-these conspiracy folks like Volker and Time magazine are tedious Mr. Zigler.
“Shrinking Role for US Money”
Oct. 15, 1979 (TIME Magazine)
“Frenzy in the gold and currency markets heightens an urgent issue.
“From the harried canyons of Wall Street to the outwardly calm boardrooms of Zurich, the world’s financial centers experienced a whiff of panic last week. In two days of frantic trading, the price of gold on the London exchange soared a breathtaking $50 per oz. to $447 at one point; then it plunged back down almost as steeply, closing the week at $385. Silver, platinum and copper also gyrated wildly. Said a New York bullion trader: ‘The market’s gone bananas.’
“The madness, as usual, was not over precious metals so much as money—specifically the battered US dollar. Once again greenbacks were being sold off heavily in world markets in exchange for more robust currencies. Struggling to keep the buck from plunging further, which would hurt West German exports, the Bundesbank spent $1.2 billion in deutsche marks to buy up unwanted dollars last week. By happenstance, as the buck was worrying down again, central bankers, finance ministers and some 6,000 other leading moneymen were gathering in Belgrade, Yugoslavia, for the annual meeting of the 138-nation International Monetary Fund. Treasury Secretary G. William Miller and Federal Reserve Chairman Paul Volcker had hardly arrived when they were besieged with calls for US action to stem the panic.”
(note:Twenty years before GATA and conspirational gold manipulation theories appeared, real live gold manipulation occurred out in the open, with Volcker in the lead)
More from TIME:
“Volcker promptly returned to Washington to draft plans for what could be the second massive dollar-rescue program the US has had to mount in eleven months. Among the steps under discussion:
“LARGER GOLD SALES. The 750,000 oz. of Fort Knox bullion the US now sells monthly might be doubled, in hopes that this might help drive prices down. Hinting at such a strategy, Under Secretary of the Treasury Anthony Solomon said last week that the gold boom was ‘extremely unhealthy for the world economy.’”
Perhaps, that is why Fort Knox has not been audited since Eisenhower, GLD has unlimited sub custodians that can never be audited? Credit Agricole-far higher rated in Europe than Goldman Sachs or JPM in research agreed in 20o7 that GATA was correct. Read there ad in the WSJ-all of what they say is in the public record-in particular look into Barrick's gold claiming to act on behalf of Central Banks-with a 15 year evergreen agreement-meaning they never have to return the gold, until they receive formal notice-and then...the 15 year clock strikes-it has been 10 years and no letter has been delivered-and the money keeps earning 5%-now that's an arms length transaction-by the people who brought you CDO's and derivatives-I suggest anyone do there own due diligence and take Mr. Ziegler's piece with a grain of salt until then.
Wednesday, 01 July 2009 15:15 EST - Posted by Bill
I believe the powers that be WANT a higher gold price. A huge dollar devaluation against gold would work just fine for an indebted country.
I believe the OBVIOUS manipulation is designed to stop spikes causing embarrasment, not to cap permanently. They want an orderly devaluation over several years, not a colapse.
But please Mr. Zeigler, don't deny manipulation. Anyone that has traded gold futures sees 'them' turn up and sit on the bids all day long. Sometimes they let it go, sometimes they sit on it all day. Sometimes it starts in London. Sometimes in New York. But don't tell me the huge sell orders that fly in at key resistance, and just beyond it, is just noise. they show their hand and it is a firm hand. No other market will see sellers just ABOVE resistance. That is a way to go bankrup and all traders know it. But gold has them hit it so hard on breakouts some days it has to be BIG boys manipulating. Any one who sees it and then doesn't acknowlege it seems strange is not paying very close attention to their market or is in denial.
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