Recent Revelations of Massive Fraud in $5.4Trillion Gold Market

[wwswimming]

the Commodities Futures Trading Commission recently had some hearings which have not been mentioned at all in the US media.

http://kingworldnews.com/kingworldn...lass_files/Andrew%20Maguire 3:30:2010.mp3

Andrew Maguire is a metal trader & whistleblower.

GATA is the gold anti-trust association.

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/31_GATA_files/GATA 3:31:2010.mp3

second webcast at King World News.

it turns out the ratio of paper gold to physical gold is 100 to one. the US government collaborates with JP Morgan to suppress the price of gold.

one of the ways JP Morgan does that is buy "naked shorting". in the past, they have been able to buy their way out of contracts, instead of providing physical metal.

long story short, it looks like some very deep-pocketed investors are calling JP Morgan's bluff, and "demanding physical". that means they won't accept money at contract expiration.

so it's basically JP Morgan + US gov. on one side, with the ability to print infinite amount of money, vs. holders of US FRN's (federal reserve notes) around the world who have just learned about the 100:1 ratio.

should be interesting ... and volatile.

the US media probably won't be covering it, for a while.

 

[Mxylplyx]

I'm confused. Are federal reserve notes supposed to be redeemable for gold? The US dropped the gold standard some time ago. This stinks a little of Ron Paul anti-fiat currency activists.

 

[DaveSimmons]

Given your Bernie Madoff nonsense about the SIPC paying "unlimited amounts at taxpayer expense" (when in the real world it's a $500 K limit per person, and industry-funded) I think I'll wait for credible news sources instead of MP3 files.

Edit: linked for the lazy, note that as of this edit the OP was never corrected:
http://forums.anandtech.com/showthread.php?t=2062897

... but if you do find some better sources (no YouTube videos please) then I'd be interested in reading them.

 

[dullard]

This stinks a little of Ron Paul anti-fiat currency activists.

Only a little?

 

[theeedude]

This paper vs physical argument comes up a lot in gold-bug circles. I wouldn't call it "recent" though.

 

[bamacre]

Only a little?

OMG the NYP is in on it!

 

[bamacre]

I wouldn't call it "recent" though.

LOL, yeah, nor would I.

 

[totalnoob]

I believe the 100:1 leverage was in the SILVER market, not the gold market. Silver is a tiny market compared to gold (only around $4-5 billion I think). That should make it much easier for investors to force a monster short squeeze.

 

[Blackjack200]

This happens AFAIK, for every commodity. There are far more contracts out there than there are actual porkbellies, barrels of Brent Crude, or bushels of wheat. Short sqeezes do happen as a result.

 

[halik]

Hehe hilarious how gold is a defacto fiat, isn't it? As soon as the commodity becomes an investment vehicle, you can make synthetic vehicles left and right.

If I create an ETN that replicated the performance of nymex traded gold, what difference does it make to your portfolio? You can either have a gold brick or equal amount of shares of my ETN and the position will be identical.

 

[lothar]

Hehe hilarious how gold is a defacto fiat, isn't it? As soon as the commodity becomes an investment vehicle, you can make synthetic vehicles left and right.

If I create an ETN that replicated the performance of nymex traded gold, what difference does it make to your portfolio? You can either have a gold brick or equal amount of shares of my ETN and the position will be identical.

Yeah...I never quite understood the hard-on some people were getting on having "physical" gold.
You'd have to be a moron to own physical gold when you can own a company stock like FCX IMO.

 

[Blackjack200]

Yeah...I never quite understood the hard-on some people were getting on having "physical" gold.
You'd have to be a moron to own physical gold when you can own a company stock like FCX IMO.

I don't know, makes perfect sense to me: gold is what you buy if you're a paranoid alarmist. They probably want the physical gold so they can bury it in the backyard next to the fallout shelter.

 

[lothar]

I don't know, makes perfect sense to me: gold is what you buy if you're a paranoid alarmist. They probably want the physical gold so they can bury it in the backyard next to the fallout shelter.

"Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."
-Warren E. Buffett

When I see Warren Buffett, Bruce Berkowitz, and Ian Cumming/Joseph Steinberg buy gold, I'll consider it as a good investment.

 

[theeedude]

Hehe hilarious how gold is a defacto fiat, isn't it? As soon as the commodity becomes an investment vehicle, you can make synthetic vehicles left and right.

If I create an ETN that replicated the performance of nymex traded gold, what difference does it make to your portfolio? You can either have a gold brick or equal amount of shares of my ETN and the position will be identical.

One is your PROMISE to pay the NYMEX price of gold, the other is actual gold in hand. People buy gold as insurance for situations when PROMISES are going to mean very little.

 

[dawp]

I thought this was going to be about all those TV ads that are pushing gold.

 

[Zorkorist]

You won't see them buying at $900/oz.

-John

 

[Zorkorist]

I thought this was going to be about all those TV ads that are pushing gold.

It is.

These fools are talking about buying gold.

-John

 

[Joepublic2]

Gold is just a commodity. Insurance company stock with the demo bill, though...

http://www.opednews.com/articles/Health-insurance-company-s-by-background-n015e-091220-88.html

Made 32k over the last 6 months betting that the demos had no spine. I want to cash out now, but I remember that the insurance comps have Obama and Co. on a short leash and he/congress/senate will send some signals if they're getting ready to dump.

 

[halik]

One is your PROMISE to pay the NYMEX price of gold, the other is actual gold in hand. People buy gold as insurance for situations when PROMISES are going to mean very little.

It's not a promise to pay, it's an asset like anything else. I can synthetically create a risk free vehicle (say backed by a pool of treasuries) with long and short side and move the principal in between the two to replicate gold performance. *

If you bought gold at $1200/oz, how much of an insurance would it be today?


* say $200M, split 50:50 between the long and short pool. If gold goes up 5%, at EOD I'll move 5M from the short pool to the long pool. Voila! Synthetic gold ETF that's risk free as far as the underlying goes and I can use the yield on the Tnotes to pay for my admin and xaction costs.

 

[ShawnD1]

I don't know, makes perfect sense to me: gold is what you buy if you're a paranoid alarmist. They probably want the physical gold so they can bury it in the backyard next to the fallout shelter.

This in itself doesn't make a lot of sense. If the world is ending, I'll buy guns and bullets. Instead of trying to convince someone to give me food in exchange for heavy metal that is almost useless, I can just shoot them and take the food.


In other news, nobody cares about gold. No sane person owns gold. It never makes money because it's not a business. It doesn't pay interest because it's not a bond. It's worthless garbage that can only be sold to other Ron Paul supporters.

 

[Thump553]

This happens AFAIK, for every commodity. There are far more contracts out there than there are actual porkbellies, barrels of Brent Crude, or bushels of wheat. Short sqeezes do happen as a result.

Bingo, end of thread.

And the OP should certainly know that the USA has been off the gold standard for decades, probably since before he was born.

 

[wwswimming]

This paper vs physical argument comes up a lot in gold-bug circles. I wouldn't call it "recent" though.

what's recent is the LBMA being caught with their pants down. taking $54 billion worth of gold and re-selling it 100 times over, which works until people start demanding physical.

more info at Zero Hedge
http://www.zerohedge.com/article/fo...onfirms-lmba-otc-gold-market-paper-gold-ponzi

http://www.zerohedge.com/article/whistleblower-exposes-jp-morgans-silver-manipulation-scheme

transcript, players
GATA - Adrian Douglas (concerned about fraud & other price suppression schemes in gold market)

CFTC - Gensler - i think. CFTC is supposed to be the regulator - CFTC = Commodities Futures Trading Commission.

Jeffrey Christian - metals trader, trying to keep up the cover-up going but making some very interesting admissions anyway.

Andrew McGuire - whistleblower & career metals trader.

 

[nonlnear]

So when people uncover these manipulation schemes that make certain large and sudden market movements so easy to predict, why do they make Chicken Little posts on the internet instead of making billions of dollars? If I knew how JPM was going to kick the price of gold or silver around, I'd be pleased as punch to take their money.

 

[halik]

what's recent is the LBMA being caught with their pants down. taking $54 billion worth of gold and re-selling it 100 times over, which works until people start demanding physical.

more info at Zero Hedge
http://www.zerohedge.com/article/fo...onfirms-lmba-otc-gold-market-paper-gold-ponzi

http://www.zerohedge.com/article/whistleblower-exposes-jp-morgans-silver-manipulation-scheme

transcript, players
GATA - Adrian Douglas (concerned about fraud & other price suppression schemes in gold market)

CFTC - Gensler - i think. CFTC is supposed to be the regulator - CFTC = Commodities Futures Trading Commission.

Jeffrey Christian - metals trader, trying to keep up the cover-up going but making some very interesting admissions anyway.

Andrew McGuire - whistleblower & career metals trader.

I would bet that GLD and similar ETFs have absolutely no clause to demand physical. Like i mentioned above, if Gold is a speculative investment vehicle, physical makes no sense.

 

[Jhhnn]

The whole thing is a tempest in a teapot, because cash settlement is the usual form of settlement in any commodity bet. And that's what we're talking about, a bet, rather than a purchase of any tangible good.

Actually buying gold is different than investing in gold as a commodity, and anybody who understands the market knows it. If I want to actually buy gold, I can do so, pay cash and take delivery on the spot. Buying a contract of any sort is buying a promise to pay, however, and is therefore subject to the usual caveats.

Claiming that the current situation is both a ponzi scheme and a way to suppress gold prices is an absurdity. Ponzi schemes don't suppress the price of an underlying asset, they inflate it...