Central Banking: A Blight On Humanity

[Peter Presland]

I doubt it has escaped the notice of anyone here that gold is finally trading well above £1,000 per oz. with Friday's COMEX close and the preceding few days well above the previous nominal record of £1,032 (That's still way below the inflation adjusted record BTW). Here are a couple of credible commentaries detailing events that allegedly were the trigger for the price surge. I consider this explanation, or something very close to it, to be plausible. Open interest on the COMEX has now reached astronomical and totally unprecedented levels in both gold and silver, with the Commercials (ie the guys on the short side) behaving in a way that we have not seen before. They are clearly paranoid. Along with a host of other unprecedented monetary extremes, this is another major indication that the Banksters really are beginning to lose it and we are approaching a major dislocation event.

From Goldseek

By: Rob Kirby

Impeccably reliable sources have informed me that as recently as Sept. 30, 2009 – the last possible day of trade in the Sept. 09 gold futures – a number of well-heeled market participants “bought” substantial tonnage worth of gold futures on the London Bullion Market [LBMA] and immediately told their counterparties they wanted to take instantaneous delivery of the underlying physical bullion.

The unexpected immediate demand for substantial tonnage of gold bullion created utter panic in at least two banks who were counterparties to this trade – J.P. Morgan Chase and Deutsche Bank – because they simply did not posses the gold bullion which they had sold short [an illegal act which in trading parlance is referred to as a “naked short”].

Because these banks did not have the bullion to honor their contracted commitments, one or both of them approached the counterparties and asked if there was any way they could settle this embarrassing matter quietly on a “cash basis” to absolve the banks from fulfilling their physical bullion delivery obligations. The purchasers were not interested in a ‘cash settlement’ and demanded delivery of physical bullion giving these banks 5 business days to resolve the situation. A premium of as much as spot plus 25 % [that would be 1,250 – 1,300 per ounce of gold] was offered to settle this matter in fiat money instead of the embarrassment of a very public “failure to deliver” on the part of the London Bullion Market Association.

Earlier this week, no less than two Central Banks became involved in effecting the physical settlement of this situation. One of these Central Banks was British [that would be the Bank of England] – and reportedly, even they were only capable of providing less than pure, non-compliant gold bars that did not meet good delivery standards stipulated by the LBMA. Like it or not, this is a testament to lack of physical gold available, folks.

To summarize: Banks like J.P. Morgan Chase and Deutsche Bk. - who sold endless amounts of gold futures at prices of 950 – 1025 and then tried to make “side deals” with the folks they sold the futures to – offering them spot + 25 % [let’s say 1,275 per ounce] to settle in fiat – only after their counter parties demanded substantial tonnage of physical gold bullion.

Stunningly, if accurate [and there is absolutely no doubt in my mind that this is not accurate], this means that gold is already in SEVERE backwardation and this fact is being hidden from the public.

Then, to protect the “integrity” of the futures market as a ‘price discovery mechanism’ – Central Banks – aiding and abetting - plunder the sovereign assets of their respective countries to bail out their agents / friends in an attempt to ‘sweep the whole bloody mess under the carpet’.

To think that anyone wonders why our financial system and fiat money will soon to be TOAST?

From Harvey Organ Blog:

We have 5 or 6 confirmations on the above caper. The venue was the LBMA which is the centre of all physical gold and silver trading in the world. The LBMA volume is 400% of that on the comex!

There is now no question that the counterparty purchasing the gold was the Chinese. Please note the day that they bought the gold. It was the last day of Sept and the last day that a contract for Oct can trade. (Although Kirby did not state the exact amt of gold, other sources
revealed that it was 20 tonnes of gold). What happened here is shear genius. The Chinese disguised themselves as if they were going to roll ie. pretrend that they were going to roll to December contracts.

So they took the rollers Oct contracts and tendered to a surprised LBMA. The LBMA did not have 20 tonnes of physical gold. The Chinese knew this as they were shut out at the window for their small normal purchases of gold
during regular business hours at the two London fixes. The Chinese have been quite angry lately due these events:

1, the oil problem last year where they purchased huge number of contracts of oil at prices well above $130.00 per barrel. The Chinese wealth funds have indicated that they are going to renege on those contracts.
2.the huge number of bonds rated AAA that are basically junk and not marketable
3.they have not got their gold from the IMF yet.
4.they wished the USA to remove Ben Bernanke and that was not done.
5.the usa is purchasing all of their debt with freshly minted dollars much to the chagrin of the Chinese (quantitative easing)
6.the usa money supply is rapidly increasing with the Federal debt now at 11.9 trillion dollars. China is also alarmed that future obligations due to usa citizens as they age is approximately 60 trillion usa dollars.
7.the usa engaged in a trade war with the chinese with respect to tires and the Chinese reciprocated on many fronts of their own.

The cartel members immediately made a phone call upstairs to the head offices of the major central bankers ie. the Bank of England, the Euro Central Bank and the Fed. These bankers tried to offer a huge premium of 25%
to get the Chinese to take dollars instead of gold but to no avail. They were given an extention of 5 days. It seems that the Bank of England found some .9000 gold (not good delivery bars) in the hope that the Chinese would be satisfied. We did not know if they were completely satisfied in total.

The big question is this: how did the Bank of England get .900 gold? The only official gold that is .9000 gold and nopt .999 is gold held at Fort Knox. Did the Fed ship gold from Fort Knox over to England?
Or did the Fed ship .900 gold first to the Bank of NY to satisfy the French (in 1968). Maybe this gold was eventually shipped from NY over to the Bank of England which then put that gold on deposit for the Bank of France.
Please remember this: England is one of two major banks as a foreign depository. However in England you must put your gold on deposit and the English can do whatever they like with the gold. However it is an obligation of the Bank of England. If they cannot deliver gold back to a depositor they then default in much the same manner as a depositor comes for his printed dollars. (the other foreign depository is the Federal Bank of NY. The foreign held gold however is earmarked gold and the usa cannot touch this gold)

Is it possible that the Bank of France decided to bail out the Americans one more time?

I will leave these unanswered questions for you to decide. However the following point is clear: USA citizens gold somehow has been shipped overseas and has been sold to satisfy a foreign countries demand for settlement of a claim. This gold is not Government's gold as set by the usa constitution. They need an act of Congress to sell gold.

[Jan Klimkowski]

Peter - thank you for this. I've been wondering what was going on in the Land of Gold. Only today, flicking through satellite channels, I went from one commercial to another offering "Cash for Gold". Paraphrase: Post us your gold jewellery, and we will give you top market rate and melt it down.

I've never seen any adverts like this before.

If the hypothesis outlined in your post above is correct, and the Chinese have demanded physical delivery of gold which J.P. Morgan Chase and Deutsche Bank have been unable to deliver, how do you suspect this will play out in goldbug, financial market and Central Bank land?

[Peter Presland]

If the hypothesis outlined in your post above is correct, and the Chinese have demanded physical delivery of gold which J.P. Morgan Chase and Deutsche Bank have been unable to deliver, how do you suspect this will play out in goldbug, financial market and Central Bank land?

Jan

To be honest, I really don't know. That's the short answer.

I still dabble in day-traded gold futures but, in line with unprecedented COT levels and the changing behaviour of the commercials category outlined in those articles, my system is simply not what it was and I will likely stop day-trading altogether. The dynamics have been altering subtly over a good few months now such that old algorithms have broken down and no amount of tweeking seems to make intra-day price action predictable enough to turn a reliable profit any more. Probably no bad thing I guess since it is a bloody useless occupation anyway - but like I've said before, I don't make the rules.

On the broader question of Gold Bug fever and the alleged 'caught-short' positions of the bullion banks: To the extent that they can still rely on the CB's to exert a measure of real control (ie suppression) of the gold price there will probably not be a default comparable to Lehmans or Bear Stearns. In spite of what seems to have been a surprise warning shot across the bows, I believe the CB's ARE still determined to exert that control despite obvious increasing Chinese involvement. In my view it is the likely existence of David Guyatt's 'black gold' in vast quantities largely controlled by the Western CB's cartel that is the real wild card. Arguably, bringing increasing amounts of it into play with the sort of devious cunning native to them, could seriously shaft anyone foolish enough to bet the farm on a real price explosion. In fact I don't think the Chinese want to precipitate a price explosion either. They are probably well aware of the 'black gold' and who controls it since a large proportion of it belonged to them before being stolen by the Japs. They are probably just intent on getting it back as an asset likely to retain value rather better than the vast hord of US paper promises they currently hold.

Anyway, all I know for sure is that the financial markets generally (Equities, Bonds, FOREX) and the PM's markets in particular have a very strange fractious feel to them right now. We are in seriously uncharted territory and anyone who believes 'the recession' is over is living in cloud-cuckoo land IMHO. All that together with the global military and domestic security stuff fills me with foreboding. But other than being determined NOT to be surprised by anything (having a few weeks stash of food, cash, fuel, a bit of bullion - that sort of thing) I'm buggered if I know what I can do about any of it except be ready to enjoy the fireworks.

[Magda Hassan]

Peter - thank you for this. I've been wondering what was going on in the Land of Gold. Only today, flicking through satellite channels, I went from one commercial to another offering "Cash for Gold". Paraphrase: Post us your gold jewellery, and we will give you top market rate and melt it down.

I've never seen any adverts like this before.

On entering my local Westfield Shopping Centre (Frank Lowry) I was greeted by a table with scales and literature and people offering to buy any gold jewelery 'top prices paid' 'turn your gold into cash'. I haven't seen anything like this before either.

They are probably well aware of the 'black gold' and who controls it since a large proportion of it belonged to them before being stolen by the Japs. They are probably just intent on getting it back as an asset likely to retain value rather better than the vast hord of US paper promises they currently hold.

Exactly!

[David Guyatt]

I have also noted the sudden appearance of several (maybe four or five different companies) TV adverts where punters can send in their gold jewelry and get cash in exchange - and figured that the availability of the metal was low and that its price was about to be hiked.

But this same sort of naked short selling (assuming the reports are indeed accurate) has happened before and was highlighted by GATA for months and months - but then appeared to quieten down and, one assumes, were quietly resolved behind the scenes.

[David Guyatt]

The more I think about these reports, the more I ponder their veracity. As a fully ordained cynic, I start to wonder if there is a deeper purpose to this.

Leaking reports to internet Goldbugs and pressure groups of Chinese insisting on physical delivery (when they must know there isn't any), smacks of a sly market LBMA manipulation.

Begin with a 1-2 month lead period where you arrange to buy cheap jewelry gold, make it fit for London Delivery and then leak reports of shortages of physical to create a price spike. Sell.

It's a flavour of Private Eye's perennial law firm: Sue, Grabbit & Runne - or the metal market equivalent: Sowe, Reape & Prosper.

[Peter Presland]

More evidence of a mad scramble to find 'London Good Delivery' standard Gold bars.

For info 'GLD' is the ticker for the largest of the Gold Exchange Traded Funds. These funds claim to posses 'allocated' gold bars to the total fiat value of the fund and publish daily lists of their serial numbers. They are still a very popular way for Jo public to invest in what they think is Gold. Most traders acknowledge that the physical holdings of the ETF's are just too big a temptation for those in control NOT to use it just an itsy-bitsy bit (or more) now and then to nudge the paper market - or whatever.

For further info "Allocated Gold' means serial numbered bars that are allocated to a particular owner (or fund) and cannot (or rather should not) be used by the bullion bank for trading purposes. 'Unallocated Gold' is simply a paper claim on the Bullion Bank for the real thing, leaving the bank free to trade with the stuff to its hearts content until called upon to deliver it.

In a follow-up to the first article posted in this thread, Rob Kirby provides more snippits which have a solid ring to them again.

By: Rob Kirby

Earlier this week, I wrote about possible “incongruities” in the gold bar registry of GLD. Specifically, here is what has happened to the GLD bar list which is published each Friday at approximately 4:30 pm EST. An alert reader I communicate with [who shall remain anonymous] has been documenting the length of the published GLD bar list:

-on Friday, Sept. 25 – the list was 1,381 pages long
-on Friday, Oct. 2 – the list was 208 pages long
-on Friday, Oct. 9 – the list was 195 pages long
-then, on Wednesday, Oct. 14 – after questions were being raised about the strange machinations with the bar list in chat rooms on the internet – the list was back up to 855 pages long

Something TRULY stinks here. No explanation has been offered for the DRAMATIC swings in this list. Where gold is concerned nothing happens by accident.

How Precious is Settled in London:

Loco London clearing is the daily paper unallocated transfers between London clearers; the transfers of gold and silver only across accounts held between clearers for their own accounts and third parties; and, as mentioned earlier, the clearing out of Zürich for the platinum group metals. It avoids security risk and the cost of physical movement of bullion; has standard market practices…

[However] Both allocated and unallocated account agreements are available. There are allocations for credit purposes, bilateral credit agreements between clearers, and London good delivery….

Some short definitions: an unallocated account is an account where specific bars are not set aside, and the customer has a general entitlement to the metal. This is the most convenient, cheapest, and most commonly used method of holding metal. The allocated account, on the other hand, is an account opened when a customer requires metal to be physically segregated, and this needs a detailed list of weights and assays….

To Summarize:

- GLD gold bullion inventory is principally held in London
- I’ve already written about some large [allocated] physical transactions that were settled last week in London under VERY strange circumstances indicative of a shortage of physical gold bullion for good delivery.
- At the same time, significant irregularities appeared in the GLD bullion bar list

Conclusion:

- is the correlated timing of these unusual events a coincidence???? Could GLD inventory have been utilized to effect these physical settlements, which in turn, would have required the “sanitization” or doctoring of the GLD bar list to avoid MANY obvious, easily detectable, duplications of bar numbers?

I discussed these irregularities with a very informed source [the same one who informed me of specific [allocated] trades settled last week] and the reply I received was as follows:

“What can I tell you that you don't already know?

They are all scrambling big time since a number of large interests have demanded audits. Independent auditors are NOW descending onto the various vaults to verify, validate and certify.

They can move this as many times in circles as they like to try to fool people.

In an Asian depository they’ve found “Good Delivery” bricks that had been gutted and filled with tungsten.

Soon, there will be xxxx hitting the fan all over place.”

These circumstances suggest that a VERY REAL physical short squeeze is in progress RIGHT NOW and a gang of fraudsters from “fiat-crack-houses” [Central Banks] are attempting to finesse their losing over-sold hand in an elaborate Three-card Monty. With reports of independent physical audits now being conducted and mysterious happenings with GLD’s bar list – GLD has NEVER looked more suspect.

Hope you’ve all got some physical gold already.

It really does look like we're about to see some fireworks.

[David Guyatt]

It will be more than interesting to watch this unfold Peter, if indeed it does.

Thanks for keeping us posted on this.

[Peter Presland]

David

I'm really just a spectator too. My trading activity focuses on intra-day price movements and, like I said before, they are becoming ever more unpredictable (on the measures I've become used too anyway) and I'm close to quitting.

I still have trouble factoring in the vast quantities of the black stuff. Were it not for its existence, I too would be a 'Gold Bug'. As it is I know that to invest in gold is to bet against the entire Central Banking Cartel which is arguably foolhardy, even discounting the possibility that it just may have the mother of all wild-cards up its sleeve. They may be crooks, but they're not fools and from where I'm sitting they still appear determined to stay in control of the PM's market. That's not to say that many of their functionaries (ie the bullion banks that may or may not enjoy certain stop-loss-type guarantees and other privileged arrangement) are not under severe pressure though - and certainly all those who have made a merry living riding their coat tails this past 25 years or so.

Anyway, the price could still near double and not beat the 1980's inflation adjusted record, so my best guess is that something like that is probably what will happen, before a dramatic collapse back to somewhere near where we are now. A dislocation event in other words, that will serve the purpose of all such events, namely to screw the unwary and put the object of the speculation back where it belongs - in the pockets of the cartel and its friends.

[Magda Hassan]

Harrods to sell gold bullion for first time

It is renowned for its glitzy clientele and upmarket Knightsbridge location, but shoppers at department store Harrods will from today be able to buy the ultimate luxury accessory – gold bars.



By James Hall, Retail Editor
Published: 12:01AM BST 15 Oct 2009
From this morning, Harrods will start selling gold bullion and coins over the counter.In a sign that the credit crisis has left his gilded customer base largely untouched, Harrods owner Mohamed Fayed has teamed up with Produits Artistiques Métaux Précieux (PAMP), the Swiss refiner, to sell gold in the store.



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Aimed at private investors, the gold will be sold at the Harrods Bank branch on the lower ground floor of the West London store.
Poor interest rates and falling property prices have left wealthy investors looking for alternative asset classes to put their money into. A weak dollar yesterday pushed the gold price to a record high of $1,072 an ounce.
Chris Hall, head of Harrods Gold Bullion, said: "The financial environment has kindled a new demand for physical gold among private investors in Britain. For many people this is a new and unfamiliar asset class that demands absolute trust. Until now London has had no well-recognised name serving this market."
"Harrods saw the opportunity to help individuals buy physical gold in a prudent manner."
Mehdi Bakhordar, managing director of PAMP, said: "Harrods stock our full range and are now the only location in London where investors can purchase a 12.5kg gold bar 'off the shelf'."
Harrods, famed for its gold and green livery, has never sold bullion before.



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