UPDATED 18th April 2013: IMPORTANT The key element in the reported story about 'the platform shutting down' has not since been substantiated. The Fundamental View blog did a followup on this story, and is recommended reading. Moral of the story: 'one specific trader's internet woes does not reflect the industry at large and needs to be tested and validated just like any other piece of information, regardless of the emotive surroundings at the time'.
http://thefundamentalview.blogspot.com.au/2013/04/shedding-light-on-how-gold-market-was.html
But please also view our own comments section here which explains our rationale behind publishing this material (and also keeping the post published). We like to consider all viewpoints and raise discussion.
----------------------------------------------------- original text:
This is a follow up post from "How to crash a market" which raised more than a few eyebrows.
Put on your smoking jacket. Pour yourself a scotch. Put your feet up on a cowering servant or submissive and read on.
L.C.
How the Gold Market was Crashed By Bill Downey
There’s been a recent huge draw down of physical gold at the New York COMEX and at the JP Morgan Chase depository. Look at the physical market draw down on the charts below. It has taken a drastic plunge.
HOUSTON -- we have a problem.
Physical inventory draw down at JPM
Charts by Nick Laird of www.sharelynx.com
Physical Drawdown at COMEX
Charts by Nick Laird of www.sharelynx.com
You can imagine the dilemma this is causing for the market interests behind these inventories. If the inventory runs out and one cannot meet deliveries then it has to be bought on the open market. Not only that but it could cause a run up in prices that would hurt the shorts in the market.
So what to do?
There is only one way out of this for the market controllers would be to devise a plan that would collapse the market and trip up all the stops at the correction lows in gold of 1525 thereby setting off the stop loss orders under this important market low. And what if the plan included a way to stop the physical market from purchasing gold under 1525 while that correction was underway?
And how can that happen?
They have to hatch out a plan and carefully orchestrate it in a series of events that takes the gold market by surprise and force the players out of their positions.
Read on for today’s lesson in market manipulation and allow me to relay my speculation about what transpired last week.
A successful ambush usually involves surprise.
One of the main new weapons in the FEDS arsenal is TRANSPARENCY.
One of the main new weapons in the FEDS arsenal is TRANSPARENCY.
After a lifetime of silence the FED all of a sudden has come out of the closet and has decided that the best thing for the market is to be transparent and to that end they now have televised communication meetings with the general public so chairman Bernanke can explain the FED policy and answer any questions that the market has on its mind as well as the usual minutes that get released to the markets that review the policy decisions and discussion of prior meetings.
Why does the Fed need to explain what they are doing now?
Well it isn’t because everything is going just fine. Put it this way. They must figure when you have 50 million people on food stamps and the Dow Jones is going up a few hundred points a week and making all time highs and you have 16 trillion dollars in debt and interest rates are zero, its best to have a communiqué every month before someone asks you to explain what is going on. It’s called staying ahead of the curve if you will. If you tell them what’s going on it makes it look like you know what you’re doing. Otherwise all we have is the statistics and by themselves they tell you something is wrong, something is terribly wrong. So they have become transparent.
During the last communiqué the chairman made it abundantly clear that QE was here to stay until the unemployment rate reached acceptable levels. This communiqué whether by personal appearance or by releasing the FOMC minutes of the prior meeting is something the FED relies on so market participants can remain comfortable and abreast of Fed monetary policy.
Three strikes and you’re out
The FOMC minutes from the last meeting were due for release during last week. But a funny thing happened. They got released EARLIER than expected. It was all a big mistake and the FED let the SEC and the CFTC know right away that the error had occurred. And lo and behold even with all its transparency there happened to be some language we didn’t get updated on until the FOMC minutes were released. The notes say that several members have been discussing cutting back on the stimulus. That was strike one. It got the gold market thinking that stimulus cuts might be coming.
Strike one
Surprise number two
Then a bombshell was released from news sources. It was reported that Cyprus would have to sell 400 million Euro’s of gold as part of the bailout package of raising money for their failed banking system. Gold prices came down to 1550 on the news and the day passed by. Even though Cyprus bankers tell us the next day that they didn't discuss selling any gold, market jitters seemed to remain and Friday was just around the corner. This was strike two.
Now we need a strike three and you’re out. Gold is a nervous market to begin with as a lot of people have already lost a lot of money in the last six months.
With Gold at 1550, all that is needed for the market to drop is to get one more push where all the stops are (just below the 2 year low of 1525).
The selling began in the Friday sessions overseas. By time we got to the New York COMEX gold open, the price was down to 1542. Now all the players are there and the volume and liquidity is there to create the final blow to the market.
And then the attack began. Wave after wave of selling until gold got to 1525. Then they break down the price below the two year low and all the stops that have been accumulating there start getting tripped up and the selling accelerates as it begins to feed on itself. The physical market for gold sees this as a gift and gets ready to make their move and buy up the gold.
Now comes the part that is pure genius or a total coincidental thing that just so happens to be a gift to those who are short the market and those who would be responsible to deliver gold should the inventory deplete.
ALL OF A SUDDEN THE LONDON PHYSICAL PLATFORM THAT BUYS AND SELLS PHYSICAL GOLD GETS LOCKED UP. THE SYSTEM FREEZES.
Read more
http://thefundamentalview.blogspot.com.au/2013/04/shedding-light-on-how-gold-market-was.html
But please also view our own comments section here which explains our rationale behind publishing this material (and also keeping the post published). We like to consider all viewpoints and raise discussion.
----------------------------------------------------- original text:
This is a follow up post from "How to crash a market" which raised more than a few eyebrows.
Put on your smoking jacket. Pour yourself a scotch. Put your feet up on a cowering servant or submissive and read on.
L.C.
There’s been a recent huge draw down of physical gold at the New York COMEX and at the JP Morgan Chase depository. Look at the physical market draw down on the charts below. It has taken a drastic plunge.
HOUSTON -- we have a problem.
Physical inventory draw down at JPM
Charts by Nick Laird of www.sharelynx.com
Physical Drawdown at COMEX
Charts by Nick Laird of www.sharelynx.com
You can imagine the dilemma this is causing for the market interests behind these inventories. If the inventory runs out and one cannot meet deliveries then it has to be bought on the open market. Not only that but it could cause a run up in prices that would hurt the shorts in the market.
So what to do?
There is only one way out of this for the market controllers would be to devise a plan that would collapse the market and trip up all the stops at the correction lows in gold of 1525 thereby setting off the stop loss orders under this important market low. And what if the plan included a way to stop the physical market from purchasing gold under 1525 while that correction was underway?
And how can that happen?
They have to hatch out a plan and carefully orchestrate it in a series of events that takes the gold market by surprise and force the players out of their positions.
Read on for today’s lesson in market manipulation and allow me to relay my speculation about what transpired last week.
A successful ambush usually involves surprise.
One of the main new weapons in the FEDS arsenal is TRANSPARENCY.
One of the main new weapons in the FEDS arsenal is TRANSPARENCY.
After a lifetime of silence the FED all of a sudden has come out of the closet and has decided that the best thing for the market is to be transparent and to that end they now have televised communication meetings with the general public so chairman Bernanke can explain the FED policy and answer any questions that the market has on its mind as well as the usual minutes that get released to the markets that review the policy decisions and discussion of prior meetings.
Why does the Fed need to explain what they are doing now?
Well it isn’t because everything is going just fine. Put it this way. They must figure when you have 50 million people on food stamps and the Dow Jones is going up a few hundred points a week and making all time highs and you have 16 trillion dollars in debt and interest rates are zero, its best to have a communiqué every month before someone asks you to explain what is going on. It’s called staying ahead of the curve if you will. If you tell them what’s going on it makes it look like you know what you’re doing. Otherwise all we have is the statistics and by themselves they tell you something is wrong, something is terribly wrong. So they have become transparent.
During the last communiqué the chairman made it abundantly clear that QE was here to stay until the unemployment rate reached acceptable levels. This communiqué whether by personal appearance or by releasing the FOMC minutes of the prior meeting is something the FED relies on so market participants can remain comfortable and abreast of Fed monetary policy.
Three strikes and you’re out
The FOMC minutes from the last meeting were due for release during last week. But a funny thing happened. They got released EARLIER than expected. It was all a big mistake and the FED let the SEC and the CFTC know right away that the error had occurred. And lo and behold even with all its transparency there happened to be some language we didn’t get updated on until the FOMC minutes were released. The notes say that several members have been discussing cutting back on the stimulus. That was strike one. It got the gold market thinking that stimulus cuts might be coming.
Strike one
Surprise number two
Then a bombshell was released from news sources. It was reported that Cyprus would have to sell 400 million Euro’s of gold as part of the bailout package of raising money for their failed banking system. Gold prices came down to 1550 on the news and the day passed by. Even though Cyprus bankers tell us the next day that they didn't discuss selling any gold, market jitters seemed to remain and Friday was just around the corner. This was strike two.
Now we need a strike three and you’re out. Gold is a nervous market to begin with as a lot of people have already lost a lot of money in the last six months.
With Gold at 1550, all that is needed for the market to drop is to get one more push where all the stops are (just below the 2 year low of 1525).
The selling began in the Friday sessions overseas. By time we got to the New York COMEX gold open, the price was down to 1542. Now all the players are there and the volume and liquidity is there to create the final blow to the market.
And then the attack began. Wave after wave of selling until gold got to 1525. Then they break down the price below the two year low and all the stops that have been accumulating there start getting tripped up and the selling accelerates as it begins to feed on itself. The physical market for gold sees this as a gift and gets ready to make their move and buy up the gold.
Now comes the part that is pure genius or a total coincidental thing that just so happens to be a gift to those who are short the market and those who would be responsible to deliver gold should the inventory deplete.
ALL OF A SUDDEN THE LONDON PHYSICAL PLATFORM THAT BUYS AND SELLS PHYSICAL GOLD GETS LOCKED UP. THE SYSTEM FREEZES.
Read more
38 comments:
How the Gold Market was Crashed By Bill Downey
I didn't know it was him who did it.
Victor
Louis,
why are we still talking about this latest fantasy? it's exactly the kind of crap that does a massive disservice by misinforming everyone who reads it and simply serves to re-enforce confirmation bias. to calm the masses.
so people who wanted to buy gold couldn't buy gold, so they sold it instead? really? that makes sense to you?
but most importantly - there is no "system" that can shut down the OTC market. ya know why? BECAUSE IT"S AN OTC MARKET!
that's what OTC means - over the counter - they pick each other up and deal on the phone.
now, if you want to tell me that the zionist pigs crashed the global telephony system in order to prevent the Noble Warriors from buying and stacking physical gold and silver (and platinum, palladium, rhodium, Crude oil, etc etc etc), then you'll obviously be on to something...
ps - ask Bron how the physical market works...
http://www.perthmint.com.au/education-spotprices.aspx
pps - do you want to know why gold went down yesterday? because there were more sellers than buyers. It wasn't an evil cartel. It was guys like Screwtape's very own GM Jenkins... thousands or tens of thousands of guys just like him. many bigger, many smaller...
For the record, both my cell and my landline were working properly all day Friday.
KD,
I am talking about it for a couple of reasons.
1. Bill Downey is someone I have respect for and he is adding more details to what he posted the other and I want to hear what he has to say.
2.Bill Downey is not Jim Willie etc. promising the end of the world with every news letter. Nor does he talk about Evil Empires or any other clap trap.
3. He is not necessarily talking about London or NY etc. but I'll let him explain that on his timeline. I asked him specifically about the OTC stuff and he will address that. At that point the argument either fails or it passes.
For those reasons I want to hear what he has to say and if it turns out that he is wrong or mistaken in any way he will admit it.
While Bill is in an explaining mood he can start by giving the address of this platform:
"ALL OF A SUDDEN THE LONDON PHYSICAL PLATFORM..."
Per KD above, Bill's saying that the world-wide telephone system, mobile and land-line, went down (email too).
Something happened, but it wasn't that.
My guess is that the volume was added to by marginal producers hedging, fwiw. Anyhoo, I am long and expecting a short-squeeze.
S Roche -
massive liquidations are often followed by a sort of V-bottom squeeze.
was that the final liquidation in gold/silver? I have no idea. There is certainly a lot of negative attention and press about gold right now, but I think I'd like to see more negativity from the hard core 'bugs to be confident of a bottom...
Louis -
My point is that the entire PM Ogosphere, as you guys coined the term, continues to make up excuses every time the metals trade lower. these excuses are not reality based.
here's my humble view:
metals became a "gotta own it" asset class. they used to be a place where people went to hide when things got bad, but that changed several years ago.
when your sector is an asset class, and everyone wants in, it's a great thing. see: gold's recent rippage in the summer of 2011 (and again, kinda in the summer of 2012).
but that works both ways - when people want out, all of that capital has to sell. price goes down.
it's not rocket science. it's not a grand conspiracy. these PM bloggers seem not to realize that not everyone takes the metal and buries it in their backyards...
and this gets back to the VALUE of gold, which I really don't want to derail this comment thread on. but if you think about it, gold is the ultimate momentum asset. it produces nothing and is only worth what someone else will pay for it. On the way up, this is contagious and good for price... on the way down, not so much.
(this is when someone usually writes that everything is only worth what someone will pay for it, which is partially right: productive assets have value that we can argue about how to assess - but they have value nonetheless. this is the entire Buffett mantra that he always repeats... I don't want to get sidetracked)
Guys,
There are holes in the story but
I am content to let the story unfold and obviously this is not the final word on this from Bill.
Gold was kicking buffets butt. May still be? The ignorance of kid is stunning for such a good trader. Gold is money . When fiat is being abused it does well. Kid is correct for now but let's see where gold is in 36 months.
As the resident "non expert" I can't help noticing how some "experts" starts frothing at the mouth when anyone dares to mention the market is operating in anything other than a normal manner. Normal trading is the mantra. No "conspiracy" it's just the market. On the other hand you have other "experts" who say it's all an evil conspiracy to steal everyone's money and that Gold and Silver will be hurtling into the stratosphere tomorrow, next week or next year. They like the normal market guys will not consider any other reality.
This is usually the reaction that someone exhibits when they have firmly nailed their colours to a particular mast and cannot countenance any arguments to the contrary. You often see them with their fingers in their ears singing la la la la to block out reality.
To a thicko like me (who doesn't belong to any camp) it's obvious that something abnormal is going on. I get the feeling both "expert" camps are wrong. I think that in reality we are seeing the so called Powers That Be and the rest of the financial World just reacting to events. These event s are caused by people believing they can control financial markets as though it is some kind of science when it isn't.
This market looks just like the effect you get when a trailer starts to get out of control and swings violently from side to side. The driver tries to correct things but normally it ends in a disaster.
I'll hang on to my Gold.
I posted this in the older post but intended it for this follow-up post so pardon me in advance for the dupliation of posts.
I've been doing more digging this weekend as have others.
These are serious claims made by Bill Downey and I made sure to read his entire essay over on his own site to make sure I wasn't missing anything. Many points captivated me and of course lead me to question the validity of the claims he's making here.
He alleges that the physical market was shut out. That one couldn't buy physical if they wanted to. However HE PROVIDES ZERO PROOF to substantiate his claims going so far as to even predict this won't be reported (because in my interpretation of what I've gathered, it DID NOT HAPPEN)
He says;
"VOILA. The perfect excuse and the perfect scenario.
The physical markets couldn’t buy at those low prices.
Let me repeat that. The physical markets couldn’t buy. They could only sell futures to hedge their physical gold positions.
Of course this will all be reported on the news and in the financials right?
Wrong.
None of it will be reported as none of it was reported on Dec 29th, 2011 when the control boyz did the same thing and locked out the computer and left the physical market holding the bag. Not one word hit the papers"
--- Boom ... There's his out.
Don't you think for one moment un the face of a gold sell-off where the financial medial is falling over each other to get the break on any story it can would not have published such a relevant story to the day's events?? Such an event would have hit even one news agency or financial reporting outlet. I cannot accept that it would not have.
Instead, readers are left to believe him because he says so!?!
He continues;
How do I know all of this happened today?
Because I was in direct contact with a big physical dealer out of the mid-east as it was happening. They have taken the time to explain the physical market and how they get SHUT out of the game --- just like they did during the last panic (and physical shortage) in Dec of 2011.
Here is the screen shot of the actual physical market in action from January 4th 2012 that the physical trader sent me.
So he tells us that's what happened on Friday because a dealer told him it was happening. In law we call that hearsay evidence and it isn't admissible for a reason.
According to Downey we have to believe that this is the chain of events leading to a physical buy shut out becuse of his compilation of circumstantial bits and pieces including a "call" he received from a trader. If ever there was a case of selective presentation of facts this is it
I couldn't make up these shennanigans if I wanted to. Downey has made it too easy to attack him on this.
Note on his own website Downey attaches a screenshot from January 4th 12 .. We don't get a screenshot from Friday's events... WHY NOT?
As was told to me by a friend who knows this market better that me, the screen shot is not of a "physical" market but just a trading platform from a bank (one of many, each BB has their own platforms) for trading spot unallocated XAU/USD FX pair.
We coulsnt believe that Downey was trying to pass this off as "the" London platform.
This story wreaks of a fabricated essay, written after the fact to include as much circumstantial and hearsay in it to keep the reader intreagued while at the same time, continues to sell the sexy "maniupulation" story.
The reason why no financial outlet is reporting it is because it didn't happen. Yes, things are really that simple sometimes.
We don't get trading halts without official press releases from the exchange or market explaining the glitch. For example, trading can't go down in New York for 2 minutes with it being reported on somewhere.
I will be running a blog post on this as I complete my own investigation into these claims.
@KD
If Turd's latest is not capitulation I don't know what is.
Here are some stats from Lance Lewis's Daily Market Summary:
GLD gapped down, according to the handbook all gaps get filled;
GLD Puke Indicator set off again creating a cluster of pukes per 2008;
GDX gapped down, see above;
GDXJ 52 week low;
XAU/gold ratio all time low, but only marginal suggesting a reluctance to follow gold lower;
GDM Bullish % reached 0%, last seen at the lows of 2008;
GDM/SPX ratio lowest since 2008;
HGNSI record low of 37.5%
Market Vane bullish consensus all time low;
DSI not quite a new low, suggesting a turn per 2008;
He believes that $85Bln per month of Fed printing is not enough (to avoid deflation) and gold is sensing this first; when the rest of the market acknowledges this, gold will soar anticipating an increase in Fed printing.
fwiw.
@Sroche -
Turd's latest is a defense of a number of people who have PROVEN to either 1) have major lacks of understanding of what they are preaching about or 2) simply make stuff up to fit the audience. Butler. Nelson. Morgan. Maguire - their significant errors of understanding the markets they are trying to analyze are easily documented (I've done some of it on my own blog), but usually ignored. I point this out because for me it's easy to tell who knows what they are talking about and who doesn't, and when you make the kind of errors that many of these guys make, you can be sure they are in the "DON'T KNOW" group. They are story tellers, not market analysts.
I think that when Turd finally realizes that he, and the rest of the audience are being misled, THAT will be the sign of capitulation...
anyway, Roche, you are one of the few on here that might actually take my advice to go read here:
http://pragcap.com/understanding-the-modern-monetary-system-series
if you do so, you'll start to understand why all of the "Fed is printing 85B a month" predictions have failed...
Duggo,
i know that in an earlier comment on another post you said not to be paranoid that you were talking about specific people, but since this is the second time you've made a comment like that after one of my own, let me respond:
I start frothing at the mouth when the charlatans spew utter and complete bullshit in an effort to continue to calm their disciples. That is what this Bill Downey piece is - nonsense, factually incorrect, but the story that you want to be told...
it's terribly sad, so please understand that when I get all wound up about this stuff, it's because I don't like to see the poor souls who aren't quite as well-informed as you are be separated from their wealth.
the emails I get from people who were suckered in by silver misinformation are terribly sad. nauseating.
so I try to help. with reality.
that's all.
Louis -
by the way - if you want me to send you the same screenshot that Downey included in his post, let me know - it's an FX pair quote. I can snap the same shot off my Interactive Brokers trading system.
also, if you look at the first chart which was the intro to his "story" about why the market needed to be crashed, it simply shows that JPM moved some gold from the eligible category to the registered category. MORE deliverable gold... not less...
@ Kid
KD, you seem to dismiss any possibility of an overt market intervention with gold by the official central planners. A bit naive a viewpoint which is why it continues to be an effective strategy. You also ignore the fact that the very pillars of the capital market structure, and by that I refer to the yield curve, is so openly controlled as to horribly distort every asset class pricing and capital allocation. How can gold be different? If you are trying to control interest rates and exchange rates, gold must be controlled as well. It's a three-legged stool.
John -
the way that central planners can intervene in the gold market is by selling their gold.
they are doing the opposite.
one cannot use futures to manipulate the price of the asset past the term of the contract.
so yes, I dismiss the possibility of fantasies like "the Powers That Be made sure that the london physical market system was down, making it impossible for anyone to buy physical gold"
and oh by the way - that didn't happen. the phones were not down in London, so the OTC market was still functioning just fine.
KD,
I respectfully disagree....if you can accept as I do that the paper gold market vastly outnumbers physical and that it is non-collateralized...then it absolutely can be used and is used as a blunt force of intervention by these planners. And there is a distinction to be made between "central planners" (US Fed and Treas) versus central bankers like China, Russia, etc. Those central bankers are indeed buyers of physical, what little can be bought, the central planners (interventionists) are massive sellers of unbacked paper.
KD,
And that same market (as perhaps you as well?) makes no functional distinction between paper gold and real gold (physical) which is what enables this interventionist tactic and makes it effective....the substitute of a credit instrument for physical in a manner that fills the present investment demand for that asset known generally as "gold"
Interesting exchange between John and KD.
One believes in God the other doesn't. Neither seem to be able to convince the other that something or someone doesn't exist.
I find it strange that for the last 40 odd years we have been able to believe in something that is purely based on faith but not fact called the US Dollar, Pound and now the Euro.
In my many years on this Earth I have acquired a large jar of money that nobody now believes in.
So in a way both KD and John are right. It's only their belief that makes it so.
One believes markets are behaving normally and is able to make useful decisions based on this.
The other believes that the market is manipulated and is equally able to make useful decisions.
I call it luck tempered with experience.
As Dirty Harry says. "you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?"
Duggo, john - your comment is important, because I have no interest in trying to convince John or you or anyone else that gold is a good or bad investment. (oh ps - the Dollar, Pound, and Euro are not purely based on faith... try this as a starter:
http://pragcap.com/thoughts-on-the-value-of-fiat-money
but let's try not to get off topic. I try to avoid debating the merits of metals, precisely to avoid such inevitable unresolvable "discussions"... so I focus on the factual errors which are prevalent in the ghost stories told by PM writers.
what I DO want to convince/explain to everyone that the PM segment of the internet is chock full of bullshit.
that was why I posted on this thread about Bill Downey's explanation of TPTB taking down the "physical system" to crash the price. it's false. it's factually wrong. that was my point.
now, John - Yes, of course paper trading outnumbers physical trading. you also seem to recognize that the market prices "physical" and "paper" the same
http://kiddynamitesworld.com/paper-and-physical-gold-prices-are-not-decoupling-yet/
there's a reason for that - it's because the paper contracts are considered metal-good (yes, even though the COMEX participants don't have enough metal to deliver into every contract, and even though the COMEX has clauses about force majeur etc..).
and my point regarding your "suppliers of unbacked paper" was one I already explained here, which i linked in a Screwtape comment thread yesterday:
http://kiddynamitesworld.com/bitcoin-as-a-metaphor-for-everything/#comment-862659122
in other words, that "unbacked paper" is only "unbacked" for the term of the contract. then it must be resolved.
of course, the "resolution" has shown to not be a problem - no price impact on the other end - the unwind/roll! and the reason for that is because it's not this "unbacked" paper that's manipulating the market.
KD,
The criticality of all this is that only physical metal performs what gold and only gold can perform during systemic failure which is precisely what the central planners are feverishly working to avoid....and I would argue are begining to suffer "fatigue" as time rolls on and their tools wear thin....witness the present condition of the JGB market...alond with many other cracks that appear more numerous and ready to widen by the day. Paper gold is gold-colored "credit" and will perform as such during a systemic failure. How many market participants who have chosen this "gold-colored debt based instrument/derivative" understand this. And if they did and the present "market cap" of gold were to be represented by "physical only" in terms of investment preferences...do you really think we'd be looking at the same price as today for this physical. Yes, "paper-gold" is presently performing and I predict it will continue to do so...until it doesn't. By the way, the Bank of Cyprus has a whole page on their website dedicated to the services they can provide clients in unallocated gold deposits including settlements with LBMA partners....Do you think those clients have a better knowlege today between the difference between paper and physical? Substitute Bank of Cyprus for Goldman sachs, Citibank, JP Morgan et al....what exactly is that difference??
Simply stated, the very survival of this dying dollar based financial system now requires massive intervention to keep rates at or close to zero, while printing enormous sums of currency, while piling ever greater amounts of debt on sovereign entities, while simultaneously preserving the relative exchange value of your currency, most especially the US dollar. This requires massive parallel intervention in the gold market which has almost always been a tactic in our financial past (London gold pool, Brown's bottom, etc) The difference now is the scale and that scale is made a whole lot easier precisely because of beliefs like yours that there's no difference between physical gold and it's paper derivative based imitator. Just because the central planners want to play you and the rest of the market for a fool, doesn't mean you have to be one.
Dear Kid
I love your sincerity (no irony).
Just to show I'm not all bad I have made my own beer and wine in the past.
My wife and I play cribbage every evening. Now there is a game of chance that I get better at the more I practice. As I play more and more my sub-conciouse learns more than I could possibly know.
John - the separation between physical and paper gold may indeed happen someday.
my point is that, contrary to the claims of many of the charlatans, it positively has not happened yet.
that won't stop them from lying about that fact, telling their readers that they need to rush to BUY PHYSICAL GOLD NOW (and oh - by the way - buy it from our online store - we've got a special sale today!)
out of curiosity, John, just so I can get more of an idea of where you're coming from (although you sound like a Freegold-er?), I'd love to know what you think of GLD.
I would describe it as a paper asset that owns physical gold, created by the world gold council with the goal of making gold easy to invest in, and of boosting the price of gold. I think it's been successful beyond their wildest dreams (too successful in fact, as the miners are learning the hard way).
Are you of the belief that GLD owns physical gold? The GLD is a scam? that GLD was a tool of the establishment to funnel money away from physical gold? That GLD will be used to confiscate the public's gold when The Time Comes? That GLD is something else entirely?
I don't want to put words in your mouth - just curious, as it will help me understand which camp you're in, and thus I'm offering up some choices I hear frequently voiced.
KD,
I understand where you are coming from and the answer is that I view GLD as another version of paper gold with some positive and negative wrinkles,but never the less it's decidedly paper gold. If you owned GLD in your Bank of Cyprus account, (and definitely there were entities that did) what do you think you have now?
KD,
By the way, I am not trying to be disrespectful to you or your point of view. It's just that much of what sadly passes for "policy" these days by people like the Fed is merely dressed up fraud. We are ultimately to blame for this fraud because our collective market actions (reactions) allow it to continue. Instead we should be vomiting all over the UST market, and all over the dollar...including by spiking gold to the moon thereby grading these "policies" with the Big Fat "F" they deserve. Counterfeiting is not a policy, it's a fraud. Cutting the deficit and throttling back borrowing is a policy. If these guys were running a public company and management's idea of leadership was to engage in massive share issuance and massive leveraging of the balance sheet, I think we'd all agree on what is to be done with this management team and also on the merits of shorting the shit out of the stock....Why is the gov't/Fed with it's shit debt and even shittier currency any different. I'll keep stacking the real deal thank you very much!
John,
perhaps you got zerohedged instead of reading the newspaper. As far as I understand, if you owned stocks, bonds, GLD, positions in futures, options, whatever, in a Bank of Cyprus brokerage account, all these securities and derivative positions are still intact. You also still own your car, your shirts, your pants, your watch, your jewellery and your house.
In Cyprus, they had some ordinary bank failures and what you lose in that case is usually a part of your deposits. Securities in your brokerage account are not part of deposits as is your house, your car and your dog (and your GLD).
Victor
Victor,
I think you need to double check that. The stocks you own (owned) were listed in the same account that held your cash...ie same account and same account number - one thing. Therefore when they strapped you down for your buzzcut.....everything got buzzed.
I had a great email exchange with Mr. Downey today. I've published a lengthy post about it. Feel free to read it.
http://thefundamentalview.blogspot.ca/2013/04/shedding-light-on-how-gold-market-was.html
John -
I'm with Victor here - I'd be quite shocked to hear that Cypriots had portions of their brokerage accounts confiscated - those are not liabilities of the bank. DEPOSITS are liabilities of the bank.
best,
KD
KD,
Not sure I buy the whole "miners don't catch a bid because of GLD" meme. Other people have said this, but is there any proof of it anywhere?
The main reason the shares have sucked is that the companies have sucked. Most companies' management not only have blown out CAPEX, but also have treated their shareholders like shit (dilutions, no/low div, etc). Shares go down in these types of situations.
Add to that that there is a whole lot of shysters in the gold business and it isn't rocket science to see why shares suck.
KD and Victor,
I hate being the bearer of bad news.....but if your securities were held in a Cypriot Bank, they were buzz-cutted. Your account and all asset contents were aggregated into a grand total and (mis)treated as such.
Here's an article that KD, Victor, John and Costata may fit all of their thought modes.
http://wallstreetwindow.com/node/8077
Seems to sum it all up nicely.
John -
I'm eagerly awaiting the source you provide to back up your claim.
I will repeat: securities are not liabilities of the bank, so I do not understand any reason why they would be haircut.
Coasta -
is there "proof" that the GLD hurt miner capital flows? just empirical evidence... although the CEO of a major mining company said something similar - I just tried to find the presentation in my email but I couldn't find it...
KD,
Yeah, there are a few guys in the industry who've said that. What would you expect a mining CEO to say? "we suck at our jobs"? Actually, one guy did say exactly that. [I can't find the presentation either - not being a wiseass]
I'm not saying that it's NOT a part of it, but I think it's a small part.
People who sell now will regret it in three years.
alternative investments options
Subscribing just so I can be notified when John publishes his source. I would like to read up on that.
Milamber
p.s. I find it a good idea to ignore a metals "analyst" when they use terms that can be found in Turd Ferguson's glossary to describe what is happening.
http://www.tfmetalsreport.com/glossary
@milamber,
Yup made up jargon is an attempt to sound more substantive and impress or the foundation of a cult :)
I'm going to follow up with Bill this evening.
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