Seventeen

If you're just laying eyes on this Freegold thing for the first time, you are in luck! As of today, if you have, say, $55,000 in surplus currency reserves sitting around, you can still exchange it for 43 ounces of real physical gold! That's almost 3 lbs. of 24-karat gold! And did you know that there's less than 1 ounce per person in the world, so 43 ounces for one person, especially a Westerner, is actually pretty remarkable.

Salience: the state or quality of an item that stands out relative to neighboring items

"Gold is so old. Such a rich history. An educated western mind cannot begin to understand it! We live in a time of closed thought and controlled perception. How could we have known that two thirds of humanity would still think of gold as wealth. It’s not that they are right or wrong to think this way, it’s that we want them to work for us! That is the problem! And when they worked for us we paid them!

And who in the hell would have thought that they would have used so much of that pay to buy gold! Some bought in tiny amounts and some bought in large amounts. This started with the new world trading order that came into being about six years ago. By now that gold is so spread out it would take 20 years and 5 small armies to get it back, I think." –Another

Someone recently proclaimed to one of my readers that "gold is not exceptional!" He was comparing gold to the charts and returns of other investments. My reader simply replied, "Gold doesn't need to be more exceptional than anything else in order to be more salient, just as Grand Central Station doesn't need to be more exceptional than anywhere else in order to be the most salient place of encounter in New York City."

I wrote about this three years ago in Focal Point – Gold:

In game theory, a focal point (also called Schelling point) is a solution that people will tend to use in the absence of communication, because it seems natural, special or relevant to them. The concept was introduced by the Nobel Prize winning American economist Thomas Schelling in his book The Strategy of Conflict (1960). In this book (at p. 57), Schelling describes "focal point[s] for each person’s expectation of what the other expects him to expect to be expected to do." This type of focal point later was named after Schelling.

Consider a simple example: two people unable to communicate with each other are each shown a panel of four squares and asked to select one; if and only if they both select the same one, they will each receive a prize. Three of the squares are blue and one is red. Assuming they each know nothing about the other player, but that they each do want to win the prize, then they will, reasonably, both choose the red square. Of course, the red square is not in a sense a better square; they could win by both choosing any square. And it is the "right" square to select only if a player can be sure that the other player has selected it; but by hypothesis neither can. It is the most salient, the most notable square, though, and lacking any other one most people will choose it, and this will in fact (often) work.

Schelling himself illustrated this concept with the following problem: Tomorrow you have to meet a stranger in NYC. Where and when do you meet them? This is a Coordination game, where any place in time in the city could be an equilibrium solution. Schelling asked a group of students this question, and found the most common answer was "noon at (the information booth at) Grand Central Station." There is nothing that makes "Grand Central Station" a location with a higher payoff (you could just as easily meet someone at a bar, or the public library reading room), but its tradition as a meeting place raises its salience, and therefore makes it a natural "focal point."

Gold's salience as the focal point store of value par excellence is not a prediction or future projection. It is a backward-looking observation. There are some 5½ billion ounces in this world of 7 billion people, and every last ounce is equitably owned by someone. During the last 17 years, 1.3 billion people were added to this planet, and also 1.3 billion ounces of gold were added to the above-ground supply. And again, every last ounce was purchased by someone.

This may seem like a silly point, but gold does not pile up on overstock.com shelves like last year's iPhone accessories waiting for frugal buyers. It sells out every year. Normally you'd think this means that supply and demand met, price was the result, and therefore the price of gold represents its fair value. But with gold, it's not quite that simple.

When I talk about gold's salience as the focal point wealth reserve, I'm not talking about gold mining shares, gold futures, gold certificates, gold-denominated trading accounts like XAUUSD, or even gold ETFs. I'm talking only about physical gold in hand, meaning discrete physical pieces of gold in the most unambiguous form of ownership you can arrange as a shrimp. I'm talking about this:


I'm sure my comment will, as always, kick off a discussion in the comments about whether this or that "gold and silver" custodial service is a viable alternative to possession, but that will be missing the point. I'm talking about gold's salience as the focal point object of wealth as it already exists among the Giants and "third world nobodies" who already own most of the gold in the world. Look at how they buy and hold gold.

Of course gold's shiny allure does reflect its salient glow upon other gold-ish investments in the mind of the Western investor. The Western mindset sees this focal point salience, is aware of it, but then uses these "alternatives to possession" to place bets on how its allure to Giants and "third world nobodies" will affect its price. As FOA wrote in Chapter 1, "This, my friends, is the very nature of western trading of gold." And Another:

Everyone knows that western minds don't like or want gold, but if they think you like it they will trade it up in price for the sake of "sticking it to you." Enter the world of "paper gold."

A riddle wrapped in a mystery inside an enigma

Something happened 17 years ago last week. I would characterize it as "the opening of the door" for Another and FOA to explain publicly, albeit anonymously, what we today call Freegold. "A riddle wrapped in a mystery inside an enigma" was the way one writer at the time, The Red Baron, described the London gold market. That's because it had been one of the most opaque and secretive markets (for obvious reason) for hundreds of years.

Then, 17 years ago last Thursday, the LBMA released, for the first time ever, its average daily clearing volume, through an article in the London Financial Times titled "Extent of global gold market revealed". Today (and ever since that day) the LBMA releases this volume every month, so it may seem like no big deal. But in 1997, the sheer magnitude of the reported volume was a real head-scratcher for some who had been following the gold market for years. Before I explain, let's take a quick look at how the City of London grew into the world's central hub for trading gold.

According to the official Gold Fixing website, the emergence of London as a gold trading center can be traced back to around 1671, with the arrival of a young merchant named Moses Mocatta. Then, in the early 1800s, Nathan Mayer Rothschild arrived in London and soon became England's official gold broker.

Nathan moved from Germany to England in 1798, and by 1805 he was a successful banker in London. His bank, N.M. Rothschild & Sons Limited, was founded in 1811, and by 1815 he was buying gold on behalf of the British Treasury to fund the Battle of Waterloo. Ten years later, he helped the Bank of England out of a liquidity crisis by providing it with gold coins.

The British army, paid with gold acquired by N.M. Rothschild, narrowly defeated Napoleon's French army in 1815, which makes it a fun fact that the London-based global banking empire of N.M. Rothschild & Sons is now wholly owned by the French branch of the Rothschild family. That happened after Sir Evelyn de Rothschild retired in 2004, and N.M. Rothschild & Sons was then merged with France's Rothschild & Cie Banque through Paris Orléans SA, now headed by David de Rothschild, eldest son of Baron Guy de Rothschild, the head of the French branch who passed away in 2007.

If I've gotten anything wrong there, I apologize. I'm certainly not a Rothschild historian, but they did play a big role in the history of the London gold market. Following WWI, an agreement was struck between London and South Africa such that newly-mined South African gold would be shipped to London for refining, after which it would be sold to the world through N.M. Rothschild for the highest price that could possibly be attained on the market at that time. Thus began the London fix.

"On 12th September 1919 at 11.00 a.m., the first gold fixing took place… The bids were made by telephone for the first few days, but it was then decided to hold a formal meeting at the Rothschild offices… Although the London fix continued to be in sterling for almost another 50 years, what really counted was the dollar price of gold, as the dollar gradually replaced sterling as the world’s favourite reserve currency." goldfixing.com

London gold fixings ceased in 1939 with the outbreak of WWII, and then resumed 15 years later in 1954. The way the fix worked was that five members of the London gold market, the five fixers, would meet once a day in the Rothschild offices with a direct phone line to each of their trading rooms. The trading rooms would be talking to their clients on both the buy and sell sides, and each fixing member would report the net buy or sell orders from their clients. The five fixers would net out the orders from the five banks and if there were more purchase than sell orders, for example, the price would be raised and each bank's trading room would relay the new price to its clients and the orders would be adjusted and reported back to the fix.

Once the buy and sell orders were all matched, the price would be declared "fixed" and the orders would be filled. This happened once a day until 1968 when they added a second "PM" fix to coincide with the opening of the US markets. But as early as 1961, the Bank of England started noticing that it was having to sell from its own reserves to keep the price down to $35 per ounce. This led to the creation of the London Gold Pool, a pool of gold reserves from eight different countries that would be used to keep the fix fixed at $35 per ounce. Within the pool, the Bank of England only had to cover 9% of whatever was needed while the US ponied up the lion's share, 50% of the pool.

In 1968, the London Gold Pool collapsed as buy orders overwhelmed the reserves. According to goldfixing.com, the pool lost 3,000 tonnes trying to hold the price at $35 per ounce. On orders from the US, which was supplying 50% of the pool, the London gold market was closed for two weeks. When it reopened, the second fix was added and they no longer tried to control the price, which quickly rose to $44 per ounce.

But something else happened during those two weeks that the London gold market was closed. London lost its South African supply line to Switzerland, which was a big hit to the London gold market at the time, about 1,000 tonnes a year. And then in 1975, the COMEX futures market opened in the US, taking even more market share away from London. London responded by giving birth to the bullion bank (a term that, in the early 80s, referred only to mine finance) and opening its gold market up to foreign banks who wanted bullion trading rooms in London.

The first of the foreigners in were Morgan Guaranty, Credit Suisse and Nova Scotia, and by the mid-80s this new "open door policy" had attracted more than 50 new "associate members of the London Gold Market". Coordination, like in the good old days of the fix, was getting more complicated. Also in the mid-80s, London opened, and then closed three years later, its own version of the COMEX, the London Gold Futures Market (LGFM). And in 1984, the pioneer of modern bullion banking, Johnson Matthey Bankers, also one of the fixers, collapsed.

It was a mess that had to be cleaned up by the Bank of England itself, and in the aftermath, the BOE assumed the supervisory role over the London bullion market and demanded that the participants create a formal body to represent them as a group. A little more than a year later, in Dec. 1987, the LBMA was born.

The first chairman of the LBMA was also the chairman of the Fix from '74-'93, and a director of N.M. Rothschild & Sons named Robert Guy. Robert Guy was also the first to push for more transparency in the LBMA in the form of turnover volume statistics as early as 1992:

London Bullion Market
By Kenneth Gooding
FT June 22, 1992, Monday

There is a need for greater transparency in the gold market, suggests Mr Robert Guy, a director of N. M. Rothschild, the bullion house which hosts London's daily gold fixing session. 'I find it very difficult when people ask me the turnover of the market not to be able to tell them.'

Mr Guy was the first chairman of the London Bullion Market Association when it was set up in 1987 to represent the interests of participants in the wholesale bullion market. He has only just stepped down after four strenuous years. Freed from the necessity for diplomatic neutrality, Mr Guy is able to nail his colours firmly to the mast. He suggests that the association went one step in the right direction towards more transparency in July, 1990, when it started to publish details of gold lending rates.

'I believe this attracted more business to the market, not only from mining companies, but also from central banks,' he says. Now he has stimulated a debate about turnover transparency. He is very much in favour of the London gold market providing turnover details, not on a daily basis but regular historic statistics. Many other markets do this - Mr Guy points to the London stock exchange as an example of a market where turnover statistics apparently help to lift trade.

'Investors today demand more transparency than they used to. I believe gold market activity would be enhanced if we had greater transparency”

Mr Guy suggests that the management of those companies participating in the market would benefit from publication of turnover statistics. They would have some benchmark figures against which to measure their own statistics. Not every member of the association agrees with him. Mr Guy thinks that most of the LBMA's market making members are in favour but 'as we believe in consensus, unless everyone agrees, it won't happen'.

And that's my brief history of the "riddle wrapped in a mystery inside an enigma" that was the London gold market for the last 300 years, bringing us up to the point in time I want to talk about, 17 years ago last week. On Jan. 22, 1997, the LBMA announced its intention to release its clearing volume in a Financial Times article titled "Dealers end gold trading secrets":

Dealers end gold trading secrets
By Kenneth Gooding
FT January 22, 1997, Wednesday

Bullion dealers, backed by the Bank of England, have agreed to overturn years of tradition and secrecy by publishing details about turnover on the London gold market.

But some analysts warned that the move, designed to increase transparency on international exchanges, might drive business away from London because of clients' desire for anonymity.

The London Bullion Market Association intends to make public international settlement and London market turnover figures every month, starting next week.

Mr Alan Baker, the association's chairman, said it hoped to "walk carefully along a narrow line between the calls for more transparency on one side and the secrecy demanded by our clients on the other".

But one analyst, who asked not to be named, said the move was "terrible". "When did a market need transparency to grow? People won't be attracted to a market showing its underwear in public."

Mr Tony Warwick-Ching, gold specialist at the CRU International consultancy, suggested the move might put London at a disadvantage to the Swiss who were unlikely to reveal any gold statistics.

"The gold market has always thrived on opacity and obscurity," he said.

Mr Baker said the data would reflect global gold dealing activity by revealing the figures for the "loco London" market, or those international deals settled in London.

Ms Rhona O'Connell, analyst at specialist mining stock-broker T. Hoare & Co, suggested the statistics would provide a clear indication of the depth of the gold market.

"It should bolster confidence if people see it is a deep market and not liable to manipulation," she said.

Then, on Jan. 30, 1997, they followed through with the article I mentioned earlier:

Extent of global gold market revealed:
London clears 930 tonnes of bullion each day
By Kenneth Gooding
FT January 30, 1997, Thursday USA EDITION 1

Deals involving about 30m troy ounces, or 930 tonnes, of gold valued at more than $ 10bn are cleared every working day in London, the international settlement centre for gold bullion.

This is the first authoritative indication of the size of the global gold market, and was revealed yesterday by the London Bullion Market Association.

With the blessing of the Bank of England, the association overturned years of tradition and secrecy to provide statistics illustrating the size and depth of the London market.

The volume of gold cleared every day in London represented nearly twice the production from South African mines in a year, Mr Alan Baker, chairman of the association, pointed out.

It was also equivalent to the amount of gold held in the reserves of European Union central banks.

The size of the gold market will surprise many observers, but traders insisted the association's statistics were only part of the picture because matched orders are cleared without appearing in the statistics. Mr Jeffrey Rhodes, of Standard Bank, London, said the 30m ounces should be "multiplied by three, and possibly five, to give the full scope of the global market".

Mr Baker said the association would produce average daily clearance figures every month. "They will provide a useful benchmark for comparison and analysis of trends in the volume of the global bullion business," he predicted.

He denied suggestions that the move might drive business away from London by upsetting clients who preferred secrecy. "These figures do not in any way affect the confidentiality of the market. While discretion and integrity will always be bywords in the London bullion market, the LBMA is nevertheless conscious of the general call for greater transparency in markets.

"The statistics demonstrate the prominence of London in the world of bullion, something we have long been aware of but which until now has been difficult to demonstrate with statistics."

LBMA members were divided over the move. One said he was puzzled. "What will people make of it?" Another said the exercise was "futile" because it did not give a complete picture of bullion market activity.

But Standard Bank's Mr Rhodes suggested the statistics would "become the key indicator in the world of gold, providing the numbers by which the market can be monitored".

Mr Martin Stokes, vice-chairman of the association, said: "This shows we have a serious market with a lot of depth and deserving of more attention." The statistics showed, for example, that the 300 tonnes of gold sold recently by the Dutch central bank - a disposal that badly affected bullion market sentiment - was not a large amount by the market's standards. The association was "making a bid to attract investors' interest".

The association also gave details yesterday about the silver market. Roughly 250m ounces of silver valued at more than $ 1bn are cleared daily in London.

It also published the results of a Bank of England survey of turnover that the 14 market-making members of the LBMA in the London bullion market conducted in May last year. This showed about 7m ounces of gold, worth nearly $ 3bn, was traded daily by these market-makers.

VOLUME

I want to draw your attention to that last paragraph. It says that the BOE's survey of 14 LMBA market makers in May of 1996 showed a "daily turnover" of 7M ounces worth $3B. Doesn't that seem low compared to the 30M ounces worth over $10B reported as "daily clearing volume" in a survey of the 8 LBMA clearing members just seven months later? Just on the face of it, that's a 4 to 1 jump in daily volume. Did something change between May and December in 1996? Did the gold trading volume explode, or is there some difference in the reporting standards of the two surveys? After all, the BOE's survey called it "daily turnover" and the LBMA survey was the "daily clearing volume".

In fact, the LBMA surveyed its 8 clearing members starting in October '96, and that month the average daily clearing volume was 27.5M ounces. So if there was a dramatic jump in the volume, it must have occurred during June through September. Or was the BOE's May '96 result a fluke, i.e., an abnormally low month? Well, as it turns out, it was not a fluke. The BOE conducted the same survey four times since 1990, with similar results since at least 1991. About 6½ million ounces in '91, 7½ in '94, and 7 in '96.

So, apparently, roughly 7M ounces in "daily turnover" was the status quo from '91 through '96, and then, in the summer of '96, something happened and the volume exploded, like punctuated equilibria, to a new status quo level which, generally, continues to this day. Or is there another explanation for the discrepancy between the BOE and the LBMA surveys? As I already mentioned, the BOE surveyed the LBMA "market makers" (14 of them) for their "daily turnover", and the LBMA surveyed its "clearing members" (which, at that time, were 8 of the 14 market makers surveyed by the BOE) for the "daily clearing volume".

What's the difference between "daily clearing" and "daily turnover", and how should we expect them to relate to one another? In other words, is there an expected ratio, like 4 to 1 or something? Actually there is! But there are many opinions on what it is, generally ranging from 3:1 to 10:1.

In 1997, from the article above, Jeffrey Rhodes of Standard Bank, an LBMA member, said the clearing volume should be "multiplied by three, and possibly five, to give the full scope of the global market."

In 2007, Stewart Murray, the recently-retired head of the LBMA, wrote that "Previous estimates of the daily volumes traded in the London market have suggested that the quantities are a positive multiple of the clearing volumes with a multiplier of between 5 and 9."

In 2009, Peter L. Smith of JP Morgan Chase, writing in the LBMA's own Alchemist, said that "the numbers are probably understated by as much as a factor of three times, or possibly even more during busy market periods."

And in 2011, in Liquidity in the Global Gold Market – Trading volume and turnover, the World Gold Council reported that "Many dealers estimate that actual daily turnover is an absolute minimum of three times the amount of transfers reported by the LBMA and could be upwards of ten times higher."

So there you have it, 3 to 5, 5 to 9, 3+ and 3 to 10. But the best indicator of the expected ratio of turnover to clearing comes from the LBMA's own 2011Q1 turnover survey, published just four months after the WGC report. In it, for the first time ever, they report both "daily turnover" and "daily clearing" side by side. These were statistics taken over three months, 63 trading days, and they revealed a ratio for turnover to clearing of 9.2 to 1. Definitely the higher end of the 3 to 10 spectrum! ;D

But perhaps you've already noticed something. Perhaps you already caught the catch. This empirical ratio of 9.2:1 does not reconcile or resolve the discrepancy between the May '96 BOE survey and the Oct. '96 LBMA one, it widens it. It makes it worse!

On the surface, that 7M to 27.5M ounce discrepancy looks like a 400% explosion in gold trading volume, over only five months. But if we apply the 9.2:1 ratio discovered in the LBMA's 2011 survey, then it looks more like a nuclear explosion of 3,600%. So, to avoid the impression of sensationalism, let's create a range with 3,600% at the high end. What should be the low, most conservative end of the spectrum, given what we know?

Well, in 2011, the LBMA surveyed 36 members, including all 11 of its "market-making members". In 1996, the BOE only surveyed the market making members, but there were 14 of them at that time. So we're comparing a survey of 14 trading rooms with one that surveyed 36, however the "market making members" should probably be given more weight. But let's not. To be sure we hit the conservative end of the spectrum, let's not discriminate between bullion banks. There is, after all, at least one analysis that concluded 23 or so bullion banks that were not surveyed in 1996 were at least as active as the 14 that were, which brings the total up to 37 bullion banks, pretty close to the 36 that were surveyed in 2011.

I'll keep this part to one paragraph so as not to bore those of you who are still with me. It is a fair assumption that the more banks polled, the higher the reported turnover would be, and therefore the higher the multiple compared to the clearing stats. 36 (members polled in 2011) divided by 14 (members polled in 1996) is 2.57. If we divide the multiple of 9.2 that came out of the 2011 survey by 2.57, we get an expected multiple of 3.6 for the 1996 survey. That is, we could expect the "turnover" to be 3.6 times larger than the "clearing volume", or said another way (because we don't know the clearing volume in May of 1996), we would expect the "clearing volume" to be the reported "turnover" divided by 3.6.

The implied increase in trading volume is about 1,400% in five months. And that gives us our range. Rather than a 400% jump in trading volume as it appears on the surface, it was probably somewhere between 1,400% and 3,600%, and I'm going to roll with the low end because it's more than dramatic enough for my purposes. Here's what it looks like putting the implied clearing volume for May '96 with the reported volumes for October through January. I converted millions of ounces into tonnes, because tonnes are the terms in which I generally think:


Now before you get lost in the details, there's a main point. And that point is that it looks like something changed in the gold market around the middle of 1996. That change, apparently, precipitated the appearance of Big Trader on the Kitco forum in December '96, the LBMA transparency decision in January, and the subsequent appearance of Another and FOA which, to me, seems to be more of an evolution of pseudonyms, from Big Trader to Another, than a string of different posters.

I just want to touch on this for a moment, because it's confusing. And I'm not suggesting that Big Trader and Another were the same person. I don't think they were. I just think that the same person (FOA) probably posted all or most of the comments on both of their behalfs, and that, between Dec. '96 and Oct. '97, the handle he used evolved from Big Trader to ANOTHER ( THOUGHTS! ). The evolution went something like this:

Big Trader
Big Trader ( the writer! )
The Writer
The Writer ( thoughts! )
BIG TRADER (THOUGHTS!)
BIG TRADER (LAST THOUGHTS!)
ANOTHER (thoughts not written anymore)
ANOTHER
ANOTHER ( THOUGHTS! )
Friend of Another
FOA

This only came to my attention less than two years ago, when Nick Laird published the old Kitco forum archives. It is my opinion, and it's only an opinion, that these early "thoughts" (the authentic ones, because there were also a few copycats) were all posted from FOA's computer, even though the thoughts originated with at least two other people, Another and Big Trader. Therefore I view them as coming from a "group" as it were. I realize it's a little ambiguous, but I think it's the best we can do with what we have to work with from those earliest comments. And with that out of the way, let's get back to the volume in 1996.

There appears to have been a dramatic jump in gold trading volume of at least 1,400% sometime in mid-1996. We could even call it a phase transition of sorts, because it appears that volume was stable at one level from '91-'96, and then it has been roughly stable at its new level for the last 17 years. Have you seen it discussed quite this way before? I haven't, and I think that's probably because the sheer magnitude of the jump only became deducible with the advent of the LBMA turnover survey in 2011.

Here it is again. This time I added the implied clearing volumes for '91 and '94 based on the turnover chart on page 40 of this BOE publication, as well as the latest volume released by the LBMA, to show where it is today. Does this make any sense?


What are we to make of this apparent jump in volume of more than a full order of magnitude? Did it really happen, or is there some other explanation for the discrepancy between the two surveys mentioned in Kenneth Gooding's article from Jan. 30, 1997? Most of the gold market followers on Kitco at the time seem to have taken the news as simply the revelation of previously-undisclosed volume, as opposed to the revelation of a sudden increase in volume. And the mainstream media that reported the two survey results seemed to ignore or not even notice the difference.

Here's another article from Gooding in May of '97. Notice the highlighted portion:

LBMA clears less gold during April
By Kenneth Gooding
Financial Times May 13, 1997, Tuesday LONDON EDITION 1

Another fall in the average daily clearing turnover for gold was reported by the London Bullion Market Association yesterday. Daily turnover was 32.1m troy ounces worth $ 11.1bn, well down on the 36.3m troy ounces worth $ 12.8bn cleared in March and the record 40.3m ounces worth $ 14bn reported in February.

The association also pointed out that April's volume total was 15 per cent below the average for the first quarter and 16.5 per cent down in value terms. "Underlying these trends was the levelling out of both gold and silver prices in April and consequently lower volatility which was naturally reflected in a generally declining level of activity and clearing turnover," said Mr Chris Elston, chief executive. Gold averaged $ 344.47 an ounce in April, compared with $ 351.80 in March.

The LBMA started reporting daily clearance statistics for London, the international settlement centre for gold bullion, only from October last year, so there are no comparative figures for April 1996.

The picture for silver in April was similar to that for gold, with 253m ounces worth $ 1.2bn cleared on average every day, down from 284m ounces worth $ 1.5bn in March. The average silver price in April fell to $ 4.77 an ounce from $ 5.20 in March.

That was his standard practice each month, to compare the monthly volume report to the prior year, and, therefore, to note that there was nothing to compare it to until October '97. But he never mentioned the May '96 BOE survey again for comparison. If he had, any comparison between the two would have raised some obvious questions, which is why I said he seemed to either ignore or not even notice the difference. To me, in hindsight, now with the advantage of the 2011 survey which gave us a concrete relationship between turnover and clearing, this seems to be the elephant in the room that nobody noticed.

Another and Big Trader on the other hand, and meanwhile, were going on and on about an explosion in the gold trading volume. Did they know something that no one else knew? Look at this comment from "Big Trader ( the writer! )" on February 27, 1997:

"Let me clear up a few things. I am not the “Big Trader”! He cannot speak or write english and does not/would not post here. He has a need to get “thoughts” to other people. I do not do well with english either. My relations with him are private and restrict me from posting my own thoughts… Those of you who are rich and “on the inside” of gold companies and gold traders, ask if anyone alive had ever seen gold trade in the present volumes that have not been seen in history. The shocking truth is that more gold has just been traded than is held in most of the central banks. So much so that even the 100+ year old london gold pool was forced to admit to trading it’s share! I should think that the big investors on comex would have known this was going to happen! No? It could only have been the people who were about to do this buying that would know ahead of time. Yes, only they would know that a “once in a lifetime” buying spree was about to take hold.

Will gold go back down in price? They don’t realy care! Only on kitco can a trader find such good info. I advise every gold trader in the world to access this site every day! There is only one person who knows me at this site. That person is the soul of discretion and integrity. Someday I will contact him again and he will learn my real name. May the force be with you, and keep your eye on london! thank you"

Notice the highlighted portion. The above was posted at the end of February '97, just about one month after the LBMA released its clearing volume for the first time on Jan. 30th. But Big Trader first showed up on Kitco on December 7, 1996, with this:

"Myself and a group are indeed placing open orders for Feb/97 gold on any breaks below $370.00 and will continue to buy each day under that price ( for weeks if allowed ). We can and will call most or all of these contracts if the market doesn’t rise enough for a rollover. Our cost and fees is such that it’s easier to buy paper here than physicals in asia…"

Again, that was Dec. 7, 1996 when Big Trader first showed up talking about himself and his "group", "in asia", buying paper gold for the purpose of converting it into physical. Then less than two months later, on Jan. 30, 1997, the LBMA released its clearing volume. Then one month later, either FOA or Another wrote "It could only have been the people who were about to do this buying that would know ahead of time. Yes, only they would know that a “once in a lifetime” buying spree was about to take hold."

In hindsight, February '97 had the highest volume, by a fair margin, during the entire first year of reporting. From the LBMA website:


About one year later, on February 4, 1998, Another wrote this:

"Most of the very large buyers completed much of their conversion all of last year. When we speak of these entities one must know that they purchase much larger amounts than Berkshire. Most cannot understand that it is difficult to take five or ten million oz./gold in physical in a month or less. Note that Mr. Buffett has taken six months and only purchased about half of his silver! Even here we speak of only $300m for the amount taken. At this time the market is very, very tight for large money to go into physical. Paper, yes! I could move five billion US into paper metal very fast, but not physical."

Most of this I'm giving you is to simply show that the narrative being explained by Big Trader, Another and FOA in those early days is, in fact, corroborated by data from official (BOE and LBMA) as well as mainstream (FT) sources at the same time, even if it was never explored in quite this same way before. And again, the magnitude of the apparently huge increase in volume only became less speculative and more concrete after August of 2011 when the LBMA released its survey.

To recap, Big Trader shows up in December talking about buying lots of February paper gold and converting it to physical. In January the LBMA starts releasing its clearing volume. In hindsight, February turns out to be a big month. And also in hindsight, 1997 turned out to be a big year for physical gold flowing out of London. Here's a chart of gold imports/exports for the UK that Victor the Cleaner put together. The data he used came from an old article by James Turk:


Notice almost 2,500 tonnes of physical gold in net exports for 1997. If we divide that amount by 12 months, it works out to about 6.7 million ounces per month. Pretty close to what Another said on Feb. 4, 1998: "Most cannot understand that it is difficult to take five or ten million oz./gold in physical in a month or less."

Remember also that Another was fond of saying "Time will prove all things." So was it just a coincidence that, time and again, Another said remarkable things that could only be corroborated years later in hindsight? Or could it be possible that he not only had access to insider intel, but also the "old money/Giant" perspective necessary to put it all together in a way that even most insiders couldn't have done with intel alone? It is this rare combination that, in my opinion, makes Another so unique, and probably also what drove him to share his insights.

This is the way I've always viewed Another, and over the years I have even developed a "profile" for him that I find most fitting. Some think he must have been a central banker, perhaps even one of the euro architects. But I have come to like the idea that he was European old money aristocracy, also having some connection to the various areas that he seemed to know so well.

Michael Kosares wrote in his intro to (THOUGHTS!): "ANOTHER demonstrates a feel for and understanding of the gold and oil markets that indicates connections at the highest echelons of international finance." I would add that he also probably had some connections making him privy to top level intel in central banking, the LBMA, Hong Kong, South Africa and Middle East oil.

In 2001, FOA wrote, paraphrasing Another, "we are not here to prove things, my friend, time will do that for us. It will also expose our standing in world of Thoughts." Please take note of how this posture differs from virtually everything else we read from other gold analysts and so-called "experts", be it reasoned speculation or statements of (supposed) fact. And it wasn't just their posture, but their entire view on the gold market that differed (and still does to this day) from virtually everyone else.

There is certainly nothing wrong with well-reasoned speculation by experts and discussions about apparent facts. But I propose to you that the logical consistency of what A/FOA shared, combined with everything else about it (their posturing, their exposing of what could only be insider intel if true, and the obvious old-money, old-world wisdom they exuded) warrants very serious consideration, especially because their view is so completely different from both the mainstream "expert" view and the majority gold bug view of the market.

So, with that in mind, let's take a quick look at some of the other things they wrote about this explosion in volume:

6/8/97: "So many off market forward gold deals were done without any gold changing hands! Big buyers got on the paper side of these things and thought that the CB’s were backing the dealer banks by written contract. If the mines couldn’t perform the banks would …….! But what if in some deals the mines were not involved at all ? Just off market option trades as backing? … And now whatever gold that was to back these deals is found to be “not there”? And everybody was looking at all this paper being sold and thought there must be one hell of a lot of gold being sold!"

Some of you may recognize the bolded part as an issue that was under debate here a while back. But how else can you explain such a huge expansion, over a short time frame, in the LBMA trading volume? If the expansion/explosion described above really happened, then it was either "one hell of a lot of [physical] gold being sold," i.e., dumped on the market, or it was a hell of a lot of paper gold being written to meet demand. And while the price of gold did decline during the summer of '96, it only dropped by about 2.5%, which, I think, obviously argues against the idea of a physical dump.

1/10/98: "What quantity of GOLD, paper or physical, has OIL traditionally purchased on an annual basis?

From 1991, appx. 20m/oz./yr., now it is more.

How much paper GOLD is out there ready to be squeezed?

Over 14,000 tons."

2/9/01: "Yes, they did introduce the gold carry trade then and the timing was no accident. I also have to point out that Another was the very first to mention a gold lending number anywhere near that level. He said it was around 14,000 many years ago or would soon approach that level. Everyone, except those that knew the game, said it was NUTS! Now, the 10,000 figure is on every desk in the world."

Trading volume, be it turnover or clearing, only tells us something about the flow. It tells us little about the stock. Here Another appears to know the stock of uncovered paper gold that was "written" (lent, borrowed and sold short) during the inflation. In currency terms, that would have been around $160B. At one point FOA infers, in no uncertain terms, that Another is, in fact, privy to this very secret information:

5/3/98 "Somehow, the BIS and the major private gold holders know the total claims, as does Another."

Many in the gold community believe that this high volume must have represented real gold changing hands. Some of it did, but most of it did not according to Another. Many believe that this much real gold could have only come out of the central bank vaults. To be sure, some did, but most of it did not according to Another.

10/12/97: "How DO they do it?

It's more complicated than this but here is a close explanation. In the beginning the CBs didn't sell their own gold. They ( thru third party ) found someone else who had bullion. That "party" sold to a broker who sold forward for a mine or speculator or government ) . In the end the 3rd party had the backing from the broker that he had backing from the CB to supply physical if needed to put out a fire. The CB held a very private note from the broker as insurance and was paid a small fee. This process mobilized free standing bullion outside the government stockpiles. The world currency gold price was kept down as large existing physical stockpiles were replaced by notes of future delivery from the merchant banks ( and anyone else who wanted to play ) .

This whole game was not lost on some very large buyers WHO WANTED GOLD BUT DIDN'T WANT IT'S MOVEMENT TO BE SEEN! Why not move a little closer to the action by offering cash directly to the broker/bank ( to be lent out ) in return for a future gold note that was indirectly backed by the CBs. That "paper gold" was just like gold in the bank. The CBs liked it because no one had to move gold and it took BIG buying power off the market that would have gunned the price! It also worked well as a vehicle to cycle oil wealth for gold as a complete paper deal.

Are you with me?

Well a funny thing happened right after the Gulf war ended. What looked like big money before turned out to be little money as some HK people, I'll call them "Big Trader" for short, moved in and started buying all the notes and physical the market offered. The rub was that they only bought low, and lower and cheaper. They never ran the price and they never ran out of money. Seeing this, some people ( middle east ) started to exchange their existing paper gold for the real stuff. From that time, early 1997 LBMA was running full speed just to stay in one spot! In other words paper volume had to increase to the physical volume on a worldwide scale, and that was going to be one hell of a jump. It could not be hidden from the news any longer.

This was not far from the time that "Big Trader" said that "if gold drops below $370 the world would see trading volume like never before seen". The rest is history. Now the CBs will have to sell 1/3 to 1/2 of their gold just to cover whats out there. To use the Queens English "it ain't gona happen dude"!"

11/16/97: "In todays time the CBs do not sell physical gold with a purpose to drive the price down. They sell to cover open orders to buy what cannot be filled from existing stocks. Look to the US treasury sales in the late 70s. They sold 1 million a month using open bid proposals with much fanfare. If the CBs wanted physical sales to drive the price they would sell in the same way.

The sales today are done quietly with purpose. The gold must go to the correct location. That is why these sales do not impact price as they occur, there is a waiting buyer on the other side. As all of these transactions are done thru certain merchant banks, not direct CB contact, the buy side does hold hedges.

When actual delivery takes place, months later ( and usually at the same time as the CB sale statement ) these hedges come off and affect the market price.

It is important to understand that none of these CB sales of physical need to go to the open market at all! The BIS could take it all. …

Banks do lend gold with a reason to control price. If gold rises above its commodity price it loses value in discount trade. They admit now to lending much where they would admit nothing before! They do this now because of the trouble ahead. Does a CB have collateral to lend its gold? Understand, they only lend their good name on paper, not the gold itself. The gold that is put on the market in these deals belongs to someone else! The question is not "Are the CBs worried for the return of gold?" but, "Has our paper been lent to the wrong people?".

The BIS will not allow the distribution of all gold to settle claims."

Confused? Let me briefly explain it as I understand it. In the first of the two comments, he said, "In the beginning…" That relates to the period from roughly 1990 through 1996, prior to the arrival of "Big Trader" and the jump in volume. Up at the top of the post, in another quote, he said, "And who in the hell would have thought that they would have used so much of that pay to buy gold! Some bought in tiny amounts and some bought in large amounts. This started with the new world trading order that came into being about six years ago." That quote was from April '97, so "about six years ago" probably meant around late 1990 to early 1991.

So "in the beginning", the CBs (not directly mind you, but through the LBMA gold dealers) found others with gold who would be willing to sell—to go short—their gold, with the implied promise that it could be repurchased at any time because the broker—the LBMA gold dealer—assured the seller that he had an assurance from the CBs that the CBs would supply physical "if needed to put out a fire." What's a fire? A fire is what the seller of the gold (the short) doesn't want—an explosion in the price while he doesn't have his gold.

"The CB held a very private note from the broker as insurance and was paid a small fee." The private note was a loan note, a promissory note, and the small fee was the gold interest rate, which the LBMA dealer paid the CB even though no real gold changed hands. This was a gold loan from the CB to the bullion bank, but the gold never left the CB vault. It was actually a cash loan at a very low interest rate, ~1%, but the promissory note held by the CB was denominated in gold ounces. It could be retired in cash at the price of gold which was expected to decline since the CBs promised to step in to put out a fire, or with actual ounces of physical received from the mines who hedged, if the price ever rose. Plus the CBs promised to roll the loan (not call it in upon maturity) if the price of gold rose. So, to the bullion banks, the cash was essentially free money that could be used to churn an income.

[5/15/99: "In addition, the CBs said they could roll it forward for ten years +/-, if the price of gold rose!"]

The borrowed cash was used to purchase the real gold from the party who was willing to sell his gold with the assurance that he'd be able to buy it back cheaper in the future. Then the purchased gold was sold to those who wanted only real physical gold, which was, in those days, the swing producer in the oil market, The House of Saud. It was then, and still is today, all about managing the subterranean flow of physical gold which is much tighter than the paper gold market makes it appear.

Those of you who are sharp gold market historians may remember the 90s as "the decade of gold sales". Throughout the decade, the price consistently declined, from $400 down to $250. And every time there was a big drop, there was a news story about another big sale. First it was the Saudis who were reportedly selling their gold, driving down the price. Then it was Duisenberg and the DNB in 1993. Then the Belgians, and finally the BOE.

That was the mainstream narrative explaining the gold market in the '90s, but it is very different from what Another explained. And for those of you that remember the story, I wanted to mention the mysteriously large (~90 tonne) Saudi gold sale that was blamed for a sudden $23 drop in the price, and was also denied by the Saudis even though London bullion dealers (LBMA members) insisted it was them.

If it was not a short sale, which no one claimed it was, then it was the sale of a "gold" position that had been previously purchased. In other words, it was the unwinding of a long position. Now think about something Another said: "As all of these transactions are done thru certain merchant banks, not direct CB contact, the buy side does hold hedges…" That would be a long position hedge, to lock in the purchase price until an actual physical order could be filled. "…When actual delivery takes place, months later… these hedges come off and affect the market price."

Could the Saudi sale have been a long position hedge (to lock in a purchase price while waiting for physical to become available) that was unwound (sold) at the moment they received (actually purchased) the physical? This not only makes really good sense, it also explains both the dealer insistence that it was a Saudi "sale", and the Saudi denial, because the Saudis would have actually been buying physical and selling paper, which caused the market price to fall. Elegant solution to the mystery, right? This is kind of like what A/FOA's insights do for the whole macro "riddle wrapped in a mystery inside an enigma." They solve it… elegantly.


Okay, back to my "brief" explanation. Enter Big Trader: "This whole game was not lost on some very large buyers WHO WANTED GOLD BUT DIDN'T WANT IT'S MOVEMENT TO BE SEEN! Why not move a little closer to the action by offering cash directly to the broker/bank ( to be lent out ) in return for a future gold note that was indirectly backed by the CBs. That "paper gold" was just like gold in the bank. The CBs liked it because … it took BIG buying power off the market that would have gunned the price!"

…What looked like big money before turned out to be little money as some HK people, I'll call them "Big Trader" for short, moved in and started buying all the notes and physical the market offered. The rub was that they only bought low, and lower and cheaper. They never ran the price and they never ran out of money. Seeing this, some people ( middle east ) started to exchange their existing paper gold for the real stuff. From that time, early 1997 LBMA was running full speed just to stay in one spot! In other words paper volume had to increase to the physical volume on a worldwide scale, and that was going to be one hell of a jump. It could not be hidden from the news any longer."

So the Asians (in Hong Kong) found out that this cheap paper gold was implicitly backed by the CBs, therefore it was as good as the real thing because it could eventually be converted into physical, or so they thought. So they gave the LBMA gold dealers cash, and lots of it (as I said above, the paper gold "inflation" worked out to about $160B at the time), in exchange for a future gold note (a gold mine forward hedge note) that they thought would be backed by CB gold if the mines couldn't produce enough.

The LBMA gold dealers took this Asian cash and lent it to the miners in exchange for the gold-ounce-denominated promissory note. The bullion bank held the note on the miner and the Asians had a note from the bullion bank. But global mining output was only about 2,290 tonnes per year at that time, and $160B could have hedged 14,000 tonnes of future production, so not all of that money was lent to gold mines.

Enter the hedge funds and the gold carry trade. Gold loans (which were actually dollar loans with the promissory note denominated in ounces) were really cheap at the time, plus the price of gold was declining, making them even better than cheap! They were virtually free money that could be invested almost anywhere to churn an income. Everyone who was anyone wanted in on the deal. And the LBMA gold dealers were the middlemen, taking a percentage from every transaction.

The LBMA could get virtually free money, first from the CBs and later from the Asians, and lend it to, as Another put it, "mines, speculator or governments." Mines were the actual forward hedges, and the speculators and governments were the hedge funds and anyone else who wanted to short the barbarous relic that was seemingly in perpetual decline, and borrow virtually free money at the same time. Money was flowing, in large amounts, and the only catch was that the promissory notes were all denominated in ounces rather than dollars.

There's no problem with this setup for the borrowers (the gold shorts, primarily hedge funds and miners) as long as the price of gold is reliably declining and the gold interest rate is low. There's no problem for the CBs as long as the LBMA can manage the subterranean flow of physical to those buyers who only care about getting the real thing. There's no problem for the paper longs that don't care about physical as long as those that do can convert their paper to physical. There's no problem for the longs that eventually want to convert their paper to physical as long as they confidently can. And there's no problem for the LBMA bullion banks as long as they have the central banks' tacit agreement "to supply physical if needed to put out a fire."

There is, however, a big problem with this setup. But it only becomes apparent to someone who can see it as a unified whole. Another was apparently in a position to see the big picture early, as was Big Trader. The CBs eventually saw it, and were forced to sell a little gold while also retracting their tacit agreement "to supply physical if needed to put out a fire" on Sept. 26, 1999, which spiked the gold lease rate up to 10% and sent the price up 20% over seven days. The hedge funds and mines got out of the carry trade after the gold price started rising, but the paper gold longs are still oblivious to even the slightest problem with this setup. Even after 17 years.

I want to mention something now. I really don't want to make a big deal out of it because it's only speculation, but I think it goes well with this post. It was an afterthought, something that came out of my efforts while writing this post. And I think it may give a few people pause, or at least something to think about and consider its implications. I know a lot of people have their own idea about who Another is, was, or might have been. And I want to state for the record that I don't know who Another was, nor do I think it matters much because his words speak for themselves. But, while working on this post, I came across the best candidate for Another that I have ever laid eyes on.

Those earliest comments by Big Trader, Another and FOA, the ones prior to the USAGOLD archive, only became available to me less than two years ago. Before that, the earliest post from Another was this one which appeared in the Red Baron's LBMA series (my emphasis):

Date: Sun Sep 14 1997 21:12
ANOTHER (an answer?)

This could be an answer directed to the "Red Baron"?

The CBs are becoming "primary suppliers" to
the gold market. Understand that they are not
doing this because they want to, they have to.
The words are spoken to show a need to raise
capital but we knew that was a screen from
long ago. You will find the answer to the LBMA
problem if you follow a route that connects
South Africa, The middle east, India and then
into Asia!

Remember this; the western world uses paper
as a real value, but oil and gold will never
flow in the same direction.
Big Trader

Another referenced that comment two months later:

Date: Sat Nov 22 1997 23:13
ANOTHER (THOUGHTS!) ID#60253:

This was written: "To find the answer to the LBMA , "Follow the connection from London, to South Africa, to the Middle East, and on to Asia"

Mr. Markus Angelicus,
I read the gold-eagle write. You have made the link between London ( LBMA ) and South Africa.

I read that comment while preparing this post, and I realized that now, with the old Kitco archives available, I could look up the Markus Angelicus comment to find out what it was that Another was confirming. It turns out that "Markus Angelicus" had written an article for Vronsky's Gold-Eagle site titled The Rothschilds, LBMA, and Gold, and Vronsky had posted a link to it on Kitco. That was what Another (or FOA) was responding to.

The only relevant reference to South Africa in the article was this: "Rothschild Freres, run by cousin Baron Guy Eduoard, was the largest private bank in France. The French House also controlled mining companies ( De Beers and gold mines in South Africa )…"

So, apparently, Another was confirming that the connection from the LBMA "to South Africa, to the Middle East, and on to Asia" was the House of Rothschild, or at least the link to South Africa.

I have had many people propose many candidates for Another to me over the years. But credit where credit is due, Mortymer proposed Guy de Rothschild as a candidate three years ago. And then FoNoah asked me to take a look at him as a candidate after I sent him the Markus Angelicus article while working on this post. I did, and, surprisingly, he fit my profile far better than anyone I've ever considered in the past. Admittedly, I didn't give Mortymer's proposal enough consideration at the time, but I also didn't have the additional information of Another's inference that Rothschild was a key connection.

I did look at other Rothschilds upon FoNoah's urging, but only Guy fit. And in case you're thinking that the French and English Houses of Rothschild are independent entities, as I mentioned earlier, today they are merged. In fact, the English side (N.M. Rothschild & Sons) is now wholly owned by the French side, and the whole shebang is controlled by Guy de Rothschild's eldest son David. Could he be SOA?

I always wondered if Another might have been directly (or indirectly) involved in the LBMA's decision to release its clearing volume 17 years ago. The Rothschilds certainly were! The Rothschilds not only headed the Fix for 85 years, but Mr. Robert Guy (I know, there's that name "Guy" again), a director at N.M. Rothschild, not only personally headed it from '74-'93, but he was also the first chairman of the LBMA, from '87-'91. And remember, from above, while still chairing the Fix and representing N. M. Rothschild's gold interests, but after retiring from the chairmanship of the LBMA, he was the first person pushing for transparency in the LBMA's turnover volume as early as 1992.

Here's a great article about the history of the LBMA, written by Robert Guy in 2012. And if you're thinking that you might now agree with me that the Rothschilds led the charge for more transparency in the LBMA, how about the charge to get the ECB to openly declare its intentions regarding gold, which it eventually did on Sept. 26, 1999? Well, check out the highlighted portion of this FT article, by none other than our old friend Kenneth Gooding, two years earlier in 1997:

Call for more gold reserve details
By Kenneth Gooding in Prague
Financial Times June 17, 1997, Tuesday LONDON EDITION 2

Central banks were yesterday urged to end the "fear factor" haunting the gold market by providing more information about what they intend to do with the gold in their official reserves.
Worries about central bank sales have helped to drive down the gold price this year, and there is particular concern about the policies of European banks ahead of the formation of a European Central Bank.

Mr Robert Guy, a director of N. M. Rothschild and Sons, told the Financial Times Gold Conference in Prague that there was a lack of information on sales.

"I hope those involved in the creation of the ECB will break their Trappist vows and share their views with the rest of us," he said. "In these days of transparency and accountability, I find it truly remarkable that we can still be given no clear picture about the role of gold in the event that European monetary union proceeds." …

As I said at the top of this post, "if you're just laying eyes on this Freegold thing for the first time, you are in luck! As of today, if you have, say, $55,000 in surplus currency reserves sitting around, you can still exchange it for 43 ounces of real physical gold!" You can, if you want to, feel sorry for the poor souls that bought gold 17 years ago on Another's advice, but I know a few of them, and they don't feel sorry for themselves. They got 160 ounces or more for that same amount of money, and that's some serious wealth! I know a couple of them who got more like 200 ounces for that much currency, and they still have it today.

I'm not wrapping this up for lack of material. I could go on and on with A/FOA quotes explaining the big picture, thanks to the LBMA's revelation of its volume 17 year ago, which really opened the door for Another to speak out. I'm actually holding back a whole bunch of quotes that I pulled for this post, simply because it's already 22 pages long. They aren't really needed anyway, and I've already done it so many times in the past. Look at my blog. I do tend to go on and on, and it's all there—the big picture Freegold view as I learned it from Another—in the archives.

You might also be thinking, "gosh, 17 years. That's a long time. They must have been wrong… or something." Well, that's not how I see it. Again, it's all here in the archives, but it seems to me that what they explained actually makes more sense today, seems more inevitable and possibly even imminent, with the benefit of hindsight, than it did 17 years ago when it was written. At least it does to a shrimp like me. It takes a while to learn to think like a Rothschild. ;D

And if you're truly just seeing this for the first time, you are probably wondering, "What's the bottom line?" Well, again, it's all here in the archives on my blog. But sure, I'll cut to the chase, just for you. It's a necessary and inevitable revaluation of gold. That's not like a bull market run-up in the price. It's an overnight gap-up in the price, something the paper traders will have no say in, and something that won't happen to other "gold-ish" alternatives. Only the real stuff. And when it's done, in my opinion, you'll still be able to get a full ounce of real 24-karat gold for the same amount of austerity that it took you to save up that $55K you have today. That doesn't mean the money you have right now will still buy you a full ounce after revaluation, but if you saved it once, hey, you can do it again. Right?

17 years is indeed a long time. But with Another's very different perspective, we can see what happened during that time, and how things are looking right now. Over the last 17 years, every ounce of new gold was purchased, and the "old gold" worked its way into stronger and stronger hands. The LBMA volume today is almost the same as it was when they started collecting data in October of '96, at least in ounce-denominated terms. In currency terms, and number of transfers, it has tripled.

Hedge funds and mines got out of the gold carry trade, for the most part, once the price started rising. The CBs stopped selling and started buying gold in aggregate around 2010, with one of the largest single purchases by a CB being Saudi Arabia, who purchased 180 tonnes.

It has always been, and still is today, all about the flow of physical which underlies the paper gold market but has very little to do with its price. This is evident today, just as it was 17 years ago in 1997, but the conditions, players and incentives are very different today. The weak hands are empty, the CBs are no longer suppliers, scrap is down, mines are under pricing pressure, and "Big Trader" is apparently back in the hunt. My best advice is to get some insurance on the present value of your savings ASAP. 5% of your savings in physical gold should be a no-brainer. And then take a closer look at the big picture Another painted. You might decide, like me, to buy a little more. ;D

"Who am I? As I will not be around for long so I am noone. But, follow with me as all of this takes place in your time!" -Another

Sincerely,
FOFOA







FOA (06/12/01; 11:23:21MT - usagold.com msg#77)

This was "part" of the price we paid for oil to flow in dollars this last decade as the Euro was born. This was the price we paid for an extension of dollar use in oil settlement. It will be moved when gold trades at a much,,,,, much higher price. It backs Another's point of long ago that oil was traded for gold in the thousands at that time,,,, we just had to wait for the real price to be shown. It will! This is the decades long game we are playing for, my friend. This is the big one we own gold for. This will be the defining moment in our time that changes perceptions about the value, reserve currencies and the wealth of ages. Watch with me now, as events prove all things!