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In a discussion I had earlier
this week with Dr. Jim Willie, we discussed how the prices of gold and silver
have been arbitrarily managed for years. In this discussion, I
contended that, while the prices of gold and silver have been closely
managed, the growing “off-take” of physical bullion is inflicting
great damage on price managers. We can see manifestations of this
reality in that price corrections [sell-offs] are much shallower and shorter
lived than they were even last year. Jim asked me if I could provide
any “hard data” or minutia showing the amounts of physical metal
being taken off the market in recent weeks.
Unfortunately, I cannot.
The reason for this was best
encapsulated in comments by GATA Secretary / Treasurer Chris Powell back in
April, 2008 in Washington,
D.C. when he opined:
“Indeed,
the disposition of Western central bank gold reserves is a secret more
closely guarded than the blueprints for the manufacture of nuclear weapons.”
With the micro
details being withheld or obscured, the proof to the thesis that price
managers are hemorrhaging physical bullion is more “macro” in
nature. So here’s a review of the macro picture [or
“known-knowns” in Rumsfeld-ian double-speak], starting with a
daily chart of gold for Sept. 8, 2009:
And now here’s
a chart of silver over the exact same time period:
Now, I’d like
everyone to see the two charts overlaid:
The charts from Sept. 8 were not cherry picked – they typify the
intra-day “rigged” relationship of gold and silver over the past
number of years. The real evidence that a shortage of physical metal
exists and is ongoing is as follows:
1] The
prices of gold and silver have tripled over the past 6 years. This in
it self, given that we know prices are arbitrarily “set” - is
evidence of rear-guard activity.
2] The
U.S. mint has suspended production of Silver and Gold
American Eagles on numerous occasions
3] Over
the past couple of years, premiums being paid for small bars and coins [due
to lack of availability] have been as much as 10 - 60 % over the
‘posted’ futures prices.
4] European
Central Banks have been unable or unwilling to fulfill their quotas [roughly
130 – 150 metric tonnes sold in the last year of the recently expired
Washington Agreement allowing for 500 metric tonnes of sales per year].
The ineffectiveness of the Washington Agreement to suppress the gold price
– as it once did - is a very likely reason why the specter of I.M.F.
gold sales has recently been rekindled.
5] Central
Banks like China and Russia are now publicly acknowledged buyers of gold
bullion for reserve diversification – even 2 years ago they WERE
NOT. Call this the China / Russia “put” under the price of gold. [ie:
THESE ARE HUGE NEW PLAYERS ON THE BUY SIDE FOR PHYSICAL.]
6] As
the Russians sent representation to GATA’s Gold Rush 21 conference in Dawson
City back in 2005, Chinese sovereign wealth funds have met with GATA on at
least 3 occasions [lengthy conference calls] since the spring of 2008 to get
the scoop on how the gold price has been suppressed – giving more
credence to the notion that the Chinese are learning how the market rigging
game is played, largely with fraudulent futures / derivatives.
7] Flowing
from [6], the Chinese have publicly stated that their State run enterprises
may unilaterally walk away from losing derivatives bets with un-named banks.
8] Fed
Governor Kevin
Warsh – responding to a GATA FOIA request – recently
acknowledged that the Fed is indeed involved in gold swaps, reversing 2001
denials that they were involved in the same. This revelation flies in
the face of sworn
testimony provided by [then] Fed Chairman Alan Greenspan [a
perjurer?] to Rep. Ron Paul back on Feb. 24, 1999:
“Last summer on a couple of
occasions here when you were talking before the committees on securities and
on derivatives you mentioned something that was interesting. You said that
central banks stand ready to sell gold in increasing quantities should the
price rise, which I thought was rather interesting.
Then I followed up
with a letter to you to ask you whether or not our central bank might not be
involved in something like that, in the gold market. And you did answer me
and stated that since the 1930's the Federal Reserve has had no authority to
be involved with the gold markets.”….
To which Pinocchio,
err….Greenspan responded,
“…… The issue of
buying and selling gold as the price changes is indeed exactly what we used
to do. We used to, at a certain thing called the gold points, which
was the price of gold plus the transportation cost differentials, we, that
is, the United States Treasury, stood ready to buy and sell gold at a
spread, as indeed all other participants in the gold standard did. So in that
regard that was exactly what was happening.
But, needless to say, since we have
gone off the gold standard, and especially since 1973, there has been
basically a general float of the dollar vis-à-vis gold, which means
that the gold price is like another commodity's price.”
Isn’t this LYING TO
CONGESS?
Gold Swaps have long been proven
by GATA to be a primary means by which Central Banks nefariously mobilize
sovereign gold stocks – creating stealth supply to sell into the
physical market to suppress the gold price.
A note
on the gold and silver derivatives game from my good friend Rhody:
“Futures
contracts were introduced in gold and silver for the first time in 1974 in Winnipeg, Canada
as a trial system. It worked so well, it was shipped to New York the next year and that began the paper gold, multiple
selling of each ounce system.....
The BIS
[Bank for International Settlements] issued data on the status of silver
derivatives held by member banks this year. It was 111 billion
dollars. The world produces $10 billion in new silver each
year, of which ALL but $1 billion is consumed by industry. That
means that these $111 billion represent debt instruments backed by only $1
billion of investor held silver. That's a 100 to 1
ratio. Keep in mind that the $111 billion does not count
the derivatives held outside the banking sector.
There
could easily be an additional $100 billion of derivative silver
debt held by hedge funds, mines, jewelers and investors. This
is why I say that each ounce of real silver is sold over 100 times, and by
that, I mean it could be 200 times. And the guys who sold the
derivatives are not the same guys who hold the $1 billion in real
silver.
You must
understand that the Western centric financial system in all its parts is a complete
fraud. “
These things –
taken together – should reinforce to ANYONE who’s paying
attention, that while the prices of gold and silver are STILL arbitrarily set
by price managers, THE GAME HAS CHANGED. Access to [or a lack
of] physical metal is the Achilles Heel of the price rigging game and only real question is how quickly the price
managers retreat and whether the melt-up remains orderly?
Got
physical precious metal yet?
Rob Kirby
KirbyAnalytics.com
All
articles by Rob Kirby
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