Unless you were hiding under a rock last week, you know about the COMEX hearing where the public was invited to submit evidence regarding gold and silver manipulation. This exercise was much like the Healthcare vote in Congress. Everyone knew the outcome beforehand, but it was supposed to make the public believe the regulators were “concerned”’. In truth, the regulators are very involved in the illegality to their own financial benefit and the benefit of their “friends” they are beholding to.
With the outcome pre-destined, little did we know that it would end up being the veritable (physical) gold mine (no pun intended) of information about what really transpires in the commodities market. First, we obtained direct evidence from Andrew Maguire (who may or may not have been the target of an attempt at “bodily harm” as reported this weekend) of extensive manipulation in the silver market. Today, Adrian Douglas, director of GATA, adds to the mountain of evidence that the commodities market, and the CFTC, stand behind what is potentially the biggest market manipulation scheme in the history of capital markets. Using the testimony of a clueless Jeffrey Christian, formerly a staffer at the Commodities Research Group in the Goldman Sachs Investment Research Department and now head and founder of the CPM Group, Douglas confirms that the “LBMA trades over 100 times the amount of gold it actually has to back the trades.” (See the Video of the Week below.)
Christian, who describes himself as “one of the world’s foremost authorities on the markets for precious metals” yet, in the words of Gary Gensler, CFTC Commissioner, said “that the bullion banks had large shorts to hedge themselves selling elsewhere- how do you short something to cover a sale, I didn’t quite follow that?” and it proves that current and former Goldman bankers are some of the most arrogant people alive, assuming that everyone else is an idiot and will buy whatever explanation is presented just because the CV says Goldman Sachs. Yet Christian confirms that the gold market is basically a ponzi: “in the “physical market” as the market uses that term, there is much more metal than that…there is a hundred times what there is.” And there you have it: as Douglas eloquently summarizes: “the giant Ponzi trading of gold ledger entries can be sustained only if there is never a liquidity crisis in the REAL physical market. If someone asks for gold and there isn’t any the default would trigger the biggest “bank run” and default in history. This is why the Central Banks lease their gold or sell it outright to the bullion banks when they are squeezed by high demand for REAL physical gold that cannot be met from their own stocks” and concludes “Almost every day we hear of a new financial fraud that has been exposed. The gold and silver market fraud is likely to be bigger than all of them. There are many investors who have purchased gold in good faith in “unallocated accounts”. At some point, these people are going to demand delivery of their metal. They will then discover that there is only one ounce for every one hundred ounces claimed. They will find out they are “unsecured creditors”.
Some day in the not-too-distant future, oil-producing states will stop accepting the paper promises of bankrupt economies as payment for their precious and finite resource. They will demand settlement in Gold. Until then the games and fraud will continue unabated at the CRIMEX. When that day comes and JPM and the other bullion banks are forced to cover their mammoth naked short positions, we will see what happens when a “beachball held underwater” is finally released.
The lesson for all of us here is simply if you BUY GOLD OR SILVER, please take possession of the metal. It will help stop the crooks in their tracks, but more importantly it will assure you have the protection you desired when you decided to purchase the metal.