Sunday, April 14, 2013

Assault On Gold Update

image source
Paul Craig Roberts
Activist Post

I was the first to point out that the Federal Reserve was rigging all markets, not merely bond prices and interest rates, and that the Fed is rigging the bullion market in order to protect the US dollar’s exchange value, which is threatened by the Fed’s quantitative easing. With the Fed adding to the supply of dollars faster than the demand for dollars is increasing, the price or exchange value of the dollar is set up to fall.

A fall in the dollar’s exchange rate would push up import prices and, thereby, domestic inflation, and the Fed would lose control over interest rates. The bond market would collapse and with it the values of debt-related derivatives on the “banks too big too fail” balance sheets. The financial system would be in turmoil, and panic would reign.

Rapidly rising bullion prices were an indication of loss of confidence in the dollar and were signaling a drop in the dollar’s exchange rate. The Fed used naked shorts in the paper gold market to offset the price effect of a rising demand for bullion possession. Short sales that drive down the price trigger stop-loss orders that automatically lead to individual sales of bullion holdings once their loss limits are reached.

According to Andrew Maguire, on Friday, April 12, the Fed’s agents hit the market with 500 tons of naked shorts. Normally, a short is when an investor thinks the price of a stock or commodity is going to fall. He wants to sell the item in advance of the fall, pocket the money, and then buy the item back after it falls in price, thus making money on the short sale. If he doesn’t have the item, he borrows it from someone who does, putting up cash collateral equal to the current market price. Then he sells the item, waits for it to fall in price, buys it back at the lower price and returns it to the owner who returns his collateral. If enough shorts are sold, the result can be to drive down the market price.


A naked short is when the short seller does not have or borrow the item that he shorts, but sells shorts regardless. In the paper gold market, the participants are betting on gold prices and are content with the monetary payment. Therefore, generally, as participants are not interested in taking delivery of the gold, naked shorts do not need to be covered with the physical metal.

In other words, with naked shorts, no physical metal is actually sold.

People ask me how I know that the Fed is rigging the bullion price and seem surprised that anyone would think the Fed and its bullion bank agents would do such a thing, despite the public knowledge that the Fed is rigging the bond market and the banks with the Fed’s knowledge rigged the Libor rate. The answer is that the circumstantial evidence is powerful.

Consider the 500 tons of paper gold sold on Friday. Begin with the question, how many ounces is 500 tons? There are 2,000 pounds to one ton. 500 tons equal 1,000,000 pounds. There are 16 ounces to one pound, which comes to 16 million ounces of short sales on Friday.

Who has 16 million ounces of gold? At the beginning gold price that day of about $1,550, that comes to $24,800,000,000. Who has that kind of money?

What happens when 500 tons of gold sales are dumped on the market at one time or on one day? Correct, it drives the price down. Investors who want to get out of large positions would spread sales out over time so as not to lower their sales proceeds. The sale took gold down by about $73 per ounce. That means the seller or sellers lost up to $73 dollars 16 million times, or $1,168,000,000.

Who can afford to lose that kind of money? Only a central bank that can print it.

I believe that the authorities would like to drive the gold price down further and will, if they can, hit the gold market twice more next week and put gold at $1,400 per ounce or lower. The successive declines could perhaps spook individual holders of physical gold and result in actual net sales of physical gold as people reduced their holdings of the metal.

However, bullion dealer Bill Haynes told kingworldnews.com that last Friday bullion purchasers among the public outpaced sellers by 50 to 1, and that the premiums over the spot price on gold and silver coins are the highest in decades. I myself checked with Gainesville Coins and was told that far more buyers than sellers had responded to the price drop.

Unless the authorities have the actual metal with which to back up the short selling, they could be met with demands for deliveries. Unable to cover the shorts with real metal, the scheme would be exposed.

Do the authorities have the metal with which to cover shorts? I do not know. However, knowledgeable dealers are suspicious. Some think that US physical stocks of gold were used up in sales in efforts to disrupt the rise in the gold price from $272 in December 2000 to $1,900 in 2011. They point to Germany’s recent request that the US return the German gold stored in the US, and to the US government’s reply that it would return the gold piecemeal over seven years. If the US has the gold, why not return it to Germany?

The clear implication is that the US cannot deliver the gold.

Andrew Maguire also reports that foreign central banks, especially China, are loading up on physical gold at the low prices made possible by the short selling. If central banks are using their dollar holdings to purchase bullion at bargain prices, the likely results will be pressure on the dollar’s exchange value and a declining market supply of physical bullion. In other words, by trying to protect the dollar from its quantitative easing policy, the Fed might be hastening the dollar’s demise.

Possibly the Fed fears a dollar crisis or derivative blowup is nearing and is trying to reset the gold/dollar price prior to the outbreak of trouble. If ill winds are forecast, the Fed might feel it is better positioned to deal with crisis if the price of bullion is lower and confidence in bullion as a refuge has been shaken.

In addition to short selling that is clearly intended to drive down the gold price, orchestration is also indicated by the advance announcements this month first from brokerage houses and then from Goldman Sachs that hedge funds and institutional investors would be selling their gold positions. The purpose of these announcements was to encourage individual investors to get out of gold before the big boys did. Does anyone believe that hedge funds and Wall Street would announce their sales in advance so the small fry can get out of gold at a higher price than they do?

If these advanced announcements are not orchestration, what are they?

I see the orchestrated effort to suppress the price of gold and silver as a sign that the authorities are frightened that trouble is brewing that they cannot control unless there is strong confidence in the dollar. Otherwise, what is the point of the heavy short selling and orchestrated announcements of gold sales in advance of the sales?

This article first appeared at Paul Craig Roberts' new website Institute For Political Economy.  Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His Internet columns have attracted a worldwide following.


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26 comments:

publius said...

I think the goal is a new money arrangement for neo-colonialism that is a new currency. Sharing power with non-whites by the white power estsblishment to prolong hegemony China is JR.

Anonymous said...

...14 ounces to the pound of Gold. Troy weight, not Avoirdupois.

Anonymous said...

See, that first line, "you were the first to point out the fed..." that's when i stopped reading. Just thought i would be the first to let you know.

Anonymous said...

took this comment from a story I saw.............

Jump up and down, get mad, write long articles.In the end you are so lucky to read this comment.

The paper gold was sold as claimchecks for the gold that "China" bought. China bought nothing,.........get it?

The wealth is being removed so when the shakers and movers relocate to those "abandoned" cities in China, the owners can reclaim the gold they bought.(ahem) already owned.

Is it becoming more clear? The only thing you need to figure out is THE DATE. If your wrong you lose.

Anonymous said...

gold is measureed in troy oz's not 16 as this article states but 12 oz
T

Anonymous said...

I read about this scenario 8 or 9 years ago on the gold.

No surpirse. Let the gold tank. They did all the selling, the banks. Then they buy it up cheap after you sell in a panic.

Then they buy up your gold cheap. It will go to the moon after you sell. They are selling to move you into selling.

Just like the stock market, they sell and you have egg on your face. They buy up stocks cheap.

That's why they own our homes. No doubt they will push up prices of houses now too. They own em all and they want them worth more than what they paid when they bought up cheap cause you couldn't pay the mortgage. They tanked to housing market as well. Your freakin homes!!

Heartless bastards.

They bank on the panic as with anything they control like stocks and bonds. They stampede you into selling and laugh at you. Evil. You sit on sidewalk and they get your home and now push up the price of housing.

Don't sell your gold if possible.

Stop believing this is a free country.

They can crash anything. And they do. They win, we always lose unless you understand the game of highway robbery and now it's really serious.

What is ridiculous is that if you tell people, they deny it. Patriotism is a scam. These banks are not even American. They are global.

They are taking over the world with these tactics.

Hellooooooooooooo.

Love you

Yikes

Anonymous said...

Robert's arrogance is on display against. He starts his article with.
"I was the first to point out that the Federal Reserve was rigging all markets...."

Here is Bob Chapman at globalresearch (which publishes Roberts) in mid 2010:

Recently we were again witness to three gold market takedowns..... This sort of action began in 1988 with the signing of the Executive Order by President Ronald Reagan entitled the President’s Working Group on Financial Markets,” ostensibly created to neutralize events such as the October 1987 collapse of the US stock market. Needless to say, that was not the real intention of the creation of such an order. As it has turned out the Treasury and the N.Y. Fed manipulates markets 24/7 worldwide, and they have a particular interest in the suppression of gold and silver prices; they being the antitheist of the US dollar."

Roberts worked for Reagan but would deny that his hero did anything but "create a robust economy." Never mind that he tripled the budget and started 30 yrs of a decline in median wages.

Many people have made the same claim Roberts is asserting he originated. For a man who predicts doom and gloom based on the hubris of the West, he is full of arrogance and narcissism himself.

"I was the first...." No you weren't. And your hero is the source of the current economic disaster you like to blame on people who "betrayed" Reagan's policy of "sound economic reforms (like cutting taxes 75% for the rich and busting the union movement and breaking the law to sell arms to terrorists to provide funds for other terrorists (Iran/Contras)."

If you criticize him or his heroes (Reagan and Ron Paul), you will be attacked as "brainwashed" and warned that he may stop writing (so precious are his posts) if people keep challenging his assertions.

He also thinks it's ok to call Dr. King a "womanizing whore" because there is room for all viewpoints in his America.

If you like to be depressed, enjoy Dr. Roberts.
Dale

Anonymous said...

A troy ounce is 12 ounces to the pound, not 16 or 14. Come on folks, you can do better getting your facts straight.

Anonymous said...

Ehhh, nope, it's not 16 ozt to a pound and it's not 14 either as the comment above claimes.

It's 12 ozt to one troy lbs. If your math is all wrong, why should I believe anything is true?

aidankirby@aol.com said...

If you have a Bank account, CLOSE IT!

Open a Credit Union account instead- No Bailouts and profits are split among members- incentives.

Turn the tables on the bastards. Its easy. DO IT!

Anonymous said...

Roberts offers an excellent explanation on how gold prices are being suppressed.

Hide Behind said...

Makes no diff 12, 14, 16 oz troy any hopes I had of acccumulating oz's or even 1. # :those dreams trounced and bounced years ago.
A working man 250k and under per year learn every illegal and legal means of keeping and increasing your vaue.
Paper assets are only good in the paper and cyber world economys and those worlds are easily crashed and all have back doors that let those you do not like have access to.
Gold in hand bars dust even nuggets flakes and flour are what blind people and to some extent can bind them as well.
Yes have paper ownership but learn the backdoor trade routes that are far more secure and lucrative than official aholes such as author of this piece knows that at any second your "holdings" will change hands kin blink of an eye.
IF you want to realy back up your assets with realgold get away from euro and US brokrerd and go asian.
The old triangle in Laos Cambodia and thai viet burma is where you should be voncentrating and to hell with theeuro valuations and commissions fix

brad said...

Money is technically just a thought.
You think it has value, i agree it has value, we use it.
If you wanted me to build an addition on your house - say a greenhouse w/passive solar w/specs laid out. Materials would cost you about 60K let's say.
You ask me two main questions, 1) Can you do this job? 2) How much will it cost me to have you do the work?

If my answer to #2 is "4 solar panels, an Outback inverter/charge controller, and a deep well 12 volt pump w/high head and low volume, you know that i place no value in money. If i said i want 14 Barbie dolls, you'd know i don't believe that the dollar is worth my while.

The only reason that we need the dollar is it's convenience. When the banksters steal all the money and we can't afford to pay our taxes because more and more of us are out of work, then we need to set up a barter system or some dollar alternative which they can't play with. When they try to kick us off our land, we don't go because we have friends and neighbors backing us up.
When it reaches that point, the US is dead, so why pay people you didn't vote for in a govt that simply assaults you. Nobody pay any taxes. Band together and grow your own food and trade for it. It will be harsh, but worth it.

Anonymous said...

When's the last time ANY bank was looking out for your best interest by giving you advance notice...NEVER! Buy into this criminal head fake if you like but I guarantee you will regret it later.

Anonymous said...

Toobob,
If the FED controls all or most markets then isn't it conceivable that low interest rates can be sustained indefinitely? If possible then isn't it also conceivable that the Dow will continue rising until a distortion occurs. To change current circumstances/control an event which the FED can't control will be necessary like a war, Bank or Sovereign collapse. Surely there are enough "incidents" to warrant higher widespread support for a higher gold price.

Anonymous said...

LOL! The Libertarians are about to learn a very valuable lesson: that they can't control the system and that it is rigged against all the little people. While they were hoarding the gold and silver, I asked a couple of questions which none of them could answer for me: (1) since you're issued a "stock" (read as a piece of paper) how do you know that there really is gold/silver backing that? (2) when the shit hits the fan, how do you know that your man holding the gold/silver is not going to rig the system himself and still screw you? Well, they couldn't answer any of those questions and here's the shit hitting the fan already. Next, will be the guns which, coincidentally, I don't see them taking up against their tyrannical government. Amerikans are such sheep and such idiots!

Anonymous said...

Hello Everyone, I'd like to introduce something called "divergence"

It won't be pretty

" I don't see them taking up against their tyrannical government. Amerikans are such sheep and such idiots! "

That's a one way street bud. Once you start pulling triggers your on a very dark spiritual path where nothing will EVER be the same.

So I say, You should be very glad that we haven't snapped already. It's not a matter of being chicken. It's a matter of not going to that very dark place. IT's a matter of trying to get these fuckers arrested without a civil war.

Anonymous said...

Mr Roberts may care to correct this essay, in light of the fact that gold bullion is priced in TROY ounces, and NOT avoirdupois onces - that is Twelve Troy ounces to the pound and NOT sixteen ounces to the pound. By my calculation his starting price should have been $18,500 million and the loss to sellers $87.6 million. Still considerable sums that only a Central Bank fraudster could hope to arrange. But, on critical issues such as this we must be correct. Regards, Ian Munro

Anonymous said...

if you don't no that gold is traded in troy oz. (14 per lb.) then why should any body belive in what your website says.

Anonymous said...

Food is more valuable then gold. You cannot eat gold. It is only valuable because humans place a value on it. Gold is used mostly in jewelry. There are more industrial uses for silver then gold. Before a commodity can have value it must have value in use and value in exchange and be an object of utitlity. When the financial base of the economic system collapses it goes back to 1-Subsistence Farming. 2-Animal Husbandry. 3-Hunters and Gatherers. 4-Barter. If you have the basic essentials of food, good drinking water, clothing, shelter, transportation, tools, with the knowledge and ability to do your own farming, raising live stock, carpentry, plumbing and electric you can survive. Personal initiative especially if it has genius behind it can do more harm than millions of people that the International Bankers have sown discord among.

Anonymous said...

I just want to know the price of one ounce ,silver or gold ,

Anonymous said...

Driving down the price of gold relative to the dollar does not exactly mean that the dollar gains value, it is still only a perceived value. If the dollar remains weak, and investors don't buy Treasury bonds, it won't matter anyway. The Fed is printing $85 B per month to keep T-bonds from imploding, if they lose $1 M trying to drive down gold, who cares? This is obviously just an experiment by the FED to see how China and investors with gold would react. See, no one believes these jokers anymore. We all know they manipulate the markets and the SEC looks the other way or gives them a small fine and a slap on the wrist. Meanwhile, our US Congress is exempt from prosecution due to insider trading. What could possibly go wrong??? LOL

Anonymous said...

If you are too focused on how many ounces make up a pound of gold, you will miss the message that the author is trying to convey. So if you've missed the whole point of the article, then condemn the author for not knowing his ounces, why should I listen to your nonsense comment? OK- you are right. Get over yourselves and comment on the article already.

Anonymous said...

'Consider the 500 tons of paper gold sold on Friday. Begin with the question, how many ounces is 500 tons? There are 2,000 pounds to one ton. 500 tons equal 1,000,000 pounds. There are 16 ounces to one pound, which comes to 16 million ounces of short sales on Friday'.

1 troy ton = 2450 troy lb.- 1 troy pound = 12 troy oz.
2450 x 12 = 29400 29400 x $1500 = $44,100,000.
$44,100,000 x 500 = $22,050,000,000

Anonymous said...

I believe the tons are Metric tons which equal 2200 lbs. Also, the ounces used in measuring precious metals are Troy Ounces which equal 14.583 per pound. Now we can do the math and achieve the correct amount of gold that was shorted. Still an extremely large number.

Anonymous said...

appropos of what "Yikes" said above; reminds of the Bob Dylan line in "Sweeteart Like You" (Infidels album)
"they say that patriotism is the last refuge,
to which a scoundrel clings.
steal a little and they throw you in jail,
steal a lot and they make you king."

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