Fund manager, author of Gold: the Once and Future Money (2007)
Posted: March 31, 2010 10:13 AM
We've had a string of amazing revelations recently regarding the world's precious metals market. This is important stuff for anyone (like me) who holds gold as a means to avoid currency turmoil and counterparty risk.
This news has been actively suppressed in the mainstream media.
The Commodity Futures Trading Commission, a U.S. government regulatory agency, held hearings in Washington D.C. in late March regarding position limits in the futures market.
People involved in the markets have known/suspected for years that they have been manipulated by certain large entities, notably JP Morgan and Goldman Sachs.
These hearings were supposed to be a non-event. However, despite the media lock-down, the word is getting out.
The CFTC, like the SEC, is a conflicted agency. Some people, notably Chairman Gary Gensler and Commissioner Bart Chilton, seem to want to clean up the sleaze, fraud and corruption.
The CFTC even invited GATA's Bill Murphy and Adrian Douglas to make statements. Would you be surprised to learn that the cameras had a "technical malfunction" during Bill Murphy's statement, which magically righted itself immediately after he finished?
After the hearing, according to Douglas, Murphy was contacted by several major media outlets for more interviews. Within 24 hours, all the interviews were canceled. All of them.
You can follow the links above to see the research that Butler, Sprott and GATA have done over the years. That was only one part of the emerging story.
The second part is the appearance of London metals trader and now whistleblower Andrew Maguire, who understands JP Morgan's manipulation scheme inside and out.
Maguire understands the process so well that he was able to describe it to the CFTC's Bart Chilton on the phone in real time. As in: "in a few minutes, they are going to do this, and then they will do that."
Listen to an extended interview with Maguire and GATA's Adrian Douglas on King World News here.
Maguire has taken some personal risks to tell all this in public. In fact, almost immediately after his initial statements, he was run over by a car while walking down the street. The driver sped away, nearly running over some other pedestrians in his haste to escape. Fortunately, Maguire survived the hit-and-run "accident" with minor injuries. What a coincidence.
The third item was during the question-and-answer session at the CFTC hearings. GATA's Adrian Douglas.
For many years, people assumed that the London Bullion Market Association (LBMA), the world's largest gold market, was a simple bullion market. Cash for gold. However, just in the past few months, more people are realizing that there is actually very little gold within the LBMA system.
Even long-time gold specialists like Maguire have been amazed to learn that there is no gold corresponding to the vast "gold deposits" at the major LBMA banks.
During the CFTC hearings, Jeffrey Christian of CPM Group apparently informed us that the LBMA banks actually have about a hundred times more gold deposits than actual gold bullion.
This means that there are thousands of clients -- Asian and Middle Eastern governments and sovereign wealth funds among them -- who think they own hundreds of billions and perhaps trillions of dollars of gold bullion, and are being charged storage fees on that fantasy bullion, but they really own unsecured gold loans to the banks at a negative interest rate.
There is nothing new about this. Morgan Stanley paid several million dollars in 2007 to settle claims that it had charged 22,000 clients for storage fees on silver bullion that didn't exist.
Imagine now that you are one of these people who think they own billions of dollars of gold in an LBMA bank depository. Now you find out that this gold doesn't really exist.
You would ask for delivery of your gold immediately. It would be a "run on the bank."
What about things like ETFs linked to gold? Most of them also claim, as assets, these "deposits" at the LBMA banks.
The entire gold market is complete "ponzimonium," a word popularized by the CFTC's Bart Chilton.
This does not even take into account the tungsten gold bar counterfeit issue, which has emerged over the past year or so.
Click below for a graph of U.S. Treasury interest rates from 1955 to 2005
Thus, when the "New London Gold Pool" blows up, we might find that the dollar decline that has been going on since 2001 could accelerate dramatically.
You would be surprised how little most big hedge funds know about gold. But they do know the scent of blood in the water. And they learn quick.