GATA Claims To Have Evidence Of "Massive Physical Short Gold And Silver Positions That Can Not Be Covered"

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DrKrbyLuv
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GATA Claims To Have Evidence Of "Massive Physical Short Gold And Silver Positions That Can Not Be Covered"

"Even as the CFTC is meeting later this month to establish position limits in the gold, silver, and other precious metals' markets, it could be none other than the CFTC's core banks, and Mr. Gensler's former Goldman bosses, that form the very core of the biggest market manipulation collusion syndicate in the history of the commodity markets.

If GATA is not bluffing and indeed has evidence of massively uncoverable physical positions, and should this evidence be made public, the repercussions for the price of gold will be unprecedented."  - from a ZeroHedge article

Here is a link and excerpts of the GATA letter:

As an executive at Goldman Sachs in London, Robert Rubin developed an idea to borrow gold from central banks at minimal interest rates (around 1 percent), sell the bullion for cash, and use the cash to fund Goldman Sachs' operations. Rubin was confident that central banks would control the gold price with ever-more leasing or outright sales of their gold reserves and that consequently the borrowed gold could be bought back without difficulty. This was the beginning of the gold carry trade.

When Rubin became U.S. treasury secretary, he made it government policy to surreptitiously operate an identical gold carry trade but on a much larger scale. This became the principal mechanism of what was called the "strong-dollar policy." Subsequent treasury secretaries have repeated a commitment to a "strong dollar," suggesting that they were continuing to feed official gold into the market more or less clandestinely to support the dollar and suppress interest rates and precious metals prices.

Lawrence Summers, who followed Rubin as treasury secretary, was an expert in gold's influence on financial markets. Previously, as a professor at Harvard University, Summers co-authored an academic study titled "Gibson's Paradox and the Gold Standard," (see Footnote 1 below) which concluded that in a free market gold prices move inversely to real interest rates, and, conversely, if gold prices are "fixed," then interest rates can be maintained at lower levels than would be the case in a free market. This was the economic theory behind the "strong dollar policy."

The CFTC's own reports of November 2009 show that just two U.S. banks held 43 percent of the commercial net short position in gold and 68 percent of the commercial net short position in silver. In gold, these two banks were short 123,331 contracts but long only 523 contracts, and in silver they were short 41,318 contracts and long only 1,426 contracts. How improbable is it that these two banks attract most of the investors who want only to sell short? (See Footnote 5 below.)

It has been possible to extrapolate that the two banks that hold these large manipulative short positions on the Comex are JPMorgan Chase and HSBC because of their huge positions in the OTC derivatives market, whose regulator, the U.S. Office of the Comptroller of the Currency, does not provide anonymity when it publishes market data. (See Footnote 6 below.) In the first quarter 2009 OCC derivatives report, JPMorgan Chase and HSBC held more than 95 percent of the gold and precious metals derivatives of all U.S. banks, with a combined notional value of $120 billion. This concentration dwarfs the concentration in the gold and silver futures markets and should raise great concern about the lack of position limits on the Comex.

It is also disturbing to us that HSBC is the custodian for the major gold exchange-traded fund, GLD, and that JPMorgan Chase is the custodian for the major silver exchange-traded fund, SLV. It is a significant material omission to fail to disclose to GLD and SLV investors that the custodian banks of the two exchange-traded funds have an interest in falling prices in the futures and derivatives markets.  - GATA source letter

Larry

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...

Buy physical gold and silver.

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...

Another homerun, Larry.

Looks like the manipulation has been in full force the past 2 days!

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...

GATA's research = government economic numbers = makes me laugh

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...
rickets wrote:

GATA's research = government economic numbers = makes me laugh

I've seen some very impressive work come out of gata. 

 

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...
Morpheus wrote:

I've seen some very impressive work come out of gata. 

The problem with GATA research is not the research itself, but the interpretation of that research. No matter what the research is, their conclusion is always an expectation for much, much higher gold prices. They have been predicting this explosive move in gold since at least 2005, and I have yet to see it materialize. If they had these extreme expectations for any financial asset other than gold, would anyone take them seriously?

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...
JAG wrote:
Morpheus wrote:

I've seen some very impressive work come out of gata. 

The problem with GATA research is not the research itself, but the interpretation of that research. No matter what the research is, their conclusion is always an expectation for much, much higher gold prices. They have been predicting this explosive move in gold since at least 2005, and I have yet to see it materialize. If they had these extreme expectations for any financial asset other than gold, would anyone take them seriously?

They're in good company. Marc Faber, Bill Fleckenstein, Jim Rogers, Jim Sinclair.  The problem is, and I know you don't believe that manipulation occurs, but humor me, is that with a manipulated market, timing a breakdown of the manipulation is nearly impossible. The cartel has the blessing and participation of the PPT, the CB's, and other powerful players. Taking them on is impossible. What GATA is predicting is an eventual destabilization of the system that leads to a breakdown in the ability to control markets. That is, at least IMO, impossible to predict timing. 

JAG. They've got some very solid papers published. You might want to take a look at them. 

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...

Jeff. Gold related video from BNN (Canada). It's an ALL mining stocks clip of the episode. Thought you'd like this. 

http://watch.bnn.ca/market-call/march-2010/market-call-march-9-2010/#cli...

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...
JAG wrote:
Morpheus wrote:

I've seen some very impressive work come out of gata. 

The problem with GATA research is not the research itself, but the interpretation of that research. No matter what the research is, their conclusion is always an expectation for much, much higher gold prices. They have been predicting this explosive move in gold since at least 2005, and I have yet to see it materialize. If they had these extreme expectations for any financial asset other than gold, would anyone take them seriously?

Jag,

Seems like gold has done pretty well since 2005.

Coop

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...

JAG, I don't mean to "pile-on" but I think Morpheus is right, GATA has been a watch dog of sorts.  They have been committed to exposing gold market manipulations.  For example, they published  an expose by writer/researcher Elaine Supkis that clearly showed, with documents, that the Fed has been involved in manipulating the gold market since at least; the 1944 Brenton Woods Agreement.

The article, by James Turk, said "An important document buried in the Federal Reserve's archives has been discovered by writer and researcher Elaine Supkis...I have long hoped that a "confidential" document like this one would eventually emerge. There are no doubt countless more like it, as evidenced by the Federal Reserve's and the Treasury's refusal to provide all the documents requested by GATA under its recent Freedom of Information Act request. Maybe those documents will eventually see the light of day too."

I also question GATA's agenda - they are owned and controlled by "gold bugs."  They seem to focus on the price of gold being kept artificially low rather than general gold shenanigans.

The "World Gold Council" reports on gold holdings are nebulous.  For example, the U.S. gold reserves are listed at around 8,100 metric tonnes but the report does not differentiate between Treasury and private Fed holdings. 

They did a good job reporting that the World Council Council totals may be wrong when they published that around 5,000 tonnes were sold by the U.S. geological survey between 2007-2008 (see my post U.S. Gold, Going or Completely Gone?).

When the Federal Reserve Act was passed in 1913, our national credit was given to private banks.  The huge U.S. gold reserves (in the late 1920's the U.S. had 26,000 tonnes of gold, over 60% of world-wide reserves) were pledged as collateral for our debt.  The U.S. lost it's gold to the Fed and we have been guardians, not owners, ever since. 

I don't think the U.S. government has any gold - this should be reported by GATA IMHO.

Larry

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...

The short positions can't be covered because gold and silver are the most accurate measures of coming inflationary price increases. Everyone has an opinion on inflation, deflation, the velocity of money, and the credibility of the dollar, but the truth is, in the late 1990s when the Dow crossed 10,000, gold was at about $250 an ounce.

Think about that. Gold knows what's coming -- way more than Neal Cavuto.

Paco Ahlgren

www.BottomViolation.com

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...
Morpheus wrote:

 The problem is, and I know you don't believe that manipulation occurs, but humor me, is that with a manipulated market, timing a breakdown of the manipulation is nearly impossible. 

I need to clarify this. I have never said that manipulation doesn't occur. What I said is this:

Market manipulation hypotheses are counterproductive to an effective trading (or investing) methodology . 

The reasoning behind this is simple: investor psychology. A good investor refrains from applying a value or expectation to an investment. Instead, the good investor acquires an asset when the "market" finds little value in it, and sells it when the market finds great value in it. When investors/traders attach a value or expectation to an investment for any reason, the investment becomes part of their self-image.

By identifying with an investment, the investor tends to buy an asset when its favored by the market because owning it makes him feel good about himself, and sell an asset when its out of favor with the market because holding it makes him feel bad about himself. In the world of trading, expectations breed emotion, and emotion causes one to buy high and sell low.

Just one man's observation and opinion, please don't burn me at the stake.

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...

When I was in the institutional gold arb business in the early 80's, we did not use the futures markets exclusively to cover longs or shorts. 

 The forward markets were also used for this purpose as the management of margin calls associated with futures was manageable, but we did not want too much exposure via COMEX.

Is there still a forward market in existance?

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...

GATA - they either find something bullish of gold and release it, or they dont release it.  I dont trust any totally one sided research firm.  Its like listening to Phillip Morris and 40 straight years of research.  Hey, whadda you know, smoking doesnt harm you.  Not one study in 40 years that determined smoking was bad for your health (I dont know that these numbers are true...just making a point)

Investigative bias is massive in GATA, and therefore I feel better off scanning many sources of information in determining if there is some gold scam going on.

By the way, when GATA says "massive evidence" and then you read their fine print, its always very circumstantial and really a stretch to conclude definitively that anything wrong has happened.  And yes, I have spent many hours reading their reports.

When it comes to betting your wealth or security on anything, its smart to keep an open mind.  I have read arguments on this site for and against gold....and I find it interesting how strong peoples bias is, and how no matter what nothing will ever change their opinion.  Keep an open mind....nothing is certain.  Overconfidence in an environment as volatile as we are in is a killer.

 

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Re: GATA Claims To Have Evidence Of "Massive Physical Short ...
JAG wrote:
Morpheus wrote:

 The problem is, and I know you don't believe that manipulation occurs, but humor me, is that with a manipulated market, timing a breakdown of the manipulation is nearly impossible. 

I need to clarify this. I have never said that manipulation doesn't occur. What I said is this:

Market manipulation hypotheses are counterproductive to an effective trading (or investing) methodology . 

The reasoning behind this is simple: investor psychology. A good investor refrains from applying a value or expectation to an investment. Instead, the good investor acquires an asset when the "market" finds little value in it, and sells it when the market finds great value in it. When investors/traders attach a value or expectation to an investment for any reason, the investment becomes part of their self-image.

By identifying with an investment, the investor tends to buy an asset when its favored by the market because owning it makes him feel good about himself, and sell an asset when its out of favor with the market because holding it makes him feel bad about himself. In the world of trading, expectations breed emotion, and emotion causes one to buy high and sell low.

Just one man's observation and opinion, please don't burn me at the stake.

A good investor refrains from applying a value or expectation to an investment.

Generally I'm with ya' on that Jeff. However, these are, as Confucious might say "very interesting times" that we live in. 

That sort of makes the rules change. That said, my investments in gold are driven by an "insurance" mindset. In other words, if TSHTF situation does not happen, then I fully expect to lose part of my capital. 

No, I'm not burning you at the stake. :)  But we do seem to have a fundamental disagreement over at least the degree of string pulling that occurs in the markets. Given what I have seen on other sites, I'd say our disagreement is on the more cordial side. 

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