Editor's note: Mark Leibovit is one of the investment world's top-rated gold timers, and helps investors anticipate and benefit from both the ups and the downs of the precious metals markets with his Leibovit VR Gold Letter (available to WND readers at a huge discount).
*****
Rigged gold price distorts perception of economic reality
TRENDING: America's most dangerous demographic
By Paul Craig Roberts and Dave Kranzler
The Federal Reserve and its bullion bank agents (JP Morgan, Scotia and HSBC) have been using naked short-selling to drive down the price of gold since September 2011. The latest containment effort began in mid-July of this year, after gold had moved higher in price from the beginning of June and was threatening to take out key technical levels, which would have triggered a flood of buying from hedge funds.
The Fed and its agents rig the gold price in the New York Comex futures (paper gold) market. The bullion banks have the ability to print an unlimited supply of gold contracts which are sold in large volumes at times when Comex activity is light.
Generally, on the other side of the trade, the buyers of contracts are large hedge funds and other speculators, who use the contracts to speculate on the direction of the gold price. The hedge funds and speculators have no interest in acquiring physical gold and settle their bets in cash, which makes it possible for the bullion banks to sell claims to gold that they cannot back with physical metal. Contracts sold without underlying gold to back them are called "uncovered contracts" or "naked shorts." It is illegal to engage in naked shorting in the stock and bond markets, but it is permitted in the gold futures market.
The fact that the price of gold is determined in a futures market in which paper claims to gold are traded merely to speculate on price means that the Fed and its bank agents can suppress the price of gold even though demand for physical gold is rising. If there were strict requirements that gold shorts could not be naked and had to be backed by the seller's possession of physical gold represented by the futures contract, the Federal Reserve and its agents would be unable to control the price of gold, and the gold price would be much higher than it is now.
*****
Platinum price being manipulated too
The prestigious Hedge Fund Journal, which has established itself as a trusted source of information on the hedge fund industry, reveals that like gold and silver, platinum is subject to price manipulation. Read the whole posting here.
*****
From the Physical Gold Fund:
'Death of Money' author explains gold manipulation
In a 45-minute interview with John Ward of Anglo-Far East bullion dealers, bestselling author, fund manager and geopolitical strategist James Rickards explains the methods, objectives and perpetrators of gold market manipulation.
The methods, Rickards says, include strategic dumping of official gold reserves, which isn't done much anymore; dumping paper gold on the futures markets to panic weak-handed and skittish longs, especially hedge funds, which is "child's play"; and gold leasing by central banks to investment banks that leverage the gold supply by a factor of 10, effectively devaluing gold, since most gold investors don't realize that there is no metal behind their claims, just the market-manipulating power of the central banks and their investment bank agents.
Another method, Rickards says, is the exchange-traded gold fund GLD, which functions mainly to fleece ordinary investors of their gold for shipment to China.
The big problem with the London gold fix, Rickards says, was not price rigging, most of that being done on the futures market in New York, but the front-running the participating banks did against the trades of their own clients.
Listen to the Rickards interview here.
*****
Financial media in U.S. ignore market manipulation
Interviewed by Dunagin Kaiser for the Reluctant Preppers Internet site, GATA chairman Bill Murphy emphasizes that the financial news media in the United States are controlled so that they avoid reporting about market manipulation. The interview is posted in two parts at YouTube
here and here.
*****
From Bloomberg.com:
Venezuela opens gold vault to impromptu inspection
Francisco Rodriguez, an economist with Bank of America Corp., was at a routine meeting with Venezuelan central bank officials last week when he sprung an unusual question on them: Can you show me your gold?
He'd been itching to take a peek for years and now was the time to ask. With the government's bonds sinking toward prices that indicate investors are bracing for the possibility of default, the country's $15 billion of gold bars are crucial to ensuring debt payments are met. His first impression once inside the vaults? Those bars don't take up a lot of room.
"You picture that amount of money requiring a lot of space when, in reality, it all fits in five small cells that were not even full to the top," Rodriguez, a Venezuela native who covers Andean economies for Bank of America Corp. in New York, said in a telephone interview. He said he started counting frantically in his head, summing up figures scrawled out on signs near each pile of the metal. By his quick math, the gold was all there.
Rodriguez said that while he has remained optimistic about Venezuela's ability to keep servicing its debts, he has been getting nervous phone calls from investors amid the rout that sent the country's benchmark bonds to as low as 67 cents on the dollar last week. One client was even worried that the gold might have vanished from the vaults, a concern that Rodriguez said helped push him to ask to see the stockpile last week.
Gold accounts for about 71 percent of Venezuela's $21.4 billion of foreign reserves, according to the World Gold Council. About $13 billion of the gold is held at the central bank in downtown Caracas, with another $2 billion at the Bank of England, according to Rodriguez. The total value of its reserves have dropped 34 percent over the past five years.
*****
From Sprott Money:
China will take control of gold pricing
Sprott Asset Management gold portfolio manager Charles Oliver tells Sprott Money News' Jeff Rutherford that China is well on its way to taking control of the monetary metal's price-determination mechanisms and building its gold reserves to a much higher level. The interview is 9 minutes long and can be heard at Sprott Money News here.
*****
From MineWeb.com:
Russia central bank buys more gold and builds bilateral trade with China
While we will probably have to wait another few days until the IMF publishes its latest statistics for the global picture, the Russian central bank has announced that it has added another 9.3 tons of gold to its official gold reserves. This is as tensions now seem to be diminishing in Ukraine which could, if the latest agreement holds, lead to Western sanctions against Russia being gradually withdrawn.
Russian gold reserves now stand at 1,113.5 tons, the world's fifth largest national holding, thus climbing even further above China’s "official" 1,054 tons. However few out there seem to believe that China doesn't have more gold than it announces to the IMF, but is holding considerable amounts in some other government-controlled accounts.
Overall, Russia has just about doubled its gold reserves since the 2007-08 financial crisis and its central bank has been a net buyer almost every month since. The figures suggest that the monthly increases have primarily come from the central bank taking in a significant proportion of the country’s domestic gold output which averaged around 20 tons a month in 2013; last year Russia was the world's third largest producer of gold and this year could surpass Australia and move into the No. 2 position behind China.
Russia, like China, perhaps somewhat belatedly, has come to see its gold holdings as a significant positive in any new world financial order that may develop over the next decade. American financial policy has dominated world trade for almost a century, but there are powerful economic forces out there – notably involving various countries, including China and Russia, building trade ties in their own domestic currencies and thus starting to bypass the dollar. Energy trade is particularly significant in this respect as the U.S. dominance in setting the terms of world trade has been very much down to the virtually total dominance of the dollar in global oil and gas transactions.
Historically the country with the most gold has been able to dominate global trade – barbarous relic or no – and while the West may see this coming to an end there is an enormous, and ever wealthier, part of the world's population which still believes in gold as the key global monetary asset. China and Russia are both strong believers in gold and the potential negotiating position it enables. At some stage soon the validity of their belief is going to be put to the test.
*****
From King World News:
Money printing will overwhelm any debt deflation
There won't be any debt deflation in the United States, Sprott Asset Management's John Embry tells King World News, because the central bank will print money to infinity to avoid it and end up instead with hyperinflation. Embry also remarks about the pounding that gold and silver keep getting at illiquid moments in the markets. His interview is excerpted at the KWN blog here.
*****
Special offer: WND readers can get a huge discount on the insider investor newsletter produced by top-rated gold market timer Mark Leibovit, the Leibovit VR Gold Letter.