World Gold Markets: How Lack of Transparency Translates into Poor Analysis

Every precious metals trader that has analyzed gold prices over the past several decades knows that a common ploy the IMF and leading global Central Banks utilize to suppress gold prices in the COMEX futures markets is to announce plans to sell gold despite their total lack of commitment to executing their announced plans.

For example, the Bank of Italy announced in late July, 2007 their plan to sell an estimated 1,740 tonnes of its gold reserves to help pay down its national debt. At this time, this announcement moved the gold futures markets lower because many analysts found this announcement shocking in light of the fact that Italy had always previously stated that its gold reserves were “untouchable”. However, any gold analyst worth his or her weight in salt immediately knew that this announcement was a complete sham because Italy’s announced sales, as considerable as they were, would never have significantly contributed to its declared end goal of solving their national debt problem.

Thus, simply by drilling down to the facts behind the Bank of Italy’s surface level announcement, one would have easily deduced that an ulterior motive much different than the stated motive existed. Sure enough, the Bank of Italy never followed through its announcement to sell its gold reserves yet still achieved its likely ulterior motive of temporarily halting the rise in gold prices and driving them lower.

More recently, at a G20 meeting in late March 2009, the IMF announced its plan to sell 403 tonnes of gold reserves to address some problems of liquidity. Even though this news was merely old news that was being recycled from the end of 2008, the prominent forum which the IMF leveraged to re-release this old statement focused the attention of neophyte gold analysts on fears of gold supplies flooding the market in the future. And just like magic, we experienced déjà vu again when gold prices plummeted lower (from $928 per fine troy the day after the announcement to a low of about $880 an ounce just one week later on April 8th). When I heard this announcement, I was at once immediately very skeptical of the IMF’s commitment to execute this plan.

If the IMF truly makes good on its threat to sell 403 tonnes of gold in the future, the IMF would fail to accomplish their goal of flooding markets with gold supply and would accomplish nothing more than the transference of global wealth from Western nations to Eastern and Middle Eastern nations as I surmise that China, Russia, select OPEC nations and other nations with large trade surpluses or a desire to decrease their U.S. dollar exposure would be more than happy to absorb the available supply. Thus, I believe that the purpose of their announcement was nothing more than a smokescreen that will never experience full execution designed to temporarily drive the price of gold down.

China’s recent revelation that it secretly increased its gold reserves by 76% over the past several years also surprises me not in the slightest as I have predicted China’s engagement in such activities for a couple of years now*. China’s revelation proves that there is little transparency in global gold markets and that the “officially” reported numbers have little relevance as they can be, and most likely will continue to grossly misrepresent the truth.

As skeptical as I was about the Bank of Italy’s announcement and the IMF announcement when they occurred, I am equally skeptical of China’s announcement. Given China’s history of public comments about their grave concern regarding the stability of the U.S. dollar and their years of engaging in secretly increasing their gold reserves, when it finally publicly reveals a new gold reserve figure, for what reason should we give this announcement credibility as being truthful?

Governments take full advantage of the fact that they can easily convince millions of unthinking people to believe something as long as they print the statement in writing and in a “credible” newspaper. Ultimately, I suspect that China’s actual gold holdings of 1,054 tonnes, up from their last reported figure of 600 tonnes, are in reality, significantly higher than this amount (as this figure still only represents a tiny 1.6% of their overall reserves). Though I can only speculate about the timing and nature of China’s recent gold revelation, I believe that China made this revelation to “test the waters” and observe the impact of their announcement on gold markets. Ultimately such a revelation, even if it does not fully disclose China’s true gold position, will significantly assist its final determination of its end target percentage of gold reserves.

Furthermore, I am confident that China has not only been secretly supplementing their gold reserves, but that they have also been very quietly adding significantly to their silver reserves, their petroleum reserves, their agricultural reserves and their reserves in base metals. Though base metals will most likely continue to experience a longer timeline to significant recovery than precious metals, they too, will eventually strongly recover in the coming years.

The overwhelming majority of analysts state that China’s strategic hands are tied by its massive holdings of U.S. dollar denominated debt and that it can’t possibly dump their massive holdings of U.S. dollar denominated debt without hurting its own economy. This is just not true. There are plenty of means to hedge against eventual significant U.S. dollar decline and China has already revealed its partial hand with its significant additions to its gold reserve.

Just a few days ago, I wrote an article about deflation and gold investments in which I stated, “We’re likely to see some downward pressure in the gold and silver futures markets in the very near term and specifically next Monday [Monday April 27th]“. Indeed yesterday, gold dropped in the COMEX markets by $6.80 an ounce (the ask price closed at $907.20 an ounce), though silver actually ended up closing just about even, higher by one penny an ounce.

Furthermore, today, Tuesday, April 28th, I predict that the downward pressure in COMEX gold markets is likely to continue and I would not be surprised to see gold pushed below $900 an ounce at some point in intra-day trading today (author’s note - I released this article about 11 hours before COMEX markets opened in New York on Tuesday).

However, these two days of downward pressure (if another downward day materializes today as I believe to be likely) do not negate the likelihood of another strong leg higher in both gold and silver in May or June. While the gold markets were obviously buoyed at the end of last week as a result of China’s revelation, knowing that the gold markets would dip yesterday and very likely today, while also understanding that these dips do not signify a reversal in trend has nothing to do with fundamental nor technical analysis, but rather with understanding the complexities of the price suppression schemes that the U.S. Federal Reserve and the U.S. Treasury execute.

One has to understand all the games that are played in these markets to not be misled by the massive amounts of “white noise” that exist in precious metals markets that are purposely created by the financial oligarchs that control the U.S. Federal Reserve and her sister Central Banks. Unfortunately, the analytical world of gold is full of gold neophytes that have not put in the considerable amounts of research necessary to understand either the fundamentals of the gold market that drive its long-term behavior or the complex relationships among Central Banks’ gold reserves, currency markets, and the U.S. Treasury that drive its short-term behavior.

*In reference to the article above, the author publicly stated his belief nearly two years ago in June of 2007 that it was an erroneous assumption to believe China’s strategic options in currency markets were handcuffed by US debt. In addition, the author specifically stated his belief in China’s secret accumulation of gold reserves multiple times over the past two years through the private forum of his SmartKnowledgeU™ Platinum Membership. For years, he has instructed his clients regarding how to create wealth from gold investments and silver investments during the ongoing financial crisis.

Comments

[J. S. Kim:]

Freya, you have buttressed the very point of my article. I don't believe there is transparency in precious metal markets and that there is massive misreporting about these markets and you believe that all your statements are factual just because they are reported by the media. In fact, you even label declines of "estimate[d] sales" and not reported sales, as a fact. This is fine and you can disagree with my points, as everyone has a right to their own opinion, but your points do not disprove any points of my article despite your propensity to use the word "fact" in your argument and accept as "fact" statistics that are published publicly by the media. A couple months ago, when China's official gold reserve holdings were still listed at 600 tonnes was this a "fact"?

The general point of my article is that anyone that has studied gold markets for a long time knows that publicly published statistics in regard to the gold market likely contain gross distortions of fact though they are stated as "fact". As far as my assertions about China's secret stockpiling of hard assets, again you missed my point. My point is that given any of their public revelations about their oil reserves, gold reserves, or base metal reserves, I still believe that these numbers are not aboveboard and that they are in reality, much higher than the publicly reported figures. Of course, I don't have proof of this, but I state my reasons for my suspicions. This is why I stated that I "suspect" this and I do not say it is a "fact".

Lastly, having stated "my belief in China's secret gold reserve accumulation multiple times over the past two years" is not the equivalent of stating that I believe China secretly increased their gold reserves solely WITHIN the time frame of the past two years. They mean entirely two different things.

Cheers.

Apr 28 04:52 AM

[J. S. Kim:]

Ah, meant to say "your acceptance as fact" above, not "accept as fact"

Apr 28 04:54 AM

[doubleguns:]

How much gold does china's mines sell on the international market?This would seem to be a logical accumulation point for the govt. I don't know how much scrap gold a bunch of peasants could actually have on hand to sell to the scrap markets. Scrap adding very much to the "reported" accumulation of 600 tons seems to optimistic to me. It would have to have come from elsewhere and knowing how much gold actually went to international markets from chinese mines would be an interesting figure.

Apr 28 09:39 AM

[aber:]

thanks for the article , btw i bought GLD today , i like gabling

Apr 28 10:08 AM

[History Buf...:]

J.S., thanks for another thoughtful and insightful article.

For those so inclined to dismiss this as more of the "ohmigod more of that phony conspiracy peddling twaddle", I just want to leave with one thought.

Occam's Razor is essentially a deductive tool that states, all things being equal, usually the simplest explanation that explains a phenomenon is the correct one.

The fact that gold, a safe haven investment for thousands of years, has not appreciated substantially over the last year in the teeth of the worst economic crisis to engulf the world in 80 years, may not in itself be proof of a conspiracy to suppress gold prices. But if you put all the other little pieces together, it certainly looks suspicious. Add to this published statements by ex heads of the US Federal Reserve Board that PROVE they do not want the price of gold to appreciate to threaten public acceptance of their fiat currency, the case is even more compelling. Add to this the easily verifiable massive naked short positions on precious metals that are out there with nary a hint of interest by the CFTC (except for this most recent "inquiry" into the silver market which will no doubt go nowhere as almost all previous CFTC inquriies have gone) and to me the conclusion is inescapable.

Apr 28 10:31 AM

[Plebian:]

"Swine Flu, October 2009. Earth is in danger of a pandemic. Six months have passed, and the disease has developed resistance to Tamiflu and other exotic man-made cocktails and vaccines. Things are getting desperate. By chance, an age-old substance is re-discovered. Silver is at the forefront of our arsenal to combat this world-wide epidemic, and colloidal silver (10 ppm) is once again in high demand... Another six months have passed, and swine flu appears to be under control. Humanity is saved. Finally, silver (la plata) becomes the most valuable substance on Earth (again)."

Apr 28 10:47 AM

[billyboy54:]

I've been following the PM market personally since 2005, and also investing since then, but I have no financial/economic training.

However, I also have noticed that govts make public announcements for specific purposes, ours as well as China's.

So when I heard this disclosure from the normally very secretive Chinese govt, I have been wondering, For what purpose ?

Your article triggered a thought: Everyone in the West thinks, as you point out, that China's position as a major US debt holder, makes them almost our financial captive, practically without any independent financial power.

However, given that a major ploy in Western CB's arsenal lately has been to keep the price of gold and silver suppressed, couldn't China's announcement of its gold purchases and holdings -- and the widely noted effects of the announcment on the price of PMs -- be seen as another kind of announcement -- i.e., that the do have some power vis a vis the Western CBs to effect changes in the dollar situation, and Western economies.

What would the effect be, for example, at a low point in the current downturn, if China suddenly announced its intention of buying much more gold "in the future".

It would of course only make such an announcement after it had accumulated that much already.

Its reserves would be bolstered, as the effect of its announcement raises the price of PMs worldwide.

If it also sold some dollar holdings shortly before, would it not come out ahead, AND be able thereby to declare itself a major holder of power in another area of financial markets.

I'm sure my ideas are full of holes, and actually would like to hear where the holes are. I need more financial education.

Given that

Apr 28 11:08 AM

[aber:]

sorry , i meant "gambling" , at this point is what i think about the market , just a big Las vegas

Apr 28 12:26 PM

[truthseeeker:]

I think the key point here is the fact that the Chinese Government had been accumulating gold secretly in a way that would not drive up the price on the Comex. How many Central Banks are accumulating gold secretly? Why? Why is the physical market stressed because of gold shortages? Why is it so difficult for the average person to obtain gold coins? To me it adds up to a new gold standard or at least partial gold standard. There is a secret scramble by governments to obtain gold while keeping the price down at the same time (to prop up the dollar that they are using to buy the gold). This also tends to keep gold out of the hands of the masses by creating a physical shortage.

Apr 28 12:35 PM

[fireball:]

mr. kim
another great article. lots of smoke to try to see through. i expect china to continue acquiring all that is real to replace dollars. i have been on the same course on a microscopic level.
i would hazard a guess that china is downplaying their acquisitions. admit to some lest a stampede start.
in recent years i keep buying silver on the dips while hoping for that drop on gold. i have a good amount of gold but would very much like to up my holdings in exchange for frns. the debt notes feel counterfiet almost these days.
i am looking for $750 to start buying again. mr. kim does that seem unreasonable to you?

Apr 28 02:10 PM

[obewon:]

Let's not "nick-pick" the author. His basic premise is that Central Banks are playing with gold; some (e.g. the USA & England) are trying to denigrate it (one doesn't have to wonder "why?"), while others (e.g. Switzerland, China, and to a lesser extent, Germany) recognize its intrinsic value.

Here's another perspective:


FACT: Gold reserves serve to protect a country’s wealth, according to Alan Greenspan. In the 1960s, he wrote an essay entitled “Gold and Economic Freedom.”
Source: www.financialsense.com...

In the years since he wrote that essay, Greenspan partly backed away from those ideas . . . and interestingly, as Fed Chairman, he ignored their implications. For those who want a quick summary, he said the following:
<i>"Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets . . . [but] in the absence of the gold standard ... there is no safe store of value. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights."</i>Alan Greenspan 1966

Further, he indicated that, without a gold standard in place, there is little to prevent governments indulging in wild credit creation, which is what the USA is doing now.

FACT: The USA is destroying its future (printing trillions of fiat dollars annually) while China is securing its future; see below.

FACT: Since Davos, China (& Russia) have been very vocal in their calls for a new global currency as a replacement for the US dollar.

FACT: Since the US Fed is now in a US dollar printing mode for the foreseeable future (trillions of USD annually!!!), China has repeatedly called attention to the systemic risks of an international monetary system that uses the USD as the world’s reserve currency. It is obvious that China wants to sharply reduce its nearly $2 trillion in USD reserves that it currently holds.

FACT: China has used some of its USD reserves to buy agricultural land in Africa and South America.

FACT: In the past 6 months, China has signed deals with six countries, including Indonesia, South Korea, Hong Kong, Malaysia, Belarus, and most recently Argentina, for currency swaps that “avoid the USD.” China’s Yuan will be the currency exchange within these foreign banking systems.

FACT: Within the past 6 months, China has established a multi billion dollar “Cooperation Fund” to help finance infrastructure projects among 7 or 8 countries in SE Asia (Thailand, Malaysia, the Philippines, Singapore, Brunei, Vietnam, and Indonesia) . The currency used is the Chinese Yuan (bypassing the USD). China wants to expand this fund to include additional countries within the next few years.

FACT: China intends to expand the Yuan’s influence with most all of their trading partners, thereby eliminating their use of the USD as the exchange currency. Foreign companies will pay for Chinese goods (imported from China) with the Yuan.

FACT: Within the past 6 months, China has made many strategic decisions to secure its own future, buy buying unbelievably large quantities of commodities (e.g. copper, aluminum, zinc, iron, soybeans, oil, etc. etc. ). For some of these purchases, China is using their USD reserves.

FACT: Ambrose Evans-Pritchard wrote an interesting commentary a few weeks ago, joking about how China might want to use a “copper standard” for a new global reserve currency, since the USD is headed for disaster. In reality, when compared to fiat currency, commodities are the only things that have lasting value, and gold plays a strong role here.

FACT: China, like Switzerland, has always valued gold because of its very limited supply, its intrinsic value, the fact that there are no “counterparties” (unlike the fraudulent “paper gold” on the COMEX), and the fact that no government (no, not even the GS controlled US FED) can counterfeit it. In sharp contrast, the US government has referred to gold as a barbarous relic that is no longer needed (note: they have had an ulterior motive here, as Alan Greenspan wrote about)

FACT: China is rapidly building its internal gold production. In the last 10 years, their annual production (as a percentage of global production) has doubled (from 6.2% in 1998 to 12.2% in 2008. That represents a huge increase. Source: www.goldsheetlinks.com...

FACT: China knows that in order for the Yuan to be considered as “part” of a new global currency, it must be viewed as a stable currency. A direct implication here is that China must sharply increase its gold reserves, which it has been doing.

CONJECTURE (but likely true): China secretly wants the Yuan to be the next global currency.

In conclusion, from a strategic perspective, I believe China is now “making all the right moves” … while the USA is making all the wrong moves.

Apr 28 02:40 PM

[History Buf...:]

Truthseeker,

It's possible the Chinese are now ready to let the market pump up the value of their gold holdings. It is probably more likely that this is a warning shot against the bow of the US of A to not be too fast and loose with any policies that might devalue the US holdings (read Treasuries) of the Chinese.

You may be right about the central banks. If they feel that the price supression scheme on the precious metals is no longer sustainable, why not push it down and let it come back up again and milk it both ways? As far as I can tell that's what the banks have been doing that have been shorting gold all this time.

By the way, it's not that hard to get physical coins (gold and silver) if you're willing to pay the premium over spot prices. At least I think it's not that hard. I haven't had good luck getting silver locally (in Los Angeles) but I'm trying out some apparently reputable mail order places and will let you know how that goes. I've been able to get gold coins locally and haven't had to pay more than about $30/oz. over spot so far. I haven't done that lately though so the numbers might have changed. I think it's definitely worth getting the physical metals considering that the comex might actually implode one of these days from all the shenanigans that have transpired in the PM markets.


On Apr 28 12:35 PM truthseeeker wrote:

> I think the key point here is the fact that the Chinese Government
> had been accumulating gold secretly in a way that would not drive
> up the price on the Comex. How many Central Banks are accumulating
> gold secretly? Why? Why is the physical market stressed because of
> gold shortages? Why is it so difficult for the average person to
> obtain gold coins? To me it adds up to a new gold standard or at
> least partial gold standard. There is a secret scramble by governments
> to obtain gold while keeping the price down at the same time (to
> prop up the dollar that they are using to buy the gold). This also
> tends to keep gold out of the hands of the masses by creating a physical
> shortage.

Apr 28 02:57 PM

[obewon:]

History Buff Said: "I think it's definitely worth getting the physical metals considering that the comex might actually implode one of these days from all the shenanigans that have transpired in the PM markets."

Have to agree with you there, History Buff!

Most investors know about the "Yen Carry Trade" that was extremely profitable for the investment Banksters a number of years ago. What many investors don't know about is something called the "Gold Carry Trade", which works in a similar way, but which has the endorsement of the US Treasury and the Fed.

JP Morgan (and to a lesser extent, HSBC, BAC, & Citi) suppress the price of paper gold on the COMEX, at the request of the US Treasury, in order to keep the USD from collapsing in relation to the gold price. This is why these banks will always be "supported" by the government, and if the government is doing this, then it's not considered to be "market manipulation."

The fact that JPM & HSBC are holding a net short gold derivative position of over 97% of all shorts is nothing short of manipulation. If you or I (or some other company) did that for the copper market, or the zinc market, we'd be sent to jail. Interestingly, these 2 large "Commercials" as they are called, have not reported a net long position in gold contracts to the CFTC since 2001 !!!

Apr 28 03:31 PM

[J. S. Kim:]

one last comment from me about this and I do appreciate everyone's comments including your follow up comment Freya. Please reference this earlier article I wrote here regarding huge anomalies in world gold markets within a 24 hour trading timeframe.

www.theundergroundinve.../

In this article, the content of which I sent CFTC Commissioner Bart Chilton, I noted a curious event where gold in Asia closed higher almost everyday and then experienced waterfall declines in the COMEX markets that same day. Here's just some of the data I sent him that I referenced in that article below:

Aug 7

Asia closed up + $3 an ounce.
NY closed down -$15 an ounce.

Aug 11

Asia closed up +$8 an ounce.
NY closed down -$40 an ounce.

Aug 14

Asia closed up +$2 an ounce.
NY closed down -$42 an ounce.

Aug 26

Asia closed down $-9 an ounce.
NY closed up +$17 an ounce.

My long time research into global markets, not only the COMEX markets but also the Asian markets, led me to conclude that not only are these markets rigged but that there is little transparency in reporting from most governments about their gold reserves. When I stated I was almost certain that gold would decline below $900 in intraday trading yesterday on the COMEX well before the gold markets opened in New York, this had nothing to do with the fact that gold was down in Asia earlier that morning. As you can see from the data I presented above, there is often zero correlation between the price behavior of gold in Asia and New York. Based upon correlation coefficients between Asia and New York gold markets, there was as strong a likelihood that gold would have risen in New York yesterday despite its weakness in Asia earlier in the day. My prediction that gold would decrease below $900 in intraday trading in New York, which is exactly what happened as it waterfalled to $885 shortly before 8:30 AM New York time before regaining much of the day's losses by 3:00 PM, was based upon my understanding of the price rigging games that occur in these markets. And today, I suspect that gold will close in New York on an upbeat with some decent gains.

Again, I can not prove my suspicions, but there is a mountain of circumstantial evidence hidden in Central Bank reports and statements of various governors of Central Banks around the world that support my theories.

Cheers.

Apr 29 07:58 AM

[obewon:]

@ Freya:

Excellent points, all of them.

And yes, my error. I meant to say $2 trillion in foreign reserves!!! You hit the nail on the head, regarding China's dilemma.

The really neat thing about their global actions is that, when they use the USD to buy tons of low-priced commodities, the USA can't accuse them of any "wrong-doing."

For the world's reserve currency, I believe China's "interim" intention is to the SDR, which, for them (and most other countries) would be far superior to the USD. Having been married to a Chinese lady for many years has taught me a lot about how China thinks.



On Apr 28 05:57 PM Freya wrote:

> obewon: you are right on most but wrong on one very important item.
>
>
> China has almost $2 Trillion in Foreign Currency reserves of which
> almost $700 Billion are USD debt.
>
> But that's not the point. The Yuan is trading at the top of its recent
> range against the USD. This means that its currency has appreciated
> against the other currencies of the world by roughly 20%(ex-yen).
> As an Export driven nation it is trying to decouple from the USD
> without appreciating its own currency further so it can Sell goods
> to the other nations in the Asean Bloc which have dropped even more
> against the USD/Yuan.
>
> How to do this without destroying the value of its USD holdings is
> the problem.
>
> The way I figure it, They are using the USD to do all of the other
> Facts you mention. Whether its commodities, land, long term contracts,
> etc. China is spending those dollars.
>
> When they are finished, I expect them to call for the immediate creation
> of SDRs to serve as the Worlds new reserve currency, the makeup of
> which will definitely not be in the USD's favor.
>
> Who knows when this Might occur, but that's what I'm looking for.

Apr 29 10:25 AM

[obewon:]

@ Freya:

I smiled when I read your post, because I remember the tactics of the "Specialists" ... though many younger generation folks wouldn't remember that.

And yes, the bullion banks, and in particular, JPM, are front running, and are allowed to do so. To the best of my knowledge, I believe JPM and HSBC are the only entities that are allowed to trade on the COMEX on a Sunday evening (now isn't that interesting! My source here is Doug Casey).

They execute the trades that the FED and Treasury want done, but since they know which way the market is going (REF: see Kim's second post on this subject!), they've made a ton of money on the front running trade over the years.

On a side note:
Going forward, it's now getting increasingly difficult for them (esp. JPM), as you implied, because they're playing with fire, yet they're holding unbelievably massive short positions in gold derivatives. As some have said, no sane, profit-maximizing commodities investor would ever do that, unless they are being compensated BIG TIME by some very wealthy backer!



On Apr 28 06:16 PM Freya wrote:

> obewon: are you familiar with the Specialist System which was dismantled
> early this decade because of "front running"?
>
> It was around for decades. IBM because of its size only had 1 specialist
> in the 70's. He had a Book and owned shares outright. He knew where
> all of the Institutional large block orders of 10k or more shares
> were priced to buy/sell since these orders were kept in his Book.
>
>
> If IBM took off to the upside, he would sell from his Book first,
> then he would sell his shares and then He would go One Hundred percent
> short to create the needed shares.
>
> When you make the statement that JPM and HSBC hold xyz short positions,
> my only comment is "same old, same old".
>
> Are they considered to be Primary Dealers? If they are, then they
> are fulfilling their function of providing Gold when there isn't
> enough. If they are not, then they are playing with fire.

Apr 29 10:45 AM

[obewon:]

@ Freya: Yeah, I understand.

What we’re now seeing with respect to the global gold market is very, very abnormal; no doubt, there’s a global war going on! Several conclusions that we can draw from all of this, in my opinion:

1. In the past, Sydney trading has always been rather quiet, but no more.
2. The action now starts in Sydney and in Hong Kong to drive the market down, and is generally done at the same time (around 3AM) from the US; this establishes the initial fix.
2. They (most likely JPM, since they hold approx. 80% of all the shorts!) generally makes 2 or 3 strikes shortly after the Sydney and HK open.
3. Their trades are unusual, since no profit-maximizing gold trader would normally do this.
4. According to the last few COT reports, even B of A and GS are now “in on this game, although they are small potatoes, compared to JPM (although GS is the big dog when it comes to manipulation of stock markets!)

Gonna be interesting over the next 2 or 3 months!

Apr 29 08:00 PM

[obewon:]

@ Freya (and all):

RE: Last Week's Significant Events (related to gold)

Go here for a very interesting read:
www.numismaster.com/ta...

It's quite understandable what is now happening to the price of gold. If I were in Geithner's shoes, I'd be real scared at this point in the game.

Apr 30 03:02 PM

[Freya:]

I was wrong, The Insider Index did not make it back into Bull territory, just barely missed.

May 02 09:55 PM

[Freya:]

Obewon: When millions of shares are reported as being sold in a short time all by the same family in the same stock, it has a tendency to skew the Insider index, it will drop back into bullish territory when the next report comes out. Plus the GPS sales are rather suspicious to begin with. The Founder acquired 20 million shares in the prior month which no one appears to have noticed although the sale of 20 million shares did.

Since Chinese Gold production is reported to be over 1,000 tons annually, I can easily see internal Gold retention providing the numbers revealed.

Gold hit a wall when the results of the Indian Gold Festival were revealed on Monday. The short squeeze rumors have proven to be rumors.

GLD has to hold $85, otherwise, I will have to reevaluate the Chart. It could be a H&S bottom but if it doesn't hold, The Double Top theory posited by some might come true.

It would sure smash my Junior Mining shares.

May 01 02:34 AM

[Freya:]

Today will prove to be very interesting. I'm hoping for an up move because $940-950 is an unfilled target for me and because the junior mining stocks I own are in very bullish patterns, esp. NXG.

So far, the battle has been in the mid-$890 area.

If you are into Oil, please consider this. A lot of demand destruction has occurred in the Gasoline patch, unemployment combined with the escalating use of Mass transit. I posit that escalating numbers of the employed will now drive.

Swine Flu Fear VS "Mass" transit.

Apr 30 02:24 AM

[Freya:]

Kim/Obewon: Believe me, I know exactly what you're talking about, there's a regular fist fight in the Asian Markets every evening. The Futures push Down every chance they get and Spot tries to push Up.

Recently, the gap between them narrows to less than $.50 cents when gold drops into the $870s with an occasional crossover. It widens above that level and goes back above $1 as it approaches $900.

I'm waiting for a sustained steady Spot above Futures evening or two before jumping on the Gold Bandwagon forcefully.

The Jury is still out but I will let Yellowhoard know because he is up in the wee hours too.

Apr 29 03:18 PM

[Freya:]

obewon: are you familiar with the Specialist System which was dismantled early this decade because of "front running"?

It was around for decades. IBM because of its size only had 1 specialist in the 70's. He had a Book and owned shares outright. He knew where all of the Institutional large block orders of 10k or more shares were priced to buy/sell since these orders were kept in his Book.

If IBM took off to the upside, he would sell from his Book first, then he would sell his shares and then He would go One Hundred percent short to create the needed shares.

When you make the statement that JPM and HSBC hold xyz short positions, my only comment is "same old, same old".

Are they considered to be Primary Dealers? If they are, then they are fulfilling their function of providing Gold when there isn't enough. If they are not, then they are playing with fire.

Apr 28 06:16 PM

[Freya:]

obewon: you are right on most but wrong on one very important item.

China has almost $2 Trillion in Foreign Currency reserves of which almost $700 Billion are USD debt.

But that's not the point. The Yuan is trading at the top of its recent range against the USD. This means that its currency has appreciated against the other currencies of the world by roughly 20%(ex-yen). As an Export driven nation it is trying to decouple from the USD without appreciating its own currency further so it can Sell goods to the other nations in the Asean Bloc which have dropped even more against the USD/Yuan.

How to do this without destroying the value of its USD holdings is the problem.

The way I figure it, They are using the USD to do all of the other Facts you mention. Whether its commodities, land, long term contracts, etc. China is spending those dollars.

When they are finished, I expect them to call for the immediate creation of SDRs to serve as the Worlds new reserve currency, the makeup of which will definitely not be in the USD's favor.

Who knows when this Might occur, but that's what I'm looking for.

Apr 28 05:57 PM

[Freya:]

Kim: Bombay Bullion Association lists the Monthly figures for Indian Imports...

Otherwise, no one really knows who has what and one does have to extrapolate occassionally.

I apologize... I had just come off a "discussion" about the fictional nature of the Swine flu. It was being pushed as a Media Conspiracy. Needless to say, I was slightly irked.

Having to deal with that total inanity and having read another "whatever I say is true" Article just prior to yours, I was ready to jump up and down on any tongue I could find.

Unfortunately, yours arrived propitiously. I keep hearing about this 403 ton bit from various sources but this is Pre-G20. The IMF lists its gold reserves as of 03/30/2009 (Their website) as 103.4 million oz. meanwhile someone else keeps posting an article that cites it as being less than half of that number.

Numbers are tossed about willynilly. Like I said, sorry. I like keeping tabs on people who explain their positions, I hope you don't mind.

Apr 28 11:16 AM

[Freya:]

Consideration.

Apr 28 03:33 AM

[Freya:]

Fact, The Indian Gold Festival Fizzeled will dealers selling gold at a discount at the end of the day.

Fact: Indian Gold dealers estimate sales to decline another 20-40% from last year's levels for the year as a whole.

Fact: Total Indian imports were 2.7 tons in the 1st quarter, down 96% from the previous year.

China, "the last couple of years", China's news release gave a time frame and how much gold they purchased on the open market.

Fact: 454 tons in 2003 to 1,054 tons in 2009
But you know it was in the last couple of years, how?

Fact: Open Market Purchases...None, reserves were increased from Scrap and Internal sources.

My position: If the Chinese people are following India's lead, then China has no need to buy externally. They can continue to buy scrap and Gold to keep people employed in those sectors.

As far as the Base metals are concerned, China has made no bones about their stockpiling. They are going gangbusters here. LME copper inventories dropped another almost 11,000 tonnes yesterday or about 2.2%, I imagine this will accelerate because of the Swine flu. I do not know how much of the World's supply of base metals comes from Mexico or precious metals for that matter, but this has to be taken into considerstion.

Apr 28 03:31 AM