Deep Capture: Manipulating Gold and Silver

[jtabeb]

Re: Deep Capture: Manipulating Gold and Silver

Thank you for stating the obvious. It needed to be said.

That's the problem with this country. Nobody states the obvious anymore.

[Camtender]

Re: Deep Capture: Manipulating Gold and Silver

Here's how it works. During a bull market, metals mostly go sideways, then they go up very fast, especially silver. When they do, sell some because they'll most likely go down again. Then buy more and hold it. Repeat.

Or take the iTulip approach. Buy it when it's lower and just hold until say 2020. Easy enough. Who cares about this nonsense.

Actually, I care and others do too. I think you are missing the big picture completely and I mean completely, but I like the buy silver low and sell high, I have never heard that before.

Perception defines money. Just ask Native Americans what was used for money before the Europeans and others showed up (you can ask me if you want since I am NA).

What is going to define our currency and the price of commodities going forward is the perception of our creditors, being billions of people across the river.

Therefore, at the end of the day, it matter less and less what anyone in the US thinks FDRs, gold, silver or base metals are worth or where they are headed.

The risk (and the reason for this posting - as far as my perception) is that the allegations of the PM market being traded on a paper fractional system at a 100:1 ratio (or whatever) is true and entities (China & India Inc. included) start wanting physical PMs and supply and demand kicks in. I would suspect we would have a currency problem here in the US at that point, but who cares..............right?????????????????????

Perception defines reality here on earth, and here in the US, our perception is going to matter less and less as we continue to head for insolvency.

[santafe2]

Re: Deep Capture: Manipulating Gold and Silver

2. Would you be so kind to post what sets the silver/gold price? Is it trading in actual physical gold, or is the price heavily influenced by supply/demand for paper silver/gold? Should it be?
What about those huge short positions that JPM and HSBC have? Are those legitimate short positions? How much bullion do they have to possess such huge short positions?

There are 3 main forces on precious metal pricing. Local currency, inflation expectations and fear. Within the context of that model, there is market manipulation. A smart metals investor is watching the top line issues to understand how metals should be moving. If they appear to be moving in a contrary fashion, one should suspect markets are being moved by other forces. When this happens, PM markets tend to move quickly. If up, take profits. If down, buy. This is not rocket science.

The details of how JPM or others manage their positions are just that, details. JPM doesn't matter in the larger view. Like GS, they are some of the smartest people on the planet, but they can't drive a market when a fair percentage of 6.8B humans can choose to own metals as a safeguard. Let them short and drive the price down for a while. It will be a good time to buy.

If you want to be an investor, invest. If you want to find conspiracies, I'm sure they are out there but I've no idea how one makes money at it.

[Rajiv]

Re: Deep Capture: Manipulating Gold and Silver

Santa Fe,

Then I presume you do not mind being sold 5 Eiffel Towers in Paris sight unseen for a million dollars each.

Because that is what is happening right now in both the PM market, and the stock market. What came out in the meetings was that the market was being leveraged 100:1 -- in other words for every kilogram of gold that was physically verifiable, they were selling 100 times as much.

Similarly, if you read Deep Capture, there is leverage occurring in the stock market as well (A process known as "Naked Short Selling") There are more stocks being sold than there are shares outstanding -- That has been well documented, and the DTCC had the gall to ask the company to issue more shares to cover that. That was adjudicated on.

If you do not own physical PM totally under your control, you own nothing. Similarly, if you do not have the stock certificate of a company, duly registered with the company, you own nothing.

What this does is to allow price manipulation by artificially increasing the supply, and to steal from true owners of a publically traded company, and from those who want to have their savings in PMs and commodities.

[Master Shake]

Re: Deep Capture: Manipulating Gold and Silver

Santa Fe,

Then I presume you do not mind being sold 5 Eiffel Towers in Paris sight unseen for a million dollars each.

Because that is what is happening right now in both the PM market, and the stock market. What came out in the meetings was that the market was being leveraged 100:1 -- in other words for every kilogram of gold that was physically verifiable, they were selling 100 times as much.

Similarly, if you read Deep Capture, there is leverage occurring in the stock market as well (A process known as "Naked Short Selling") There are more stocks being sold than there are shares outstanding -- That has been well documented, and the DTCC had the gall to ask the company to issue more shares to cover that. That was adjudicated on.

If you do not own physical PM totally under your control, you own nothing. Similarly, if you do not have the stock certificate of a company, duly registered with the company, you own nothing.

What this does is to allow price manipulation by artificially increasing the supply, and to steal from true owners of a publically traded company, and from those who want to have their savings in PMs and commodities.

I'm not sure how reliable Deep Capture is as a source of information. Barry Ritholz of The Big Picture is certainly no fan of Deep Capture's Patick Byrne.

http://www.ritholtz.com/blog/2009/12...ebook-friends/

[cobben]

Re: Deep Capture: Manipulating Gold and Silver

Mitchell's (Byrne's?) point of view was interesting, still digesting it.
Here's another piece to the puzzle that debunks GATA to some extent at least.
There are obviously lots of opposing vested interests fighting it out here.
Watch the markets, "the truth" will appear there first.

Of Gold Bugs and Market Parables
http://seekingalpha.com/article/1966...arket-parables


"I seldom comment on anything having to do with precious metals because, well, the subject tends to bring out, how to say it?, er, enthusiasts. Monomaniacal enthusiasts. But I feel somewhat compelled to do so, because Adrian Douglas, a board member of the Gold Anti-Trust Action Committee (GATA) structured his comments to the CFTC about metals position limits around one of my older writings on manipulation. (Douglas’s comments are all over the web–that’s just one link.) (Douglas delivered some impromptu testimony at the CFTC hearings on the subject.)
. . .

GATA and other gold bugs have chronic difficulties distinguishing between stocks and flows. They point to the fact that the volume of trades in gold exceeds actual gold stocks. The aptly-named (since it is high variance) ZeroHedge breathlessly repeats such things, claiming that this is evidence of a Ponzi scheme. Did these guys just fall of the turnip truck?: this is true for virtually every major commodity market. For a variety of reasons, the number of transactions, and frequently the open interest, is a multiple of the underlying deliverable supply.
. . .

The facts that the volume of trades, and open interest, exceed deliverable supply, and that very few contracts are settled by delivery, have characterized commodity markets since the birth of futures markets in the late-1860s. They have been the subject of comment and frequent criticism since that time. This is not, contrary to what Douglas says, a new thing.. . . ."


addendum:

What he is pointing out is that there is a fundamental difference between the stock market, which is a actual physical market of stocks where naked positions are really counterfeiting, and any futures market, which is a zero-sum game of inherently "naked" promises to deliver/receive at specified dates no less.

The London market is supposedly a true physical market and as such is more interesting.
<!--IBF.ATTACHMENT_909759-->

[Master Shake]

Re: Deep Capture: Manipulating Gold and Silver

Mitchell's (Byrne's?) point of view was interesting, still digesting it.
Here's another piece to the puzzle that debunks GATA to some extent at least.
There are obviously lots of opposing vested interests fighting it out here.
Watch the markets, "the truth" will appear there first.

Of Gold Bugs and Market Parables
http://seekingalpha.com/article/1966...arket-parables


"I seldom comment on anything having to do with precious metals because, well, the subject tends to bring out, how to say it?, er, enthusiasts. Monomaniacal enthusiasts. But I feel somewhat compelled to do so, because Adrian Douglas, a board member of the Gold Anti-Trust Action Committee (GATA) structured his comments to the CFTC about metals position limits around one of my older writings on manipulation. (Douglas’s comments are all over the web–that’s just one link.) (Douglas delivered some impromptu testimony at the CFTC hearings on the subject.)
. . .

GATA and other gold bugs have chronic difficulties distinguishing between stocks and flows. They point to the fact that the volume of trades in gold exceeds actual gold stocks. The aptly-named (since it is high variance) ZeroHedge breathlessly repeats such things, claiming that this is evidence of a Ponzi scheme. Did these guys just fall of the turnip truck?: this is true for virtually every major commodity market. For a variety of reasons, the number of transactions, and frequently the open interest, is a multiple of the underlying deliverable supply.
. . .

The facts that the volume of trades, and open interest, exceed deliverable supply, and that very few contracts are settled by delivery, have characterized commodity markets since the birth of futures markets in the late-1860s. They have been the subject of comment and frequent criticism since that time. This is not, contrary to what Douglas says, a new thing." <!--IBF.ATTACHMENT_909759-->

The comments section was interesting.

[Rajiv]

Re: Deep Capture: Manipulating Gold and Silver

I think the disconnect between Ritzholtz and Byrnes takes place because Byrnes considers the practice widespread, and a systemic risk, while Ritzholtz seems to think it is minor, and practiced only by a few bad apples, and therefore not a systemic problem.

If Byrnes is correct, then it takes the carpet out from underneath everybody who makes a living from financial markets -- and therefore the first reaction is always one of disbelief. If one hasn't been burnt by these shenanigans, then one will generally underplay Byrne's allegations -- no matter how well documented.

[Rajiv]

Re: Deep Capture: Manipulating Gold and Silver

I think you are missing what happened at the CFTC meeting -- from - It's admitted to the CFTC: London gold market is a Ponzi scheme

As dramatic as this revelation was at the CFTC hearing, there was another bombshell at the hearing. This was the testimony I was able to deliver at the hearing while assisting Harvey Organ with his testimony. I was able to show that the London Bullion Market Association (LBMA) over-the-counter gold market is nothing but a massive "paper gold" Ponzi scheme. What was then astonishing is that the bullion bank apologist, Jeffrey Christian of CPM Group, who has always been staunchly against GATA, endorsed my comments as being "exactly right" and went on to confirm that the LBMA trades more than 100 times the gold it has to back the trades.

There were lots of almost as equally explosive admissions at the hearing, so I have made a transcript of the relevant section of the webcast. I have posted the two short video clips here and here which are what have been transcribed.

http://www.youtube.com/watch?v=9wIMpe9SjfQ
http://www.youtube.com/watch?v=e9bU0r6JP4s

The transcript is given below with some notes added by me.

* * *

COMMISSIONER SCOTT O'MALIA: Both Mr. Organ and Mr. Epstein in the second panel raised the concerns that short positions exceed the physical supply. The second panel kind of argued that that wasn't a concern. Are you concerned that the shorts will not be able to deliver if called upon?

JEFFREY CHRISTIAN: No. I am not at all concerned. For one thing, it has been persistently that way for decades. Another thing is that there are any number of mechanisms allowing for cash settlements and problems, and a third thing is, as many people who are actually knowledgeable about the silver market and the gold market have testified today, that almost all of those short positions are in fact hedges -- the short futures positions are hedges, offsetting long positions in the OTC market. So I don't really see a concern there.

[NOTE: It is interesting that Christian is not concerned about the ability of the shorts to deliver because they can cash-settle. He clearly has no understanding that when someone wants to buy precious metals, giving him cash instead is a failure to deliver, a default. But Christian is not concerned. He says that the short position is actually hedged by a long position on the OTC, but we will see later in this testimony how he describes the "OTC physical market" and we will see that the long position is not bullion but is in fact an unbacked (or only partially backed) IOU for bullion.]

COMMISSIONER O'MALIA: Mr. Organ, would you like to respond?

HARVEY ORGAN: I do see a risk on this, and I think it is a risk that we have to be very, very careful of. As countries like China, South Korea, and Russia start demanding and taking physical delivery of their gold and moving it offshore to their shores and putting pressure on the Comex, we will probably come to a point in time where we will have a failure to deliver.

ADRIAN DOUGLAS: Mr. Chairman, could I make a comment?

CHAIRMAN GARY GENSLER: No. Who are you?

ADRIAN DOUGLAS: I would ...

CHAIRMAN GENSLER: No. I said no.

DOUGLAS: Oh, you said no?

CHAIRMAN GENSLER: I don't know, who is this?

DOUGLAS: I am Adrian Douglas. I am assisting Harvey.

CHAIRMAN GENSLER: All right, Sir. Yes.

DOUGLAS: I would just like to make a comment. We are talking about the futures market hedging the physical market. But if we look at the physical market, the LBMA, it trades 20 million ounces of gold per day on a net basis, which is $22 billion. That's $5.4 trillion per year. That is half the size of the U.S. economy. If you take the gross amount, it is about 1 1/2 times the U.S. economy. That is not trading 100-percent-backed metal; it's trading on a fractional-reserve basis. And you can tell that from the LBMA's Website, because they trade in "unallocated" accounts. And if you look at their definition of an "unallocated account," they say that you are an "unsecured creditor." Well, if it's "unallocated" and you buy 100 tonnes of gold even if you don't have the serial numbers, you should still have 100 tonnes of gold, so how can you be an unsecured creditor? Well, that's because it's fractional-reserve accounting, and you can't trade that much gold -- it doesn't exist in the world. So the people who are hedging these positions on the LBMA, it's essentially paper hedging paper. Bart Chilton uses the expression "stop the Ponzimonium" and this is a Ponzi scheme. Because gold is a unique commodity and people have mentioned this, it is left in the vaults and it is not consumed. So this means that most people trust the bullion banks to hold their gold and they trade it on a ledger entry. So one of the issues we have got to address here is the size of the LBMA and the OTC markets because of the positions which are supposedly backing these positions which are hedges, but it is essentially paper backing paper.

[8 seconds of silence]

CHAIRMAN GENSLER: Oh. I guess I get time. Errr. ... Umm. I don't have any other questions. Commissioner Dunn.

COMMISSIONER MICHAEL DUNN: I appreciate the difficulty of trying to do this by remote, but at the end of your testimony you start talking about bonafide hedge exemptions for commercial traders and must be part of position limits and not to grant hedge exemptions to swap dealers would be devastating for liquidity of exchanges and the price discovery capacity, and we got into who determines what is legitimate. But could you amplify on that a bit and what you see as a danger there?

CHRISTIAN: Yes, I can amplify on it. But amplifying on it a bit is more difficult because it is a very big subject. The first thing is that precious metals, copper, other metals, energy -- these are all traded internationally and are fungible commodities, by and large. There are a lot of strange things that have been misspoken about the difference between the wholesale and the retail market and we don't really have the time to go over those, I think. But the fact of the matter is. ...

[The lights go off.]

CHRISTIAN: Oh, excuse me. I am in a building with motion-sensitive lighting and it doesn't recognize what I do as human activity.
CHAIRMAN GENSLER: Those were your words, not anybody's here.
CHRISTIAN: No, they were my wife's! If you start putting position limits on bonafide hedgers, for example, the bullion banks -- and the previous fellow was talking about hedges of paper on paper and that is exactly right. Precious metals are financial assets like currencies, T-bills, and T-bonds; they trade in the multiples of a hundred times the underlying physical and so people buying them are voting and giving an economic view of the world or a view of the economic world, and so when you start saying to a bank I have a number of people. ...

[NOTE: This is mind-blowing. Christian openly admits that the LBMA OTC market is not trading in physical gold or silver but in paper promises. But gold is not intended to be a "financial asset" like T-bills and currencies. That is the whole point of owning it. Actual physical bullion is a tangible asset with intrinsic value that doesn't have counterparty risk. Christian believes that the purpose of trading paper promises in gold is for investors to "vote" on their view of the economic world. He confirms that the LBMA trades hundreds of times the real underlying physical gold. This is even a higher estimate than I have made. The LBMA is, as I asserted before the commission, a giant Ponzi scheme.]

CHRISTIAN: Well, actually let's go back to a concrete example of Mr. Organ when he was talking about August of 2008 when there was an explosion in the short positions in gold and silver held by the bullion banks on the futures market and he seemed to imply that that was somehow driving the price down. If you understand how those bullion banks run their books, the reason they had an explosion in their short positions was because they were selling bullion hand over fist in the forward market, in the physical market, and in the OTC options market. Everyone was buying gold everywhere in the world, so the bullion banks who stand as market makers were selling or making commitments to sell them material and so they had to hedge themselves and they were using the futures market to do that. So if you place position limits on the futures market, they will have to find some other mechanism to hedge themselves -- and they will. And someone else will provide that market.

COMMISSIONER DUNN: Jeffrey, I am going to cut you off because I want to ask another question of Mr. Organ.

[NOTE: It is hard to imagine more inane drivel than this. Christian conjures up the image of bullion bankers selling bullion like crazy to the public, which is in a feeding frenzy, and the bullion bankers are "hedging themselves" by selling gold short on the Comex!? Did he get that idea from a blonde? A little while later Chairman Gensler also realized that this was the biggest baloney ever concocted as a cover for massive gold market manipulation by JPMorgan Chase and HSBC in 2008 and so he poses a follow-up question.]

CHAIRMAN GENSLER: I would like to follow up on Commissioner Dunn's question for Mr. Christian, if I might, because I didn't quite follow your answer on the bullion banks. You said that the bullion banks had large shorts to hedge themselves selling elsewhere, and I didn't understand. I might just not have followed it and you're closer to the metals markets than me on this, but how do you short something to cover a sale? I didn't quite follow that?

CHRISTIAN: Well, actually I misspoke. Basically what you were seeing in August of 2008 was the liquidation of leveraged precious metals positions from a number of places and the bullion banks were coming back to buy it, and they were hedging those positions by going short on the Comex and that is really what it was.

[NOTE: Even on a second attempt Christian invents the most ridiculous poppycock to explain away the blatant manipulation of the precious metals in 2008. If, in his own words, investors were buying gold hand over fist everywhere in the world, why would leveraged long holders dump all their long holdings? They ordinarily would have been making a fortune. The bank participation report of August 2008 shows that two or three bullion banks sold short the equivalent of 25 percent of world annual silver production in four weeks and the equivalent of 10 percent of annual world gold production. There was simultaneously a decrease in their long positions, which were almost non-existent anyway, which is incoherent with a notion that the bullion banks were mopping up dumped leveraged investments. For an intelligent and coherent explanation of what happened in August 2008 read my CFTC written testimony here:]

https://marketforceanalysis.com/index_assets/CFTC%20HEARING%20ON%20METAL...

CHAIRMAN GENSLER: So I am glad I asked because I really didn't follow that. But if I think of the earlier charts of the positions of the bullion banks that Mr. Sherrod had, these concentrated shorts have been, well, you know, reasonably consistent. They are not exactly the same on every day, but his charts showed a similarity across a couple of years. So what are bullion banks -- I mean, I am just trying to understand -- what are bullion banks hedging on the other side? We heard from other panels, but you seem to be familiar. Is it warehouse receipts? What is it?

CHRISTIAN: Well, it's a tremendous number of things. You were at Goldman shortly after me and we had an MIS system that kicked out a daily gold book.

CHAIRMAN GENSLER: That's really remarkable because we don't seem to have a lot of similar views, but, you know, a lot of people were at Goldman Sachs.

CHRISTIAN: Well, I didn't like the trends at Goldman, so I left in 1986. But honestly, and bad jokes aside, if you look at a bullion bank's book -- its gold book, for example -- you will see an enormous number of things. There will be gold forward purchases from mining companies. There will be forward purchases from refineries. There will be gold that has been leased out to electronics manufacturers, component manufacturers, and countless manufacturers and jewelers. As gold flows through the beneficiation process -- and again, these are all long, complex issues that are hard to reduce -- but, you know, a lot of producers will sell their gold the moment it leaves their possession at the mine. It might be in concentrate form or it might be in dore form. It then goes to a smelter or a refinery. The bullion bank buys that and it agrees a price at the time it is buying it but it won't be allowed to sell that metal until the refinery outturn, which is maybe two weeks but it could be six months. So they will go into the market and short the market in order to cover the commitment they have made to buy at that price and then when they get the metal in the physical market, then they can either sell that metal in the physical market and unwind the hedge in the futures market or the forward market or do something else. There are all sorts of other derivative contracts that investment banks and bullion banks will sell to investors, to other banks, pension funds, to insurance companies, and each of those will often have a long exposure in gold, which will be hedged with an offsetting short position. [NOTE: There he goes again with that blonde idea that when you sell gold to someone, you hedge that with a short position.] So if you look at a bullion bank's gold book or silver book, you would find a large range of topics. One of the things that the people who criticize the bullion banks and talk about this undue large position don't understand what is the nature of the long positions of the physical market and we don't help it. The CFTC, when it did its most recent report on silver, used the term that we use, "the physical market." We use that term as did the CFTC in that report to talk about the OTC market -- in other words, forwards, OTC options, physical metal, and everything else. People say, and you heard it today, there is not that much physical metal out there, and there isn't. But in the "physical market," as the market uses that term, there is much more metal than that. There is a hundred times what there is. If I look at the large short positions on the Comex, my question is: Where are the other shorts being hedged? Because the short position that I believe the bullion banks use to hedge their physicals is larger than their short position on the Comex, and the answer is that they hedge it in the OTC market in London.

CHAIRMAN GENSLER: I thank you for that detailed discussion

* * *

This is a stunning revelation. Christian confirms that the "physical market" is not in fact a physical market at all. It is a loose description of all the paper trading and ledger entries and some physical metal movements that occur each day on behalf of people who believe they own bullion in LBMA vaults but in fact don't. They are told they have "unallocated gold" or "unallocated silver," but that does not mean the LBMA has physical metal set aside for those customers and has just not given specific bar numbers to the customers.

No, it is the most cynical and corrupt definition of "unallocated" -- the customer has NO bullion allocated to him. NONE!

The LBMA defines the owners of "unallocated accounts" quite clearly as "unsecured creditors." That means they have NO collateral. NONE.

Can it be any clearer? It is a giant Ponzi scheme.

[zilbo79]

Re: Deep Capture: Manipulating Gold and Silver

Mitchell's (Byrne's?) point of view was interesting,

The facts that the volume of trades, and open interest, exceed deliverable supply, and that very few contracts are settled by delivery, have characterized commodity markets since the birth of futures markets in the late-1860s. They have been the subject of comment and frequent criticism since that time. This is not, contrary to what Douglas says, a new thing.. . . ."

<!--IBF.ATTACHMENT_909759-->

Interesting. So basically what he's saying is that price manipulation by false paper promises (counterfeit) in this market has been in place since the beginning therefore it is OK I can trust this market.

I tend to agree with Mitchell that this just makes the notion of a market laughable. How is it a market when you can't trust the quotes when you know someone is just creating false paper promises (counterfeit) upon paper promises with no actual deliverable gold?

What Christian was saying is that every ounce of gold or silver is being sold 100 times. This would not be problematic if we were speaking of some dusty market in Central Asia with rows of traders’ stalls wherein some commodity (such as gold, silver, radios or Kalashnikovs) were being sold and resold in rapid-fire succession: there, our sensibilities about scarcity, value, and price discovery would actually grip reality. Here, however, we are talking of markets where the distinction between reality and representation has become as blurry as the last round of a game of musical chairs, enabling some sellers to offload paper IOUs promising eventual delivery of silver and gold – promises that would be impossible to keep if some small segment of the buyers were to demand delivery of the real thing.

...

This is slightly absurd. Later in his testimony, Christian himself said that it was “exactly right” to say that the hedges are nothing more than hedges of “paper on paper” – a particular sort of merry-go-around where one IOU is settled by another IOU, with these IOUs outnumbering real gold and silver by multiples of a hundred times.

As for the notion that cash settlement solves the problem, Maguire noted in his radio interview that cash settlement “is the very definition of default. If somebody wants to buy gold and silver and instead they’re given cash, that is a default.” In addition, “there are people who will not want cash – Chinese, Vietnamese, Russians – people looking for the metal, they will want to take it, and that will cause a default on the Comex [the metals exchange] because the Comex will be drained…that was the word that was used by several people making testimony [at the CFTC meeting], that the Comex would be drained…” [emphasis added]

It seems that Mitchell's article makes the case for owning physical gold all the more stronger.

[cobben]

Re: Deep Capture: Manipulating Gold and Silver

"I think you are missing what happened at the CFTC meeting -- from - It's admitted to the CFTC: London gold market is a Ponzi scheme"

What I see is an amazing lack of interest in understanding how these various markets really work together as a whole.

That does not mean that the LBMA is necessarily a ponzi scheme, just that Christian seems to be semi-clueless as to what is really going on. That in itself is scary enough.

[Rajiv]

Re: Deep Capture: Manipulating Gold and Silver

What that shows to me is that most players are not buyers of gold, but rather speculators, and therefore do not take delivery of the commodity or instrument.

This action allows market makers the opportunity to "skillfully" apply the "art" of market making to "temporarily" increase the "supply" of gold and line their own pockets ("brokerage fees") -- however, this "temporary" increase in supply makes a hash out of price discovery -- and therefore the market really becomes a meaningless method of bringing a balance between supply and demand.

This process I believe is occurring in most financial markets today.

[cobben]

Re: Deep Capture: Manipulating Gold and Silver

"the market really becomes a meaningless method of bringing a balance between supply and demand.

This process I believe is occurring in most financial markets today."

A quick look at their site shows offhand that the LBMA is much more than a simple physical market clearing organization, so what one really wants to know then is to what extent the LBMA system has been corrupted, if at all.


http://www.lbma.org.uk/london


The London Bullion Market

London is the focus of the international Over-the-Counter (OTC) market for gold and silver, with a client base that includes the majority of the central banks that hold gold, plus producers, refiners, fabricators and other traders throughout the world.
Members of the London bullion market typically trade with each other and with their clients on a principal-to-principal basis, which means that all risks, including those of credit, are between the two counterparts to a transaction. This is known as an ‘Over the Counter’ (OTC) market, as opposed to an exchange traded environment.
The London bullion market is a wholesale market, where minimum traded amounts for clients are generally 1,000 ounces of gold and 50,000 ounces of silver.
Unlike a futures exchange – where trading is based around standard contract units, settlement dates and delivery specifications – the OTC market allows flexibility. It also provides confidentiality, as transactions are conducted between the two principals involved.

[Southernguy]

Re: Deep Capture: Manipulating Gold and Silver

First thing Monday morning: Selling all GLD. Buying physical (at a 6% surcharge, where I live) buy nevertheless....the real thing is always THE REAL THING.

Interesting. So basically what he's saying is that price manipulation by false paper promises (counterfeit) in this market has been in place since the beginning therefore it is OK I can trust this market.

I tend to agree with Mitchell that this just makes the notion of a market laughable. How is it a market when you can't trust the quotes when you know someone is just creating false paper promises (counterfeit) upon paper promises with no actual deliverable gold?

It seems that Mitchell's article makes the case for owning physical gold all the more stronger.

[icm63]

Re: Deep Capture: Manipulating Gold and Silver

Metal Man,

I believe the whistle blower and Gata made a more important point rather than mere price manipulation, the point that concerns me was that paper gold may not be backed with 1 x 1 physical gold, and that it could be as high as 100 x 1 (paper gold to physical gold).

NOTE: Enron, Lehman, had auditors as well.

Which is super charger bullish for physical GOLD ONLY. Anything hard, silver, copper, oil, etc