Friday, January 17, 2014

"The Hows And Whys Of Gold Manipulation"

We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K.  - Eddie George, then Governor of the Bank of England, 1999
That quote was Eddie George in reference to the reason why he sold half of England's 800 tonne gold reserve.  Looking back, the sale was a colossal financial failure for England as the announcement of it drove the price of gold under $300 and ounce and most of the gold was sold well under $300/oz.  England will never get that gold back unless they are willing to pay a price that would be many multiples of the current market price for an ounce - or if they confiscate what remains in GLD...

The manipulation of the gold market by the U.S. Government and the Federal Reserve has been going on for decades.  It intensified after the Bretton Woods Treaty established the dollar as the global reserve currency.  Since the Fed rolled out its QE program, its manipulation of the gold market has ramped up to the point at which it has become obvious to anyone involved in the markets and who has half a brain.

Paul Craig Roberts has been working hard to write articles which expose the truth about how the Government is systematically dismantling the U.S. Constitution and Rule of Law and replacing them with a system of political and financial repression.  He invited me to write an article with him on how the Fed/Government manipulates the gold market for the purpose of defending QE and the dollar.  Here's the link:
                        The Hows and Whys of Gold Manipulation

Keep in mind that the article is read world-wide and translated into several different languages, so we had to do our best to explain securities markets concepts in a manner which would be accessible to anyone not familiar with how securities and bullion markets operate.

Just like every other instance in history of Government intervention in markets and economies, this scheme has created economic dislocations and severe adverse consequences.  When it ultimately fails, the collateral damage caused from this will impact everyone.

Faith is belief in something without evidence.  With all the evidence available, anyone who refuses to believe that the gold  market is manipulated is making a faith-based judgement.


  1. As you, I have 'faith' in the failure of the these markets...based on faithful evidence presented by the informed 'faithful'....thanks for your 'non faithful' blog


  2. An excellent article deserving of wider publication.

    "Gold in the hands of the people is the enemy of the state"
    -- A. Hitler

  3. Good article with you and roberts. So it all comes down to QE, stop and domestic economic problems, keep going and international problem.Police state required

  4. This may come as a crazy idea but believe it or not Obama winning the election and being president may have been a good thing. Reason - our present day system needed a strong surge of force to move it. Think of Obama as a laxative. Something had to change. Our present day political system is useless for many reasons moving forward. Way too many positions at the top. The federal government is like a dying dinosaur ready to come crashing to the ground ! Dismantling allot of the useless crap regarding the federal level and make more localized government become the effective force might be what's next in line for any real promise. Funny how the man himself didn't really do anything to make worthwhile changes for the good of this nation. His term certainly is shaping up to be the doorway to many other opportunities not pertaining to the man classified by this reader as the big "O".

    1. Barry O may be the last president of what is now known as the United States (ie I'm talking secession).

  5. But Dave, you didn't answer the key questions in the article.
    1. When will the gold suppression scheme end?
    2. How low can we go before the gold and silver move up?

  6. Brilliant article by you and Paul Craig Roberts. I understand most of it, except the need to slam gold after the taper announcement. I realize they are tapering into weakness, and believe the announcement was window dressing to fortify confidence in the dollar. I would have thought that the announcement would have caused interest rates to go up, dollar strengthen, and stocks and gold go down. What I gather from the article is a fall in stocks and bonds would lead to gold being an attractive play relative to stocks and bonds so the slamdown was enacted to preempt that from happening. Is that correct?

    1. Gold spike higher after an initial spike down. I expected that to happen in absence of market interference because everyone knows that the will have to reverse the taper and increase it at some point.

      Stocks were getting hammered. They massively intervened to get gold back down and stocks up.

  7. "We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it."

    After reading this quote, I began to wonder just how desperate the US Government and all governments and central banks would be to keep gold down today.

    We know China is buying gold with both hands, both the metal and mines. Suppose there comes a day when COMEX has run on gold by big consumers of gold (jewelry makers, electronics makers, users that need gold or they go out of business) and there is not enough gold to fill demand. In order to keep the price of gold from skyrocketing, the US might be forced to request gold from China.
    China could:
    1. Laugh in the face of Uncle Sam.
    2. Laugh in the face of Uncle Sam and publicly broadcast to all the people of China and the world that the US has no more gold.
    3. Agree to sell gold to the US/COMEX, IF the US agreed to stop interfering in China's backyard (stop supporting Taiwan, recognize Taiwan as part of the PRC, stop supporting Japan, recognize China's territorial claim to the Chinese Sea, etc.)
    It is not always about the gold, its sometimes about the leverage that gold can give its owners, especially when those nations are owners.

    We have no idea what behind the scenes deals would be worked out by the US to keep the system from coming apart. After all, if the US was willing to pull $700 billion out of thin air to save Wall Street from financial collapse back in 2008, and if the Federal reserve is willing to try to QE itself and the country to financial oblivion, what other dirty tricks would the US do to keep the game going?

    I don't mean t play devil's advocate, especially since old scratch has more than enough advocates from Wall Street and from banksters, I'm just thinking aloud and wondering what new dirty tricks the powers that be have up their sleeves to keep themselves in power for a little while longer.

    1. Even today’s premium of $17 is a substantial premium over the dilutive London spot price. And it’s undermining the LBMA’s efforts to steal forward production at a discount. But what’s really flying under the radar here, Eric -- and this is a big deal -- this is essentially a ‘shadow’ wholesale fix being set in Shanghai, well ahead of the AM and PM London fixes, and it’s going completely unnoticed and unreported by the (mainstream) media.

      These poached forwards have been historically relied upon by the LBMA bullion banks to pay rehypothecated bullion positions at a discount. And they are totally reliant on perpetual rollovers to continue the collateralizing game. And this move by China seriously erodes the influence the LBMA banks have on the global market.

    2. Interesting scenario, number 3. In the end, everything boils down to the Golden Rule ("he who has the gold makes the rules").

    3. ....and silver.

    4. The U.S. government might have 1 ace up their sleeve that they won't show until it is necessary :

  8. @Anonymous:
    "Think of Obama as a laxative."

    I think of Obama as what necessitates a laxative: An obstinate turd that makes your life miserable.

  9. St. Paul proclaims in Hebrews11.1 that "Faith is the substance of things hoped for, the evidence of things not seen." As with so many things there is a good faith as when we trust in something that we have been led to believe in absent any present confirming evidence because of our inner conviction that, in time, our faith will be confirmed regarding that trust. And there is bad faith when we are led to believe in something in which we place our trust that is actually antithetical to our expectations and which in time proves to be not based in fact. A subtle and yet ultimately important difference. In other words faith can confirm evidence in time. We are at that point, when the truth as you have so amply given witness to is being confirmed along with our good faith, reason, and sound judgment. Excellent and definitive article in collaboration with PC Roberts.

  10. Excellent article by you and PCR. Extremely well written. In view to the price fixing charges being raised by the German regulators and the fact that newly refined bars were sent back to the Germans from the Fed suggests that the gold suppression scheme is close to its end.

  11. Update:
    Flanagan now has his 1-hour Thursday webinar up on site:
    key point again is go to 53 min mark, where he shows commodity metals, crude, etc., in long triangle coiling formations.
    Also to note he says the Gann 60-year is late (was due to start Oct/2013, but this high is still in future, except now it's due soon), & it is very suspiciously quiet in commodities for so long, never seen before.

    1. Flanagan can not hit himself in the ass with a bull fiddle when it comes to these mkts; only thing he has been right on is stocks and slightly in the bonds

  12. Several months before the Soviet Union collapsed (in 1990 or '91 I believe?), the Soviets were selling into the market gold which had the stamp of the Czars, meaning they were scraping the bottom of the barrel and that collapse was imminent. Now (aside from the difficulties of Germany being able to repatriate its gold) there is anecdotal evidence that western bullion warehouses (the LBMA?) are supplying to the market gold which had been deposited with them in the 1960s and 1950s. More barrel scraping?

    Interesting times we're living in.

  13. The one question that this reader has is why all the pussy footing around the word manipulation of gold and silver !!?? I'll bet that if the physical gold and silver ever succeeded from the paper /derivative/hedge fund/etf/ make believe pha cacta dollar making scheme , that there would be no confusion. Manipulation = business as usual regarding the u.s govrnmnt and their moves to help keep the currency note alive and on life support of course .

  14. A New Way to Hold Gold
    Democratizing Gold

    In short, a fractional gram's worth of gold is affixed to layers of polyester, creating a note – called an "Aurum" – similar in dimension and thickness to a U.S. dollar bill. This gold (usually 1/10th or 1/20th of a gram) is commercially recoverable. So an Aurum offers similar potential as a coin or bar, in terms of providing a vehicle for storing and exchanging known, dependable increments of precious metals – just in much smaller (and more affordable) amounts than commercially available to date.

    The big idea here? In a world where a 1oz coin of gold costs over $1,200, an Aurum will let you hold a few dollars' worth of gold in a single note. If you've got pocket change, you can be a precious metals owner.

    And you don't have to change your behavior. You can store and transport an Aurum in your billfold along with your dollars.

  15. At Davos: Paul Singer To Warn Of Derivatives Catastrophe

    Paul Singer’s speech and later debate on the topic “Are Markets Safer Now?” is expected to shake the very foundation of the elite event, according to a letter to investors reviewed by ValueWalk. “We can only assume that the reason the global financial system is still… overleveraged, opaque, reliant upon the implicit and explicit support of governments for its very existence… is that fixing the problem would be too painful for powerful special interest groups,” the rough draft says, setting up for the next warning and pointing to government bailouts and the political lobbying machine that ensures they remain intact.

  16. Tragedy and Hope: Professor Carroll Quigley and the “Article that Said Too Little”

    Missed Opportunities and Omission in the Interview with Quigley

    In the aforementioned article “The Professor Who Knew Too Much,” the discussion of Quigley’s works and career are limited to a “Right Wing” vs. “Left Wing” dichotomy which does a great disservice to the historicity and veracity of the claims he made in his most famous and revelatory works “Tragedy and Hope: A History of the World in Our Time” and later “The Anglo-American Establishment: From Rhodes to Cliveden”. Thanks to independent researchers, a 1974 audio recording was recovered from the archives of Georgetown University which contains the actual interview that was conducted for this article. This is a very rare and candid interview of Professor Quigley in a lengthy discussion on the “controversy” surrounding “Tragedy and Hope”. The audio recording appears to have been in the public domain online since at least 1998. [5]

    “The argument that the two parties should represent opposed ideals and policies, one, perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to the doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people can “throw the rascals out” at any election without leading to any profound or extreme shifts in policy.” [6]

    – “Tragedy and Hope: A History of the World in Our Time” by Carroll Quigley (pg.1247)

  17. China's economy, the world's second-largest, grew at its slowest pace in 14 years in 2013, latest figures show.

    Its gross domestic product (GDP) expanded 7.7% from a year ago, the slowest pace of growth since 1999.

    The growth rate was better than the government's target of 7.5%. The pace of expansion was also the same as 2012.

    The data highlights the challenge policymakers face in sustaining China's high growth rate as they look to rebalance the economy.

  18. How to Manipulate the Entire IPO Market With Just $250 Million
    Monday, January 20, 2014 at 1:21AM

    Tech isn’t exactly booming, as we’ve seen from numerous revenue and earnings debacles. Most recently, Intel’s: revenues were down 1% from 2012 and 2.4% from 2011. Net income was down 13% from 2012 and 25% from 2011. Looking forward, they’d be flat, CEO Brian Krzanich warned. In 2013, the PC industry just saw its worst decline in shipments ever.

    Dell and HP announced big layoffs. Other tech companies too are “realigning” their workforce. And after rumors started spinning out of control on Friday, Intel confirmed that it too would axe 5% of its workforce of about 105,000 “to align our resources to meet the needs of our business.” Revelations of how the NSA has compromised products and services of US tech companies caused orders to collapse in China, Russia, and other countries, where orders were supposed to grow at big double-digit rates. It left IBM, Cisco, and brethren with a mess on their hands [read.... Costs Of NSA Scandal To Bleed US Tech For Years].

    But that hasn’t kept valuations of tech startups from being pushed into the stratosphere. Turns out, it’s relatively easy these days. By the stroke of a pen and $250 million, an elite club decided amongst each other that the “valuation” of on-line storage provider Dropbox was close to $10 billion.

    BlackRock, the world’s largest money manager with $4.3 trillion in assets, is leading the deal, according to unnamed sources of the Wall Street Journal. The elite club includes “previous backers,” and they included Goldman Sachs, Sequoia Capital, Index Ventures, and Accel Partner. In 2011, Dropbox had raised $250 million from these previous backers. The deal valued it at $4 billion. With the above stroke of a pen, the value of their investments has jumped 150%. With that same stroke of the pen, they also jacked up the future valuations of all other IPOs, and many more billions will be made – just like Twitter’s IPO helped jack up Dropbox’s valuation.

  19. US regulators ‘funded at a level to fail’

    “Whatever increase in the examination of advisers they are able to perform will have to be gained through efficiencies, and while I am certain that examiners’ productivity can be increased, I don’t think we can expect to see a significant change in the overall examination rate,” says Neil Simon, vice-president for government relations at the Investment Adviser Association.

    The CFTC will be able to reinstate a number of staff positions eliminated during across-the-board budget cuts last year. However, it too was hoping to add examiners for newly registered swaps dealers, execution facilities and clearing houses – one of the commission’s new responsibilities under the Dodd-Frank financial reform law.

    “To an enormous extent, they are going to be dependent on the industry self-regulatory organisations to provide that oversight,” says Barbara Roper, director of investor protection for the Consumer Federation of America.

    “The SEC situation is bad, but the CFTC situation is criminal.”

    Dennis Kelleher, president of Better Markets, the financial reform advocacy group, contends the technology allocations suggest the SEC and CFTC are “funded at a level to fail”.

  20. Price Inflation Will Force the US Mint to Once Again Change the Metal Content of Coins
    Price inflation indexes may not indicate much inflation, but the US Mint knows that the indexes don't reflect the true picture .

    The Mint is considering a change to the mix of metals it uses to make quarters, dimes and nickels, because of the climbing cost of production of the coins. reports WSJ.

    It now costs 1.8 cents to make a penny and 9.4 cents to make a nickel, costing the federal government about $104.5 million last year.

    If the materials are altered for the first time in half a century or more, some coins could have new colors and weigh less, says WSJ. It plans to keep the diameter and thickness of any potential new coins the same as existing specie.

  21. That Was The Weak That Worked: Part 3

    BUT several years later a conversation surfaced that had involved Bank of England Governor Eddie George, shortly after the Washington agreement was signed in 1999. Whereupon many of the doubts surrounding the motives behind the strange doings in the gold markets disappeared like my buddy Whipper West 20 seconds before the bar tab is presented:

    (Jesse’s Café Américain): In front of 3 witnesses, Bank of England Governor Eddie George spoke to Nicholas J. Morrell (CEO of Lonmin Plc) after the Washington Agreement gold price explosion in Sept/Oct 1999. Mr. George said “We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake.

    Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K.

    You want to find a smoking gun at the crime scene? Well this one has fingerprints on it and the words “Eddie George, Governor of the Bank of England” carved into the butt.

    Case closed. Except…

    Now, do you remember those two very quiet and matter-of-fact announcements I told you we’d get to? Well here they are:

    First, on April 14, 2004, came this:

    (Reuters): NM Rothschild & Sons Ltd., the London-based unit of investment bank Rothschild, will withdraw from trading commodities, including gold, in London as it reviews its operations, it said on Wednesday.

    Perfectly innocuous.

    Then on June 1st, a few weeks later, a similar and equally low-key announcement hit the wires:

    (Reuters) — AIG International Ltd., part of American International Group Inc., will no longer be a London Bullion Market Association (LBMA) market maker in gold and silver, the LBMA said on Tuesday.”

    OK … now Rothschild was an old, established name in the metals markets, but AIG? The derivatives-driven basket-case/liability insurance giant? What the hell were THEY doing up to their eyeballs in gold?

    Well, one of the most respected names in the bullion markets is that of Arthur Cutten, proprietor of Jesse’s Café Américain (if you follow gold and silver but don’t have that page bookmarked, I’d recommend you do so right now.) In a post he wrote in March 2010, Arthur asked a pertinent question: