PDA

View Full Version : Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen



EJ
04-05-10, 03:59 PM
http://www.itulip.com/images2/notrealB300.jpgSilver price manipulation? If it looks too bad to be true, it probably is

I continue to receive emails asking for my opinion on the now week old report by purported silver fraud whistle blower Andrew Maguire and Adrian Douglas of GATA. Their tale of silver price manipulation involving bankers and regulators told in an interview on the King World News last week has been billed as the “largest financial fraud in history.”

As a long time gold and silver investor, not a trader, I’m probably the wrong guy to ask, because I’ve never been a fan of GATA and price manipulation theories. I think it's a lot of nonsense, and this story strikes me as no more credible than any previous one.

For readers who are not familiar with the organization, GATA is the Gold Anti-Trust Action Committee. I became aware of GATA before the group’s inception, when the idea of forming such a group was batted around gold sites such as Kitco’s old forums that I was reading in the mid 1990s as background research before getting into the gold market in 2001.

GATA’s mission is “to advocate and undertake litigation against illegal collusion to control the price and supply of gold and related financial securities.” The premise of GATA was that one or more trusts exist to control the price of gold. Later GATA extended its mission to include the silver market where manipulation is also believed by some traders and investors to occur.

The gold trust of course aims to suppress gold and silver prices not raise them. If the purpose of the trust was to push gold and silver prices up, then who’d complain and why would GATA exist? GATA’s beef is that a cabal of investment banks, central banks, and other nefarious and well-funded parties in the gold and silver markets act to push prices around in the short-term, taking money from independent traders, and also down in the long-term, taking money from buy-and-hold gold investors like me.

Before I go on, I should point out to new readers that my view of the gold and silver markets is not disinterested. I write from the vantage point of one who got into the gold market in 2001 when gold traded at $265. I also bought silver, but not nearly as much, in the same year at an average price of $4.25.

Since then I’ve checked in on GATA from time to time when stories alleging gold and silver price suppression cropped up. Over nine years, as numerous GATA reports of price manipulation appeared, I watched the price of gold move year after year in one direction: up. In fact, the gold price has not ended one year during that period below its opening price. Silver was more volatile on an annual basis, but nine years later it now also trades for more than four times what I paid for it. The relatively small platinum purchase I made has by comparison risen only 3.7 times, but I never hear about platinum price suppression.

As I watched the price of my gold and silver rise, I found GATA’s claims of gold price suppression increasingly curious. If there is a cabal scheming to hold down the price of gold and silver, it must be an exceedingly stupid and poorly organized cabal. It appears that it goofed and suppressed the stock market instead.

http://www.itulip.com/images2/goldvsstocks2001-2009.gif

Gold price rises 330% since I bought it in 2001, two years after GATA was formed





Nine years of gold rising faster than most commodities, including platinum, has done nothing to dissuade GATA from searching for evidence of illegal gold and silver price manipulation.

To be fair, GATA’s focus is not on long-term gold and silver investors like me but traders who have to duke it out in the gold and silver spot and futures markets on a daily basis.

I don’t trade because I don’t think I can win more money on short-term bets than it costs me in time and transaction costs compared to other things I can be doing. I don’t blame anyone else for trying, but whether illegal manipulation is occurring in the markets or not, I view markets as battlegrounds where the big players always have an advantage over the little guy.

For example, here are a few animated charts that compare one day gold and silver trading on three different days in 2008.

http://www.itulip.com/images2/goldVSsilverNOSYNCH060808.gif

Gold and silver intraday June 5, 2008. Gold spikes up at noon, silver doesn’t.



http://www.itulip.com/images2/goldVSsilverSYNCH061908.gif

Gold and silver intraday June 19, 2008. Both spike up around noon.



http://www.itulip.com/images2/goldVSsilverSYNCH062208.gif

Gold and silver intraday June 22, 2008. Both spike down around noon.





When I see gold and silver trade this way, I’m thinking that a lot of big money is stacked against me in short-term trading. Call it manipulation or call it big money beating the little guy, as long as the trades are legal, the situation is no different than in any other market, such as the housing market today where huge pools of money are buying up large numbers of properties in Florida and California at prices that individual buyers will never see.



http://www.itulip.com/images2/notrealA300.jpgFor evidence of malfeasance, GATA relies primarily on the testimony of individuals in the gold and silver industry.

The KWN interview of London metals futures trader Andrew McGuire is the latest “evidence” of illegal manipulation. As I began to listen to the interview, I was stopped not two minutes in by his assertion that banks had "clearly, clearly, clearly" colluded to bring silver prices down from around $20 to around $9 around the time of the collapse of Bear Stearns in 2008 “over a matter of weeks.”

There has been only one period over the past ten years when silver prices fell from over $20 to below $9. That was in 2008.

http://www.itulip.com/images2/silver2008.gif





The price decline did not happen over a “period of weeks” but over a span of seven months.

The focus on silver during this period is illogical. Silver was not the only victim of the 2008 price collapse. All commodity and metals prices plunged then. The chart below shows the relationship between silver, the CRB metals price index, and the CRB commodity spot price index over the period in question.

http://www.itulip.com/images2/silvervscrb2008.gif





Silver fell to the same extent as the entire metals complex, around 50%, while all commodities fell 31%. Were all these prices under the control of the cabal through the futures market? That's quite a cabal!

This is the primary reason for my skepticism about GATA since day one. They never attempt to correlate gold and silver price movements to any external event that may at the same time be influencing the prices of many other commodities that they don't care about because they and their constituents don't own them. The fixation on gold and silver leads to repeated errors of inductive reasoning as relevant pricing factors are excluded in the calculation of the theory of price manipulation.

Next McGuire asserts that he accurately predicted silver price movements on February 5, 2010, and that these price movements conclusively proved price manipulation, which proof a market regulator failed to fully appreciate.

My observation is that sometimes the market starts the day up then falls, and other days down, then rises.

http://www.itulip.com/images2/silverupdown.gif


Up then down


http://www.itulip.com/images2/silverdownup.gif


Down then up






McGuire claims he correctly forecast a rise followed by a decline on February 5, 2010 before the fact based on his analysis of the futures market. In my view, he had a 50/50 chance of getting it right. If he correctly predicted the pattern of silver trades three or four times in a row, then I’d start to believe that he may be on to something, but this one instance, even if it were independently verified, does not prove McGuire’s ability to forecast silver price is better than random chance.

As a gold and silver investor not a trader, that’s about as far as I can go based on my knowledge of and impressions of the market.

One of our members xPat (http://forum.itulip.com/forums/member.php?u=33946) is a professional global commodities trader believes that in fact evidence of illegal trading activity in the silver market abounds. Unfortunately, according to him, GATA has the case completely wrong, and McGuire’s argument is full of holes. Here’s his take (edited for style):
1. "Illegal naked short selling" is a phenomenon of the stock market, not the futures market. Most contracts sold in the futures market are "naked," that is, the seller doesn't own the underlying, and this is perfectly normal. It is the intended functioning of the market. There is nothing illegal going on. No conspiracy. No fraud.

2. Contrary to GATA's allegations, Jeff Christian's testimony to CFTC was not an admission of anything. He merely stated several obvious, well-known facts about the futures market. There is no fraud, no cover up, and no conspiracy revealed by his 100:1 comment.

3. GATA's assertions about selling contracts without owning the underlying as amounting to fraud or default are ludicrous and exhibit an extraordinary ignorance on the part of GATA principals of how the market operates. Contracts held past first notice date and then not delivered are a form of default, but that's not what's in question here. GATA is working for an entirely legitimate cause—to end the very real downward manipulation of silver and gold markets by JP Morgan—but their leadership has demonstrated categorical incompetence beyond any doubt. GATA leadership should step down now and make room for competent people who actually understand commodities markets to take over and fight this very important cause.

4. Andrew Maguire's motives should be scrutinized closely. The GATA people may just be ignorant, but someone with Maguire's experience in futures trading couldn't possibly be so incompetent as to have supported the statements made in the King World News interview. He says rich Asians are bugging him, waiting for the green light to squeeze the shorts in silver. I have to wonder whether he's actually trying to meet those rich Asians for the first time to attract them as clients. His boy scout whistle blower story is extremely compelling at first glance, but to anyone who actually trades futures for a living they just don't hold up to close scrutiny.

5. The attempted assassination story is also highly suspect. JPM would only be adding credibility to his futures manipulation story by trying something so stupid. I have to wonder if he himself staged it as a way to generate media attention.
6. Ron Kirby is the "analyst" who broke the <leo_highlight style="border-bottom: 2px solid rgb(255, 255, 150); background: transparent none repeat scroll 0% 0%; cursor: pointer; display: inline; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;" id="leoHighlights_Underline_0" onclick="leoHighlightsHandleClick('leoHighlights_Underline_ 0')" onmouseover="leoHighlightsHandleMouseOver('leoHighlights_Underl ine_0')" onmouseout="leoHighlightsHandleMouseOut('leoHighlights_Underli ne_0')" leohighlights_keywords="tungsten" leohighlights_url="http%3A//thebrowserhighlighter.com/leonardo/highlights/keywords?keywords%3Dtungsten">tungsten</leo_highlight>-salted gold story with what I consider to be some very sensationalist and factually inaccurate writing. He is the man who wrote about "naked short selling, an illegal act where a someone sells a commodity contract in the futures market even though they don't own the underlying commodity." (Disclaimer: quoted statement is from memory - I'm sure it's substantially accurate but really don't have time to go check Kirby's article for exact wording).Anyone who understands the futures market would immediately recognize this nonsense for what it is. "Illegal Naked Short Selling" is a real issue, but the phrase relates to the stock market, not the futures market. Futures are a derivative market, and the seller isn't expected to own the underlying. There is nothing illegal about that whatsoever, and it is most often the case in most commodities. So Kirby either has no clue what the futures market actually is or how it operates, or else he's engaged in an intentional disinformation campaign designed to put fear, uncertainty and doubt into the metals markets. I can't decide which, but either way I have zero respect for this character.In his original piece breaking the <leo_highlight style="border-bottom: 2px solid rgb(255, 255, 150); background: transparent none repeat scroll 0% 0%; cursor: pointer; display: inline; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;" id="leoHighlights_Underline_1" onclick="leoHighlightsHandleClick('leoHighlights_Underline_ 1')" onmouseover="leoHighlightsHandleMouseOver('leoHighlights_Underl ine_1')" onmouseout="leoHighlightsHandleMouseOut('leoHighlights_Underli ne_1')" leohighlights_keywords="tungsten" leohighlights_url="http%3A//thebrowserhighlighter.com/leonardo/highlights/keywords?keywords%3Dtungsten">"tungsten</leo_highlight> story," he claimed to have personally seen shipping receipts proving that <leo_highlight style="border-bottom: 2px solid rgb(255, 255, 150); background: transparent none repeat scroll 0% 0%; cursor: pointer; display: inline; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;" id="leoHighlights_Underline_2" onclick="leoHighlightsHandleClick('leoHighlights_Underline_ 2')" onmouseover="leoHighlightsHandleMouseOver('leoHighlights_Underl ine_2')" onmouseout="leoHighlightsHandleMouseOut('leoHighlights_Underli ne_2')" leohighlights_keywords="tungsten" leohighlights_url="http%3A//thebrowserhighlighter.com/leonardo/highlights/keywords?keywords%3Dtungsten">tungsten</leo_highlight> slugs manufactured in the Midwest USA were shipped to Fort Knox as part of a clandestine secret military operation aimed at defrauding the world by replacing all the gold in Ft. Knox with Tungsten-filled bars. Or somesuch hogwash. Go read his story if you want to know the exact plot line... But now in the latest version of this spy novel (posted by Kirby on ZeroHedge just the other day), he claims the 400-oz tungsten blanks were manufactured in eastern Europe and shipped to Ft. Knox. In the first article he claimed he had seen shipping receipts proving the tungsten blanks were made in the US. Minor inconsistency there...

Of course Kirby never bothers to mention that although gold and tungsten have nearly identical density, they have completely different ultrasonic response frequencies, and that a tungsten fake would be spotted instantly if assayed by any sophisticated buyer using ultrasonic verification. That's a rather odd detail to leave out. Unless you're writing conspiracy drivel for the intentional purpose of scaring people.
His recent piece on Zerohedge was an embarrassment to ZH, and is full of factual inaccuracies. This guy just plain doesn't understand how futures markets function and prefers to flaunt his ignorance publicly rather than educate himself. It's shameful that he's getting so much coverage.

7. There is a strong body of evidence assembled by Ted Butler alleging that Bear Sterns was engaged in a massive concentrated short position that was taken over by JP Morgan and was still being used to manipulate the market right up to just before the CFTC hearing. I find Butler's analysis of the COT reports revealing this highly concentrated short to be highly credible. Whether that very large short is truly being used to manipulate the market to the downside is something I can neither prove nor disprove, but I think the evidence Butler has assembled certainly warrants a closer look by regulators. GATA has very real evidence of a large concentrated short and a plausible allegation that it exists purely for downside market manipulation. Those claims certainly warrant thorough investigation. This evidence contrasts with this business of a JPM short and the utter nonsense being thrown around by GATA relative to the 100:1 "leverage" (sic) business.

I predict their numerous inaccurate statements in the KWN interview will be used to discredit them in a future public hearing.I'm not an expert in the commodities futures market so I cannot evaluate xPat's counter arguments to McGuire's, but I know that many of our members are as a group exceedingly sharp and well versed on the subject, and I have no reason to doubt xPat. He offers further clarifications of his opinions here. (http://www.itulip.com/forums/showthread.php?p=156224#post156224) [/URL] I will leave it to the iTulip community to decide.

The remaining assertion that banks are manipulating gold and silver to manipulate the dollar makes no sense. The exchange rate value of the dollar can be manipulated by setting gold prices and was back when the dollar was backed by gold. This was the primary mechanism of dollar devaluation by FDR in 1933. But the US is not on a gold standard. If it's on any commodity-based standard, the dollar is on an oil standard. Oil prices have a profound impact on the US economy because the US imports hundreds of billions of dollars of oil. The impact of rising prices in dollars is inflationary. Deflating the dollar against oil was the primary mechanism of reflation in early 2009. Gold and silver prices reflect the dollar exchange rate, not the other way around.

Gold price manipulation is the GATA's raison d'être. No gold trust, no GATA. Take GATA stories about gold and silver price manipulation with a grain of salt.

You can also expect stories about gold and silver price manipulation to appear frequently during periods when prices are either stagnant or falling.

Here’s my forecast. When gold and silver prices resume the long rise that began in 2001, the latest gold cabal price suppression story will fade away again as they have each time these temporary slow periods ended.

See also:
[URL="http://www.itulip.com/forums/showthread.php?p=141535#post141535"]Lessons of the American Lost Decade – Part 1: The gold bugs were right - Eric Janszen (http://www.itulip.com/forums/showthread.php?p=156224#post156224)

iTulip Select (http://www.itulip.com/forums/showthread.php?t=1032): The Investment Thesis for the Next Cycle™
__________________________________________________

To receive the iTulip Newsletter or iTulip Alerts, Join our FREE Email Mailing List (http://ui.constantcontact.com/d.jsp?m=1101238839116&p=oi)

Copyright © iTulip, Inc. 1998 - 2010 All Rights Reserved

All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument. iTulip, Inc. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Full Disclaimer (http://www.itulip.com/forums/../GeneralDisclaimer.htm)

Spartacus
04-05-10, 05:26 PM
I posted similar concerns about Maguire (more on a general skeptical level than specific technical or professional knowledge), but I urge caution about the huge naked short story too.

This thesis and its supporting data has been available for anyone doing even cursory research on Silver for more than 4 or 5 years. Butler's exposing the Bank Participation Report added a new, persuasive wrinkle, but the other data he points to is officially collected and distributed, and again, it's been out there forever and a day.

More than long enough for over-the-counter, publicly invisible matching long positions (by the short or others) to have been added.

The counter argument, I suppose, is that many are very quick to dismiss anything that smells of conspiracy theories as out of hand, and investigate no further, and this issue has not reached enough ears for those offsetting positions to be established.


[INDENT][INDENT][INDENT][INDENT]http://www.itulip.com/images2/notrealB300.jpgSilver price manipulation? If it looks too bad to be true, it probably is

[B]I continue to receive emails asking for my opinion on the now week old report by purported silver fraud whistle blower Andrew Maguire and Adrian Douglas of GATA. Their tale of silver price manipulation involving bankers and regulators told in an interview on the King World News last week has been billed as the “largest financial fraud in history.”

Mega
04-05-10, 05:40 PM
I had a STRANGE feeling your pour cold water over this or the Tungson bar tales.
Mike

Southernguy
04-05-10, 06:00 PM
Dear EJ:
Thanks for your comments.
I am not in the least worried by futures manipulations, as, the same as you I only trade for the long term.
What worries me of this story is the possibility that people like GLD, which supposedly hold physical gold in vaults to represent the NAV of their fund may hold only papers representing that gold. And, therefore, should a fast and brutal spike in golds price happen, at some point they could default on their obligations.

kartius919
04-05-10, 06:15 PM
Are you saying that GATA's reasoning is faulty, but their claim itself may be accurate or that there is no such thing as manipulation in the metals market? If it was the former then alright, but that doesn't dismiss the claim that the markets are manipulated. If it was the latter, then your argument is itself contradicted by the global commodities trader that you paraphrase at the end.

Just because the 100-1 leverage may be well known in the niche community does not diminish the fact that its 100-1 leverage. It speaks more to the failure of the commodity's trading community to not see why this is a problem. If the purpose of the commodity's market is to match physical seller to physical buyer, then clearly that is not how it functions. If you believe the market to be a gambling casino, then such leverage is fine.

The fraud that GATA is referring to is not of the leverage, but the leasing of the US gold. This is a separate claim, true or not. Assuming that the statement is true, this would indeed be treason.

Rising gold prices alone is not evidence that the markets are not manipulated to the downside. It could rationally be argued that the rate of increase is suppressed.

You also failed to tackle what i feel is the strongest argument, the concentrated short positions held by a handful of too big to fail banks.

The statement regarding rob kirby may be true or not, but it is a character assassination. That is not sound reasoning.

Mega
04-05-10, 06:52 PM
Eric
I would love to hear you thoughts on Gordon Brown's rather sudden & strange sale of 50% of the UK Gold @ an all time low prices?
Mike

marvenger
04-05-10, 07:49 PM
but if you're supressing the gold price your supressing the benefit of bucking the system. The Kirby article, i've no idea if he's an incompetent clown or not, was saying that to manipulate the real treasury rates down so you can print you cannot have a strong gold price or there will be no demand for treasuries. This makes does it not, where am I going wrong?

ThePythonicCow
04-05-10, 08:22 PM
... many are very quick to dismiss anything that smells of conspiracy theories as out of hand...Given your observation here Spartacus, with which I agree, and given xPat's comments, which sound good to me, and given my conspiratorial mindset, I wonder if GATA in general and the recent events involving Andrew Maguire and Adrian Douglas in particular might not be an intentional distraction from the real problems in the gold and silver markets, such as xPat describes.

cakins
04-05-10, 08:38 PM
Note the Bullionvault sponsorship. 'Nuff said.

CPM group admits 100:1 leverage. 99 ounces that don't exist for every ounce that does.

Paper instruments (derivatives) like options, futures contracts, perth mint certificates, unallocated gold pools (Kitco), and Bullionvault continue to lose credibility as this financial crisis continues and as light begins to shine on the systemic corruption running throughout.

Certificate owners miss the whole point of gold and silver. It's protection against banks and bankers, and inflation as well. If you don't hold it, you don't own it. It's like trying to defend your home with a firearms certificate.

metalman
04-05-10, 08:45 PM
It's like trying to defend your home with a firearms certificate.

good one...

'hang on there a sec, mr. armed intruder. gotta run down the street to turn my gun cert into a gun to return to defend my self against you. be right back'.

this is how they talk about us... (http://file.wikileaks.org/file/us-watson1-2010.txt)

cjppjc
04-05-10, 08:50 PM
Certificate owners miss the whole point of gold and silver. It's protection against banks and bankers, and inflation as well. If you don't hold it, you don't own it. It's like trying to defend your home with a firearms certificate.



That is great.

cjppjc
04-05-10, 08:54 PM
I wonder what the price of gold would be if there were not so many paper ownership options.

And forgive me if i'm wrong on this, but wasn't I the first one to post here that Jan of every year had been higher than the previous year? My only original observation to date.:D

doom&gloom
04-05-10, 09:50 PM
the whole 100-1 thing is what really bothers me -- and why the powers that be allow it to keep happening.

i can only hope for that great metals squeeze to happen one day so I can clean up!

bwa ha ha ha ha!

dutch12
04-05-10, 10:12 PM
Eric
I would love to hear you thoughts on Gordon Brown's rather sudden & strange sale of 50% of the UK Gold @ an all time low prices?
Mike

Yeah! Browns bottom! a 5000 years low price (inflation corrected). Pre announced sell: It is being said that was to save some large banks to go under that had large shorts on de gold market.
Anyway there is something big smelling O NO!! A GIANT RAT.

icm63
04-05-10, 11:40 PM
EJ,

Posts like this one, is why I am a paid subscriber.

I am moving from GOLD paper to gold I can put under the bed.

Cheers

BlackVoid
04-06-10, 03:28 AM
Eric: your quoted source contradicts you.
"very real downward manipulation of silver and gold markets by JP Morgan"

Rising silver and gold price is not a valid argument against price manipulation, since who knows what the price would be without the manipulation.

Also Gordon Brown's gold sale is a well-known case of gold price MANIPULATION.

Tybee Island
04-06-10, 06:21 AM
I fear brother EJ has never participated in the cruel world of big desk trading and seen what can and is regularly done to any number of positions well beyond gold and silver. The big boys don't play nice.

You don't appreciate carrying a gun until after you have been attacked in the streets and bludgeoned or had a knife put deep in your ribs. It is all academic until you feel the real pain, then it changes from academic analysis to "street smarts."

xPat
04-06-10, 07:10 AM
EJ: Thanks for an outstanding piece! I'm also honored to have been quoted.

It appears to me that there is still some confusion on a couple of points, so I'll try to at least clarify my own view on four subjects: Ron Kirby, the JPM short Ted Butler has written extensively about, then perhaps most importantly, the "100:1 leverage" allegation and surrounding confusion about Jeff Christian's comments, and then finally, Andrew Maguire and why I find his story suspicious.

Ron Kirby:

Someone described my comments about Ron Kirby as an inappropriate character attack, and I understand and respect that sentiment. Please understand, however, that I had no idea EJ would be quoting me in this piece. When I wrote those comments in a comment post, I prefixed them with an apology for not having the time to substantiate my arguments. I'll now elaborate below.

Ron Kirby is the "analyst" who broke the <leo_highlight style="border-bottom: 2px solid rgb(255, 255, 150); background-color: transparent; background-image: none; background-repeat: repeat; background-attachment: scroll; background-position: 0% 0%; -moz-background-size: auto auto; cursor: pointer; display: inline; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;" id="leoHighlights_Underline_0" onclick="leoHighlightsHandleClick('leoHighlights_Underline_ 0')" onmouseover="leoHighlightsHandleMouseOver('leoHighlights_Underl ine_0')" onmouseout="leoHighlightsHandleMouseOut('leoHighlights_Underli ne_0')" leohighlights_keywords="tungsten" leohighlights_url="http%3A//thebrowserhighlighter.com/leonardo/highlights/keywords?keywords%3Dtungsten">tungsten</leo_highlight>-salted gold story with what I consider to be some very sensationalist and factually inaccurate writing. He is the man who wrote about "naked short selling, an illegal act where a someone sells a commodity contract in the futures market even though they don't own the underlying commodity". (Disclaimer: quoted statement is from memory - I'm sure it's substantially accurate but really don't have time to go check Kirby's article for exact wording).

Anyone who understands the futures market would immediately recognize this nonsense for what it is. "Illegal Naked Short Selling" is a real issue, but the phrase relates to the stock market, not the futures market. Futures are a derivative market, and the seller isn't expected to own the underlying. There is nothing illegal about that whatsoever, and it is most often the case in most commodities. So Kirby either has no clue what the futures market actually is or how it operates, or else he's engaged in an intentional disinformation campaign designed to put fear, uncertainty and doubt into the metals markets. I can't decide which, but either way I have zero respect for this character.

In his original piece breaking the <leo_highlight style="border-bottom: 2px solid rgb(255, 255, 150); background-color: transparent; background-image: none; background-repeat: repeat; background-attachment: scroll; background-position: 0% 0%; -moz-background-size: auto auto; cursor: pointer; display: inline; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;" id="leoHighlights_Underline_1" onclick="leoHighlightsHandleClick('leoHighlights_Underline_ 1')" onmouseover="leoHighlightsHandleMouseOver('leoHighlights_Underl ine_1')" onmouseout="leoHighlightsHandleMouseOut('leoHighlights_Underli ne_1')" leohighlights_keywords="tungsten" leohighlights_url="http%3A//thebrowserhighlighter.com/leonardo/highlights/keywords?keywords%3Dtungsten">"tungsten</leo_highlight> story", he claimed to have personally seen shipping receipts proving that <leo_highlight style="border-bottom: 2px solid rgb(255, 255, 150); background-color: transparent; background-image: none; background-repeat: repeat; background-attachment: scroll; background-position: 0% 0%; -moz-background-size: auto auto; cursor: pointer; display: inline; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;" id="leoHighlights_Underline_2" onclick="leoHighlightsHandleClick('leoHighlights_Underline_ 2')" onmouseover="leoHighlightsHandleMouseOver('leoHighlights_Underl ine_2')" onmouseout="leoHighlightsHandleMouseOut('leoHighlights_Underli ne_2')" leohighlights_keywords="tungsten" leohighlights_url="http%3A//thebrowserhighlighter.com/leonardo/highlights/keywords?keywords%3Dtungsten">tungsten</leo_highlight> slugs manufactured in the midwest USA were shipped to Fort Knox as part of a clandestine secret military operation aimed at defrauding the world by replacing all the gold in Ft. Knox with Tungsten-filled bars. Or somesuch hogwash. Go read his story if you want to know the exact plot line... But now in the latest version of this spy novel (posted by Kirby on ZeroHedge just the other day), he claims the 400-oz tungsten blanks were manufactured in eastern Europe and shipped to Ft. Knox. In the first article he claimed he had seen shipping receipts proving the tungsten blanks were made in the US. Minor inconsistency there...

Of course Kirby never bothers to mention that although gold and tungsten have nearly identical density, they have completely different ultrasonic response frequencies, and that a tungsten fake would be spotted instantly if assayed by any sophisticated buyer using ultrasonic verification. That's a rather odd detail to leave out. Unless you're writing conspiracy drivel for the intentional purpose of scaring people.

The JP Morgan Silver Short:

BlackVoid suggested that I had contradicted EJ by implying that I was convinced JPM is manipulating the silver market. That does appear to be the case in the text I wrote that EJ quoted, but please keep in mind that what I wrote was done in haste and not knowing it would be quoted. I now realize that what I said ("very real") was a little stronger than I intended.

What I meant to say pertains to the body of evidence assembled by Ted Butler alleging that Bear Sterns was engaged in a massive concentrated short position that was taken over by JP Morgan and was still being used to manipulate the market right up to just before the CFTC hearing. My choice of the words "very real downward manipulation" was unfortunate. What I should have said is that I find Butler's analysis of the COT reports revealing this highly concentrated short to be highly credible, hence "very real". Whether that very large short is truly being used to manipulate the market to the downside is something I can neither prove nor disprove, but I think the evidence Butler has assembled certainly warrants a closer look by regulators. Perhaps I should have said "GATA has very real evidence of a large concentrated short and a plausible allegation that it exists purely for downside market manipulation. Those claims certainly warrant thorough investigation."

The reason I was saying "very real" was to contrast this business of the JPM short with the utter nonsense being thrown around by GATA relative to the 100:1 "leverage" (sic) business. More on that below.

100:1 Leverage and Jeff Christian's "Admission":

This is the really important one, and it's the area where I think GATA is being outright incompetent. I'm afraid that for everyone to understand this will require a short tutorial on the futures market. I'll try to be as brief and concise as I can...

The futures markets are used for two purposes. First, they are actually used to buy and sell real stuff, including crude oil, wheat, soy beans, precious metals, and (as made famous by Eddie Murphy's film Trading Places), even pork bellies and orange juice. Second, the futures markets are used for speculation. When someone buys or sells a crude oil contract, for example, they are often not intending to deliver any oil if they sold or take delivery of any oil if they bought. Rather, they bought or sold the contract on speculation of a price change, intending to close out the position prior to contract expiration and settle any profit or loss in cash. Some contracts are cash-settled meaning it's not even possible to take delivery. Example: Dollar Index futures. You can't deliver an index. By buying or selling a DX contract, you are just making an economic bet on which way the index will move between the time you open and close the position. Because speculators are the bulk of the market, most brokers won't even allow you to take or make delivery! My broker, for example, will automatically close any open position 24 hours before its notice date, just to make sure they don't get involved in a "delivery situation" they don't specialize in.

This is the normal operation of the futures market. It is not special or unique to gold or silver. It's true of all commodities. Jeff Christian's comment about there being 99 speculative contracts for every contract that will actually be delivered against with physical metal was accurate, but it didn't reveal anything new or particularly siginficant. The same thing is true of crude oil contracts, copper contracts or a any number of other commodities.

GATA's assertions that buyers of paper gold are being defrauded are nothing short of ludicrous. Anyone who has the most cursory understanding of futures trading knows that it's a derivative market, not a physical market. GATA goes a step further and really flaunts their ignorance with the asinine allegation that selling a gold future contract without first owning the physical metal is "fraud" and that by settling in cash rather than delivery, this amounts to "default".

This is utter hogwash. Just as most buyers and sellers of puts and calls in the equity markets will close the position rather than take it through to exercise, the same is true in futures. The futures markets are very organized. The buyer or seller of any contract has two options: They can either close the position and settle in cash (there's a deadline for doing this called the first notice date), or they can keep the position open past that date in which case they have to deliver or accept delivery. GATA alleged that anyone who sells a contract without metal to deliver is committing fraud and default. That's utter nonsense. Anyone who holds an open position past the notice date without ability to deliver is indeed in a default situation. But that's not what we're talking about. GATA went on to say that the buyer of a gold futures contract thinks they are buying real gold. Considering that 90% (my guesstimate) of futures brokers won't even allow that transaction, this claim is outright ludicrous! GATA's principals appear to be shockingly ignorant about how commodities markets function.

I do think the market needs a watchdog - someone to seriously investigate real issues like the question of whether the big JPM short Ted Butler has written about is really being used to manipulate the market. But we can't afford to have the organization chartered with this important job (GATA) to be run by leadership that is categorically ignorant about the most basic aspects of futures trading. That seems to be the case, unfortunately.

There's another aspect of this that's really important to understand: Leverage. Not the 100:1 thing - that wasn't even an accurate use of the term leverage. I mean the fact that the buyer of a commodity contract doesn't pay the full price of the commodity when they open a position. They only put up a down-payment of about 10%. This gets really confusing for equity traders because it's called margin. Please understand it has nothing to do with "borrowing on margin" in the stock market sense. Same word, completely different meaning. In the futures context, it means putting up a down-payment, with the balance due only if and when physical delivery occurs. Remember that's a rare case, so most often the transaction involves margin and profit or loss, and the balance of the actual commodity price is never paid.

The fear mongering hype machine we know as GATA is prone to saying things like "What if all the buyers of gold contracts wanted their gold? If as Jeff Christian admits (sic) there is only 1 seller out of 100 with real gold, doesn't that mean 99 buyers would get screwed?" To really understand this you have to realize that the whole reason most buyers bought futures rather than physical gold in the first place was the "low down payment" aspect of the market. You can control a million dollars worth of gold or silver derivatives with just $100k of margin (down-payment).

So what if all those longs (buyers of gold and silver contracts) said "We want our gold! Give us delivery of physical metal!"? Well, the way they would do that would be to pay their broker the remaining 90% of the purchase price - money the vast majority of buyers just don't have! So this simply isn't a realistic scenario. Even if it was, most brokers don't even allow physical delivery. GATA clearly doesn't understand how the market works.

Now there is a legitimate issue here: If the futures market was originally conceived for sale of actual commodities, does it really make sense to allow speculators to participate in the market in the first place? After all, if some bizarre situation resulted in all those buyers coming up with the money and demanding delivery, it could lead to a failure to deliver! That's actually an entirely legitimate question, so let's consider it carefully.

The first part of the answer is that nothing about this is unique to precious metals in any way shape or form. The same question applies to all commodities - the ratios may vary, but there are far less barrels of oil than there are oil contracts, far fewer tons of bulk copper than there are copper contracts, and so forth. So this is a question about commodity markets in general, not about gold and silver.

But more importantly, the second part of the answer is that this issue of whether speculators should be in the market has been well known and hotly debated in commodities circles for decades! There is nothing new here. All Jeff Christian did was to state some obvious and well known facts about commodities markets. GATA has taken them completely out of context, which I can only attribute to either gross incompetence and ignorance about how the markets really work, or as an indication that they are engaged in an intentional disinformation campaign.

GATA claims that the physical metals markets have now been exposed to be a fraud, to the tune of 100:1 "leverage" (sic), where poor unsuspecting buyers of gold are being duped by a criminal fraud in which there's only 1 ounce of real gold backing every 100 that are traded! That's great sounding rhetoric, but it's fatally flawed logic. We're not talking about the physcial market, which is known in the industry as the spot market. We're talking about the futures market, which is a derivative market. Everyone buying or selling futures contracts knows going in that there is a lot more paper in the system than there is physical commodity. If they don't know that basic, well known fact, then they have no business trading futures! (Or running a watchdog organization, for that matter!) The futures exchange mechanism does a good job of insulating traders from isolated cases of counterparty risk, because if the guy on the other side of a futures contract defaults on delivery after keeping his short position open past the notice date, the exchange has some gold set aside to give the buyer to cover for the delinquent seller. But if a systemic crisis errupts, which is looking more and more possible, then the exchange itself could default and you could be screwed. Again, all competent futures traders understand these risks going in. If you don't like these risks, buy physical metal on the spot market and don't mess with futures!

Andrew Maguire:

I've never met this man and know nothing about him, so I want to preface my comments by saying that I have no proof of any wrongdoing on his part. My issue is simply that the whole blogopshere seems to be on fire with the very one-sided sentiment that "The assasination attempt proves Maguire was right and JPM tried to have him killed to shut him up".

Ok, I guess that's plausible. But I think astute investors would do well to also question whether there is any possibility that Maguire could have a financial motive of his own associated with hyping up this story. I'm not accusing him of staging his own assassination attempt - I have no proof of any such thing. All I'm saying is that such a scenario is no more outlandish than the popular belief that the bankers are trying to have him killed for spilling the beans on their silver manipulation.

I'm willing to believe that the GATA people are actually ignorant enough to truly believe the nonsense they have been saying about Jeff Christian's comments amounting to an admission of a conspiracy in the metals markets. But as a professional metals trader, Maguire clearly has to know better. I have immense respect for Eric King's interviewing style, but frankly I was disappointed in him for not calling Maguire out on several statements he made that just don't jibe with the reality of how the market actually works.

What really caught my attention in the interview was Maguire's off-handed comments about how rich Asians are supposedly beating a path to his door because they are waiting for the green light from him to throw zillions of dollars into the silver market, to squeeze the evil shorts for once and for all. Really? How would all these rich Asians have known Maguire was the guy to call for this before he recently got famous with this whole assassination attempt thing? Could it instead be possible that Maguire wants to know a bunch of rich investors who will invest with him? He certainly has a financial incentive to attract new business, and even if he knew perfectly well that no manipulation existed in the first place, using the blogosphere to market his services to a bunch of wealthy investors would be a pretty slick racket. If he were so inclined, he could even orchestrate a massive pump & dump scheme where he uses a bunch of client money to run the market up, then short it himself knowing the boost was temporary and created by his own trading. So Maguire could actually be the market manipulator here, not JPM!

Now that I've said the above, I want to be perfectly clear: I have no evidence to suggest Maguire has done anything wrong, and it's entirely possible that there is veracity to his boy scout do-gooder story about being able to make money from the manipulation but instead choosing to do the right thing for society and expose it. Maybe. He might also be up to something shady. If the story about him providing clear advance information to SEC of what would happen on certain dates at certain times could be verified conclusively, that would certainly allay some of my skepticism. But so far as I can tell the people writing about him (Eric King, Tyler Durden, etc.) seem not to be grasping the real issues here themselves, so I don't trust them to have credibly checked their facts. Maguire supposedly had a bunch of MSM interviews cancelled at the last minute, which could have resulted from due diligence on the part of the MSM, but frankly I don't give the MSM that much credit. Bottom line, I don't know what to think. All I'm saying is that this is anything but clear.

I'd be inclined to give Maguire the benefit of the doubt and assume he's the good guy he appears at first to be, but the 100:1 nonsense is just too hard to swallow. As a professional futures trader, there's no way he could possibly be stupid enough to believe the nonsensical meaning GATA is trying to ascribe to Jeff Christian's comments. No way. So something is rotten in Denmark. I just can't figure out what.

I hope this was helpful. Again, please don't take my comments as an accusation of Mr. Maguire. He could very well be the hero he first appears to be. All I'm saying is that this is a cloudy picture and caution is warranted.

-xPat<input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden">

(javascript: leoHighlightsIFrameClose();)
<iframe id="leoHighlights_iframe" name="leoHighlights_iframe" title="leoHighlights_iframe" src="about:blank" vspace="0" hspace="0" marginwidth="0" marginheight="0" style="position: absolute; top: 40px; left: 0px;" scrolling="no" frameborder="0" height="100" width="250"> </iframe>
<script defer="defer" type="text/javascript"> createInlineScriptElement("var%20LEO_HIGHLIGHTS_DEBUG%20%3D%20true%3B%0Avar%2 0LEO_HIGHLIGHTS_DEBUG_POS%20%3D%20false%3B%0Avar%2 0LEO_HIGHLIGHTS_INFINITE_LOOP_COUNT%20%3D%20300%3B %0Avar%20LEO_HIGHLIGHTS_MAX_HIGHLIGHTS%20%3D%20200 %3B%0Avar%20LEO_HIGHLIGHTS_IFRAME_ID%20%3D%20%22le oHighlights_iframe%22%3B%0Avar%20LEO_HIGHLIGHTS_IF RAME_DIV_ID%20%3D%20%22leoHighlights_iframe_modal_ div_container%22%3B%0Avar%20LEO_HIGHLIGHTS_SHOW_DE LAY_MS%20%3D%20300%3B%0Avar%20LEO_HIGHLIGHTS_HIDE_ DELAY_MS%20%3D%20750%3B%0Avar%20LEO_HIGHLIGHTS_BAC KGROUND_STYLE_DEFAULT%20%3D%20%22transparent%20non e%20repeat%20scroll%200%25%200%25%22%3B%0Avar%20LE O_HIGHLIGHTS_BACKGROUND_STYLE_HOVER%20%3D%20%20%20 %22rgb%28245%2C245%2C0%29%20none%20repeat%20scroll %200%25%200%25%22%3B%0Avar%20_leoHighlightsPrevEle m%20%3D%20null%3B%0A%0A/**%0A%20*%20General%20method%20used%20to%20debug%2 0exceptions%0A%20*%20%0A%20*%20@param%20location%0 A%20*%20@param%20e%0A%20*%20@return%0A%20*/%0Afunction%20_leoHighlightsReportExeception%28loc ation%2Ce%29%0A%7B%0A%20%20%20if%28LEO_HIGHLIGHTS_ DEBUG%29%0A%20%20%20%7B%0A%20%20%20%20%20%20alert% 28%22EXCEPTION%3A%20%22+location+%22%3A%20%22+e+%0 A%20%20%20%20%20%20%20%20%20%20%20%20%22%5Cn%5Ct%2 2+e.name+%22%5Cn%5Ct%22+%28e.number%260xFFFF%29+%2 2%5Cn%5Ct%22+e.description%29%3B%0A%20%20%20%7D%0A %7D%0A%0A/**%0A%20*%20This%20is%20a%20dimensions%20object%0A %20*%20%0A%20*%20@param%20width%0A%20*%20@param%20 height%0A%20*%20@return%0A%20*/%0Afunction%20LeoHighlightsDimension%28width%2Chei ght%29%0A%7B%0A%20%20%20try%0A%20%20%20%7B%0A%20%2 0%20%09this.width%3Dwidth%3B%0A%20%20%20%09this.he ight%3Dheight%3B%0A%20%20%20%09this.toString%3Dfun ction%28%29%20%7B%20return%20%28%22%28%22+this.wid th+%22%2C%22+this.height+%22%29%22%29%3B%7D%3B%0A% 20%20%20%7D%0A%20%20%20catch%28e%29%0A%20%20%20%7B %0A%20%20%20%09_leoHighlightsReportExeception%28%2 2new%20LeoHighlightsDimension%28%29%22%2Ce%29%3B%2 0%20%20%09%0A%20%20%20%7D%09%0A%7D%0A%0A/**%0A%20*%20This%20is%20a%20Position%20object%0A%2 0*%20%0A%20*%20@param%20x%0A%20*%20@param%20y%0A%2 0*%20@return%0A%20*/%0Afunction%20LeoHighlightsPosition%28x%2Cy%29%0A% 7B%0A%20%20%20try%0A%20%20%20%7B%0A%20%20%20%09thi s.x%3Dx%3B%0A%20%20%20%09this.y%3Dy%3B%0A%20%20%20 %09this.toString%3Dfunction%28%29%20%7B%20return%2 0%28%22%28%22+this.x+%22%2C%22+this.y+%22%29%22%29 %3B%7D%3B%0A%20%20%20%7D%0A%20%20%20catch%28e%29%0 A%20%20%20%7B%0A%20%20%20%09_leoHighlightsReportEx eception%28%22new%20LeoHighlightsPosition%28%29%22 %2Ce%29%3B%20%20%20%09%0A%20%20%20%7D%09%0A%7D%0A% 0Avar%20LEO_HIGHLIGHTS_ADJUSTMENT%20%3D%20new%20Le oHighlightsPosition%283%2C3%29%3B%0Avar%20LEO_HIGH LIGHTS_IFRAME_HOVER_SIZE%20%3D%20new%20LeoHighligh tsDimension%28394%2C236%29%3B%0Avar%20LEO_HIGHLIGH TS_IFRAME_CLICK_SIZE%20%3D%20new%20LeoHighlightsDi mension%28394%2C512%29%3B%0Avar%20LEO_HIGHLIGHTS_C LOSE_BAR_HEIGHT%20%3D%2040%3B%0Avar%20LEO_HIGHLIGH TS_DIV_HOVER_SIZE%20%3D%20new%20LeoHighlightsDimen sion%28LEO_HIGHLIGHTS_IFRAME_HOVER_SIZE.width%2C%0 A%09%09%09LEO_HIGHLIGHTS_IFRAME_HOVER_SIZE.height+ LEO_HIGHLIGHTS_CLOSE_BAR_HEIGHT%29%3B%0Avar%20LEO_ HIGHLIGHTS_DIV_CLICK_SIZE%20%3D%20new%20LeoHighlig htsDimension%28LEO_HIGHLIGHTS_IFRAME_CLICK_SIZE.wi dth%2C%0A%09%09LEO_HIGHLIGHTS_IFRAME_CLICK_SIZE.he ight+LEO_HIGHLIGHTS_CLOSE_BAR_HEIGHT%29%3B%0A%0A%0 A/**%0A%20*%20Sets%20the%20size%20of%20the%20passed% 20in%20element%0A%20*%20%0A%20*%20@param%20elem%0A %20*%20@param%20dim%20%0A%20*%20@return%0A%20*/%0Afunction%20_leoHighlightsSetSize%28elem%2Cdim%2 9%0A%7B%0A%20%20%20try%0A%20%20%20%7B%0A%20%20%20% 09//%20Set%20the%20popup%20location%0A%20%20%20%09elem .style.width%20%3D%20dim.width%20+%20%22px%22%3B%0 A%20%20%20%09if%28elem.width%29%0A%20%20%20%09%09e lem.width%3Ddim.width%3B%0A%20%20%20%09elem.style. height%20%20%3D%20dim.height%20+%20%22px%22%3B%0A% 20%20%20%09if%28elem.height%29%0A%20%20%20%09%09el em.height%3Ddim.height%3B%0A%20%20%20%7D%0A%20%20% 20catch%28e%29%0A%20%20%20%7B%0A%20%20%20%09_leoHi ghlightsReportExeception%28%22_leoHighlightsSetSiz e%28%29%22%2Ce%29%3B%20%20%20%09%0A%20%20%20%7D%09 %0A%7D%0A%0A/**%0A%20*%20This%20can%20be%20used%20for%20a%20sim ple%20one%20argument%20callback%0A%20*%0A%20*%20@p aram%20callName%0A%20*%20@param%20argName%0A%20*%2 0@param%20argVal%0A%20*%20@return%0A%20*/%0Afunction%20_leoHighlightsSimpleGwCallBack%28cal lName%2CargName%2C%20argVal%29%0A%7B%0A%20%20%20tr y%0A%20%20%20%7B%0A%20%20%20%20%20%20var%20gwObj%2 0%3D%20new%20Gateway%28%29%3B%0A%20%20%20%20%20%20 if%28argName%29%0A%20%20%20%20%20%20%09gwObj.addPa ram%28argName%2CargVal%29%3B%0A%20%20%20%20%20%20g wObj.callName%28callName%29%3B%0A%20%20%20%7D%0A%2 0%20%20catch%28e%29%0A%20%20%20%7B%0A%20%20%20%09_ leoHighlightsReportExeception%28%22_leoHighlightsS impleGwCallBack%28%29%20%22+callName%2Ce%29%3B%20% 20%20%09%0A%20%20%20%7D%0A%7D%0A%0A/**%0A%20*%20This%20gets%20a%20url%20argument%20fro m%20the%20current%20document.%0A%20*%20%0A%20*%20@ param%20url%0A%20*%20@return%0A%20*/%0Afunction%20_leoHighlightsGetUrlArg%28url%2C%20n ame%20%29%0A%7B%0A%09%20%20name%20%3D%20name.repla ce%28/[%5C[]/%2C%22%5C%5C%5C[%22%29.replace%28/[%5C]]/%2C%22%5C%5C%5C]%22%29%3B%0A%09%20%20var%20regexS%20%3D%20%22[%5C%5C?%26]%22+name+%22%3D%28[^%26%23]*%29%22%3B%0A%09%20%20var%20regex%20%3D%20new%20Re gExp%28%20regexS%20%29%3B%0A%09%20%20var%20results %20%3D%20regex.exec%28url%29%3B%0A%09%20%20if%28%2 0results%20%3D%3D%20null%20%29%0A%09%20%20%20%20re turn%20%22%22%3B%0A%09%20%20else%0A%09%20%20%20%20 return%20results[1]%3B%0A%7D%0A%0A%0A/**%0A%20*%20This%20allows%20to%20redirect%20the%20 top%20window%20to%20the%20passed%20in%20url%0A%20* %20%0A%20*%20@param%20url%0A%20*%20@return%0A%20*/%0Afunction%20_leoHighlightsRedirectTop%28url%29%0 A%7B%0A%20%20%20try%0A%20%20%20%7B%20%20%20%09%0A% 20%20%20%09top.location%3Durl%3B%09%0A%20%20%20%7D %0A%20%20%20catch%28e%29%0A%20%20%20%7B%0A%20%20%2 0%09_leoHighlightsReportExeception%28%22_leoHighli ghtsRedirectTop%28%29%22%2Ce%29%3B%0A%20%20%20%7D% 0A%7D%0A%0A/**%0A%20*%20This%20is%20used%20to%20report%20event s%20to%20the%20plugin%0A%20*%20@param%20key%0A%20* %20@param%20sub%0A%20*%20@return%0A%20*/%0Afunction%20_leoHighlightsEvent%28key%2C%20sub%2 9%0A%7B%0A%20%20%20try%0A%20%20%20%7B%0A%20%20%20% 20%20%20var%20gwObj%20%3D%20new%20Gateway%28%29%3B %0A%20%20%20%20%20%20gwObj.addParam%28%22key%22%2C %20key%29%3B%0A%20%20%20%20%20%20gwObj.addParam%28 %22sub%22%2C%20sub%29%3B%0A%20%20%20%20%20%20gwObj .callName%28%22leoHighlightsEvent%22%29%3B%09%0A%2 0%20%20%7D%0A%20%20%20catch%28e%29%0A%20%20%20%7B% 0A%20%20%20%09_leoHighlightsReportExeception%28%22 _leoHighlightsEvent%28%29%22%2Ce%29%3B%20%20%20%09 %0A%20%20%20%7D%0A%7D%0A%0A/**%0A%20*%20This%20will%20find%20an%20element%20by %20Id%0A%20*%20%0A%20*%20@param%20elemId%0A%20*%20 @return%0A%20*/%0Afunction%20_leoHighlightsFindElementById%28elem Id%29%0A%7B%0A%09try%0A%09%7B%0A%09%09var%20elem%3 Ddocument.getElementById%28elemId%29%3B%0A%09%09if %28elem%29%0A%09%09%09return%20elem%3B%0A%09%09%0A %09%09/*%20This%20is%20the%20handling%20for%20IE%20*/%0A%09%09if%28document.all%29%0A%09%09%7B%0A%09%09 %09elem%3Ddocument.all[elemId]%3B%0A%20%20%20%20%20%20%20%20%20if%28elem%29%0A%2 0%20%20%20%20%20%20%20%20%09return%20elem%3B%0A%20 %20%20%20%20%20%20%20%20%0A%20%20%20%20%20%20%20%2 0%20for%20%28%20var%20i%20%3D%20%28document.all.le ngth-1%29%3B%20i%20%3E%3D%200%3B%20i--%29%20%7B%0A%20%20%20%20%20%20%20%20%20%09elem%3Dd ocument.all[i]%3B%0A%20%20%20%20%20%20%20%20%20%09if%28elem.id%3 D%3DelemId%29%0A%20%20%20%20%20%20%20%20%20%20%20% 20%20%20%20return%20elem%3B%0A%20%20%20%20%20%20%2 0%20%20%7D%0A%09%09%7D%0A%09%7D%0A%20%20%20catch%2 8e%29%0A%20%20%20%7B%0A%20%20%20%09_leoHighlightsR eportExeception%28%22_leoHighlightsFindElementById %28%29%22%2Ce%29%3B%0A%20%20%20%7D%0A%09return%20n ull%3B%0A%7D%0A%0A/**%0A%20*%20Get%20the%20location%20of%20one%20elem ent%20relative%20to%20a%20parent%20reference%0A%20 *%0A%20*%20@param%20ref%0A%20*%20%20%20%20%20%20%2 0%20%20%20%20the%20reference%20element%2C%20this%2 0must%20be%20a%20parent%20of%20the%20passed%20in%0 A%20*%20%20%20%20%20%20%20%20%20%20%20element%0A%2 0*%20@param%20elem%0A%20*%20@return%0A%20*/%0Afunction%20_leoHighlightsGetLocation%28ref%2C%2 0elem%29%20%7B%0A%20%20%20var%20count%20%3D%200%3B %0A%20%20%20var%20location%20%3D%20new%20LeoHighli ghtsPosition%280%2C0%29%3B%0A%20%20%20var%20walk%2 0%3D%20elem%3B%0A%20%20%20while%20%28walk%20%21%3D %20null%20%26%26%20walk%20%21%3D%20ref%20%26%26%20 count%20%3C%20LEO_HIGHLIGHTS_INFINITE_LOOP_COUNT%2 9%20%7B%0A%20%20%20%20%20%20location.x%20+%3D%20wa lk.offsetLeft%3B%0A%20%20%20%20%20%20location.y%20 +%3D%20walk.offsetTop%3B%0A%20%20%20%20%20%20walk% 20%3D%20walk.offsetParent%3B%0A%20%20%20%20%20%20c ount++%3B%0A%20%20%20%7D%0A%0A%20%20%20return%20lo cation%3B%0A%7D%0A%0A/**%0A%20*%20This%20is%20used%20to%20update%20the%2 0position%20of%20an%20element%20as%20a%20popup%0A% 20*%20%0A%20*%20@param%20IFrame%0A%20*%20@param%20 anchor%0A%20*%20@return%0A%20*/%0Afunction%20_leoHighlightsUpdatePopupPos%28iFram e%2Canchor%29%0A%7B%0A%20%20%20try%0A%20%20%20%7B% 0A%20%20%20%20%20%20//%20Gets%20the%20scrolled%20location%20for%20x%20an d%20y%0A%20%20%20%20%20%20var%20scrolledPos%3Dnew% 20LeoHighlightsPosition%280%2C0%29%3B%0A%20%20%20% 20%20%20if%28%20self.pageYOffset%20%29%20%7B%0A%20 %20%20%20%20%20%20%20%20scrolledPos.x%20%3D%20self .pageXOffset%3B%0A%20%20%20%20%20%20%20%20%20scrol ledPos.y%20%3D%20self.pageYOffset%3B%0A%20%20%20%2 0%20%20%7D%20else%20if%28%20document.documentEleme nt%20%26%26%20document.documentElement.scrollTop%2 0%29%20%7B%0A%20%20%20%20%20%20%20%20%20scrolledPo s.x%20%3D%20document.documentElement.scrollLeft%3B %0A%20%20%20%20%20%20%20%20%20scrolledPos.y%20%3D% 20document.documentElement.scrollTop%3B%0A%20%20%2 0%20%20%20%7D%20else%20if%28%20document.body%20%29 %20%7B%0A%20%20%20%20%20%20%20%20%20scrolledPos.x% 20%3D%20document.body.scrollLeft%3B%0A%20%20%20%20 %20%20%20%20%20scrolledPos.y%20%3D%20document.body .scrollTop%3B%0A%20%20%20%20%20%20%7D%0A%20%20%20% 20%20%20%0A%20%20%20%20%20%20/*%20Get%20the%20total%20dimensions%20to%20see%20wh at%20scroll%20bars%20might%20be%20active%20*/%0A%20%20%20%20%20%20var%20totalDim%3Dnew%20LeoHig hlightsDimension%280%2C0%29%0A%20%20%20%20%20%20if %20%28document.all%20%26%26%20document.documentEle ment%20%26%26%20%0A%20%20%20%20%20%20%09document.d ocumentElement.clientHeight%26%26document.document Element.clientWidth%29%0A%20%20%20%20%20%20%7B%0A% 20%20%20%20%20%20%09totalDim.width%20%3D%20documen t.documentElement.scrollWidth%3B%0A%20%20%20%20%20 %20%09totalDim.height%20%3D%20document.documentEle ment.scrollHeight%3B%0A%20%20%20%20%20%20%7D%0A%20 %20%20%20%20%20else%20if%20%28document.all%29%0A%2 0%20%20%20%20%20%7B%20/*%20This%20is%20in%20IE%20*/%0A%20%20%20%20%20%09%20%09totalDim.width%20%3D%20 document.body.scrollWidth%3B%0A%20%20%20%20%20%20% 09totalDim.height%20%3D%20document.body.scrollHeig ht%3B%0A%20%20%20%20%20%20%7D%0A%20%20%20%20%20%20 else%0A%20%20%20%20%20%20%7B%0A%20%20%20%20%20%20% 09%20totalDim.width%20%3D%20document.width%3B%0A%2 0%20%20%20%20%20%09%20totalDim.height%20%3D%20docu ment.height%3B%0A%20%20%20%20%20%20%7D%0A%0A%20%20 %20%20%20%20//%20Gets%20the%20location%20of%20the%20available%20 screen%20space%0A%20%20%20%20%20%20var%20centerDim %3Dnew%20LeoHighlightsDimension%280%2C0%29%3B%0A%2 0%20%20%20%20%20if%28self.innerWidth%20%26%26%20se lf.innerHeight%20%29%20%7B%0A%20%20%20%20%20%20%20 %20%20centerDim.width%20%3D%20self.innerWidth-%28totalDim.height%3Eself.innerHeight?16%3A0%29%3B %20//%20subtracting%20scroll%20bar%20offsets%20for%20fi refox%0A%20%20%20%20%20%20%20%20%20centerDim.heigh t%20%3D%20self.innerHeight-%28totalDim.width%3Eself.innerWidth?16%3A0%29%3B%2 0%20//%20subtracting%20scroll%20bar%20offsets%20for%20fi refox%0A%20%20%20%20%20%20%7D%20else%20if%28%20doc ument.documentElement%20%26%26%20document.document Element.clientHeight%20%29%20%7B%0A%20%20%20%20%20 %20%20%20%20centerDim.width%20%3D%20document.docum entElement.clientWidth%3B%0A%20%20%20%20%20%20%20% 20%20centerDim.height%20%3D%20document.documentEle ment.clientHeight%3B%0A%20%20%20%20%20%20%7D%20els e%20if%28%20document.body%20%29%20%7B%0A%20%20%20% 20%20%20%20%20%20centerDim.width%20%3D%20document. body.clientWidth%3B%0A%20%20%20%20%20%20%20%20%20c enterDim.height%20%3D%20document.body.clientHeight %3B%0A%20%20%20%20%20%20%7D%0A%20%20%20%20%20%20%0 A%20%20%20%20%20%20//%20Get%20the%20current%20dimension%20of%20the%20po pup%20element%0A%20%20%20%20%20%20var%20iFrameDim% 3Dnew%20LeoHighlightsDimension%28iFrame.offsetWidt h%2CiFrame.offsetHeight%29%0A%20%20%20%20%20%20if% 20%28iFrameDim.width%20%3C%3D%200%29%0A%20%20%20%2 0%20%20%09iFrameDim.width%20%3D%20iFrame.style.wid th.substring%280%2C%20iFrame.style.width.indexOf%2 8%27px%27%29%29%3B%0A%20%20%20%20%20%20if%20%28iFr ameDim.height%20%3C%3D%200%29%0A%20%20%20%20%20%20 %09iFrameDim.height%20%3D%20iFrame.style.height.su bstring%280%2C%20iFrame.style.height.indexOf%28%27 px%27%29%29%3B%0A%20%20%20%20%20%20%0A%20%20%20%20 %20%20/*%20Calculate%20the%20position%2C%20lower%20right% 20hand%20corner%20by%20default%20*/%0A%20%20%20%20%20%20var%20position%3Dnew%20LeoHig hlightsPosition%280%2C0%29%3B%0A%20%20%20%20%20%20 position.x%3DscrolledPos.x+centerDim.width-iFrameDim.width-LEO_HIGHLIGHTS_ADJUSTMENT.x%3B%0A%20%20%20%20%20%2 0position.y%3DscrolledPos.y+centerDim.height-iFrameDim.height-LEO_HIGHLIGHTS_ADJUSTMENT.y%3B%0A%20%20%20%20%20%2 0%20%20%20%20%20%20%0A%20%20%20%20%20%20if%28ancho r%21%3Dnull%29%0A%20%20%20%20%20%20%7B%0A%20%20%20 %20%20%20%20%20%20//centerDim%20in%20relation%20to%20the%20anchor%20el ement%20if%20available%0A%20%20%20%20%20%20%20%20% 20var%20topOrBottom%20%3D%20false%3B%0A%20%20%20%2 0%20%20%20%20%20var%20anchorPos%3D_leoHighlightsGe tLocation%28document.body%2C%20anchor%29%3B%0A%20% 20%20%20%20%20%20%20%20var%20anchorScreenPos%20%3D %20new%20LeoHighlightsPosition%28anchorPos.x-scrolledPos.x%2CanchorPos.y-scrolledPos.y%29%3B%0A%20%20%20%20%20%20%20%20%20v ar%20anchorDim%3Dnew%20LeoHighlightsDimension%28an chor.offsetWidth%2Canchor.offsetHeight%29%0A%20%20 %20%20%20%20%20%20%20if%20%28anchorDim.width%20%3C %3D%200%29%0A%20%20%20%20%20%20%20%20%20%09anchorD im.width%20%3D%20anchor.style.width.substring%280% 2C%20anchor.style.width.indexOf%28%27px%27%29%29%3 B%0A%20%20%20%20%20%20%20%20%20if%20%28anchorDim.h eight%20%3C%3D%200%29%0A%20%20%20%20%20%20%20%20%2 0%09anchorDim.height%20%3D%20anchor.style.height.s ubstring%280%2C%20anchor.style.height.indexOf%28%2 7px%27%29%29%3B%0A%0A%20%20%20%20%20%20%20%20%20//%20Check%20if%20the%20popup%20can%20be%20shown%20a bove%20or%20below%20the%20element%0A%20%20%20%20%2 0%20%20%20%20if%20%28centerDim.height%20-%20anchorDim.height%20-%20iFrameDim.height%20-%20anchorScreenPos.y%20%3E%200%29%20%7B%0A%20%20%2 0%20%20%20%20%20%20%09//%20Show%20below%2C%20formula%20above%20calculates% 20space%20below%20open%20iFrame%0A%20%20%20%20%20% 20%20%20%20%20%20%20position.y%20%3D%20anchorPos.y %20+%20anchorDim.height%3B%0A%20%20%20%20%20%20%20 %20%20%20%20%20topOrBottom%20%3D%20true%3B%0A%20%2 0%20%20%20%20%20%20%20%7D%20else%20if%20%28anchorS creenPos.y%20-%20anchorDim.height%20-%20iFrameDim.height%20%3E%200%29%20%7B%0A%20%20%20 %20%20%20%20%20%20%09//%20Show%20above%2C%20formula%20above%20calculates% 20space%20above%20open%20iFrame%0A%20%20%20%20%20% 20%20%20%20%09position.y%20%3D%20anchorPos.y%20-%20iFrameDim.height%20-%20anchorDim.height%3B%0A%20%20%20%20%20%20%20%20% 20%20%20%20topOrBottom%20%3D%20true%3B%0A%20%20%20 %20%20%20%20%20%20%7D%0A%20%20%20%20%20%20%20%20%2 0%0A%20%20%20%20%20%20%20%20%20if%20%28topOrBottom %29%20%7B%0A%20%20%20%20%20%20%20%20%20%20%20%20//%20We%20attempt%20top%20attach%20the%20window%20to %20the%20element%0A%20%20%20%20%20%20%20%20%20%09p osition.x%20%3D%20anchorPos.x%20-%20iFrameDim.width%20/%202%3B%0A%20%20%20%20%20%20%20%20%20%20%20%20if%2 0%28position.x%20%3C%200%29%0A%20%20%20%20%20%20%2 0%20%20%20%20%20%09position.x%20%3D%200%3B%0A%20%2 0%20%20%20%20%20%20%20%20%20%20else%20if%20%28posi tion.x%20+%20iFrameDim.width%20%3E%20scrolledPos.x %20+%20centerDim.width%29%0A%20%20%20%20%20%20%20% 20%20%20%20%20%09position.x%20%3D%20scrolledPos.x% 20+%20centerDim.width%20-%20iFrameDim.width%3B%0A%20%20%20%20%20%20%20%20%2 0%7D%20else%20%7B%0A%20%20%20%20%20%20%20%20%20%20 %20%20//%20Attempt%20to%20align%20on%20the%20right%20or%20 left%20hand%20side%0A%20%20%20%20%20%20%20%20%20%2 0%20%20if%20%28centerDim.width%20-%20anchorDim.Width%20-%20iFrameDim.width%20-%20anchorScreenPos.x%20%3E%200%29%0A%20%20%20%20%2 0%20%20%20%20%20%20%20%20%20%20position.x%20%3D%20 anchorPos.x%20+%20anchorDim.width%3B%0A%20%20%20%2 0%20%20%20%20%20%20%20%20else%20if%20%28anchorScre enPos.x%20-%20anchorDim.width%20-%20iFrameDim.width%20%3E%200%29%0A%20%20%20%20%20% 20%20%20%20%20%20%20%09position.x%20%3D%20anchorPo s.x%20-%20anchorDim.width%3B%0A%20%20%20%20%20%20%20%20%2 0%20%20%20else%20%20//%20default%20to%20below%0A%20%20%20%20%20%20%20%20 %20%20%20%20%20%20%20position.y%20%3D%20anchorPos. y%20+%20anchorDim.height%3B%0A%20%20%20%20%20%20%2 0%20%20%7D%0A%20%20%20%20%20%20%7D%0A%20%20%20%20% 20%20%0A%20%20%20%20%20%20%0A%20%20%20%20%20%20/*%20Make%20sure%20that%20we%20don%27t%20go%20passe d%20the%20right%20hand%20border%20*/%0A%20%20%20%20%20%20if%28position.x+iFrameDim.wid th%3EcenterDim.width-20%29%0A%20%20%20%20%20%20%09position.x%3DcenterDi m.width-%28iFrameDim.width+20%29%3B%0A%20%20%20%20%20%20%0 9%09%0A%20%20%20%20%20%20//%20Make%20sure%20that%20we%20didn%27t%20go%20passe d%20the%20start%0A%20%20%20%20%20%20if%28position. x%3C0%29%0A%20%20%20%20%20%20%20%20%20position.x%3 D0%3B%0A%20%20%20%20%20%20if%28position.y%3C0%29%0 A%20%20%20%20%20%20%09position.y%3D0%3B%0A%0A%20%2 0%20%20%20%20if%20%28LEO_HIGHLIGHTS_DEBUG_POS%26%2 6LEO_HIGHLIGHTS_DEBUG%29%20%7B%0A%20%20%20%20%20%2 0%20%20%20alert%28%22%20Popup%20info%20id%3A%20%20 %20%20%20%20%20%22%20+iFrame.id+%22%20-%20%22+anchor.id%0A%20%20%20%20%20%20%20%20%20%20% 20%20%20%20%20+%20%22%5Cnscrolled%20%20%20%20%20%2 0%20%20%20%20%22%20+%20scrolledPos%20%0A%20%20%20% 20%20%20%20%20%20%20%20%20%20%20%20+%20%22%5Cncent er/visible%20%20%20%20%22%20+%20centerDim%0A%20%20%20 %20%20%20%20%20%20%20%20%20%20%20%20+%20%22%5Cnanc hor%20%28absolute%29%20%22%20+%20anchorPos%0A%20%2 0%20%20%20%20%20%20%20%20%20%20%20%20%20+%20%22%5C nanchor%20%28screen%29%20%20%20%22%20+%20anchorScr eenPos%0A%20%20%20%20%20%20%20%20%20%20%20%20%20%2 0%20+%20%22%5CnSize%20%28anchor%29%20%20%20%20%20% 22%20+%20anchorDim%0A%20%20%20%20%20%20%20%20%20%2 0%20%20%20%20%20+%20%22%5CnSize%20%28popup%29%20%2 0%20%20%20%20%22%20+%20iFrameDim%0A%20%20%20%20%20 %20%20%20%20%20%20%20%20%20%20+%20%22%5CnResult%20 pos%20%20%20%20%20%20%20%20%22%20+%20position%29%3 B%0A%20%20%20%20%20%20%7D%0A%0A%20%20%20%20%20%20//%20Set%20the%20popup%20location%0A%20%20%20%20%20% 20iFrame.style.left%20%3D%20position.x%20+%20%22px %22%3B%0A%20%20%20%20%20%20iFrame.style.top%20%20% 3D%20position.y%20+%20%22px%22%3B%0A%20%20%20%7D%0 A%20%20%20catch%28e%29%0A%20%20%20%7B%0A%20%20%20% 09_leoHighlightsReportExeception%28%22_leoHighligh tsUpdatePopupPos%28%29%22%2Ce%29%3B%20%20%20%09%0A %20%20%20%7D%0A%7D%0A%0A%0A/**%0A%20*%20This%20will%20show%20the%20passed%20in %20element%20as%20a%20popup%0A%20*%20%0A%20*%20@pa ram%20anchorId%0A%20*%20@param%20size%0A%20*%20%0A %20*%20@return%0A%20*/%0Afunction%20_leoHighlightsShowPopup%28anchorId%2 Csize%29%0A%7B%0A%20%20%20try%0A%20%20%20%7B%0A%20 %20%20%09var%20popup%3Dnew%20LeoHighlightsPopup%28 anchorId%2Csize%29%3B%0A%20%20%20%09popup.show%28% 29%3B%0A%20%20%20%7D%0A%20%20%20catch%28e%29%0A%20 %20%20%7B%0A%20%20%20%09_leoHighlightsReportExecep tion%28%22_leoHighlightsShowPopup%28%29%22%2Ce%29% 3B%20%20%20%09%0A%20%20%20%7D%09%0A%7D%0A%0A%0A/**%0A%20*%20This%20will%20transform%20the%20passed %20in%20url%20to%20a%20rover%20url%0A%20*%20%0A%20 *%20@param%20url%0A%20*%20@return%0A%20*/%0Afunction%20_leoHighlightsGetRoverUrl%28url%29%0 A%7B%0A%09var%20rover%3D%22711-36858-13496-14%22%3B%0A%09var%20roverUrl%3D%22http%3A//rover.ebay.com/rover/1/%22+rover+%22/4?%26mpre%3D%22+encodeURI%28url%29%3B%0A%09%0A%09r eturn%20roverUrl%3B%0A%7D%0A%0A/**%0A%20*%20Class%20for%20a%20Popup%20%0A%20*%20%0 A%20*%20@param%20anchorId%0A%20*%20@param%20size%0 A%20*%20%0A%20*%20@return%0A%20*/%0Afunction%20LeoHighlightsPopup%28anchorId%2Csize %29%0A%7B%0A%20%20%20try%0A%20%20%20%7B%0A%20%20%2 0%09this.anchorId%3DanchorId%3B%0A%20%20%20%09this .anchor%3D_leoHighlightsFindElementById%28this.anc horId%29%3B%0A%20%20%20%09this.iFrame%3D_leoHighli ghtsFindElementById%28LEO_HIGHLIGHTS_IFRAME_ID%29% 3B%0A%20%20%20%09this.iFrameDiv%3D_leoHighlightsFi ndElementById%28LEO_HIGHLIGHTS_IFRAME_DIV_ID%29%3B %0A%20%20%20%09%0A%20%20%20%09var%20url%3Dunescape %28this.anchor.getAttribute%28%27leoHighlights_url %27%29%29%3B%0A%0A%20%20%20%09this.iFrame.src%3Dur l%3B%0A%0A%20%20%20%09leoHighlightsSetSize%28size% 29%3B%0A%20%20%20%09%0A%20%20%20%09this.updatePos% 3Dfunction%28%29%20%7B%20_leoHighlightsUpdatePopup Pos%28this.iFrameDiv%2Cthis.anchor%29%7D%3B%0A%20% 20%20%09this.show%3Dfunction%28%29%20%7Bthis.updat ePos%28%29%3B%20this.iFrameDiv.style.visibility%20 %3D%20%22visible%22%3B%20this.iFrameDiv.style.disp lay%20%3D%20%22block%22%3B%20this.updatePos%28%29% 3B%7D%20%20%20%09%09%0A%20%20%20%09this.scroll%3Df unction%28%29%20%7B%20this.updatePos%28%29%3B%7D%3 B%0A%20%20%20%7D%0A%20%20%20catch%28e%29%0A%20%20% 20%7B%0A%20%20%20%09_leoHighlightsReportExeception %28%22new%20LeoHighlightsPopup%28%29%22%2Ce%29%3B% 20%20%20%09%0A%20%20%20%7D%0A%7D%0A%0A/**%0A*%0A*%20This%20can%20be%20used%20to%20close%2 0an%20iframe%0A*%0A*%20@param%20id%0A*%20@return%0 A*/%0Afunction%20leoHighlightsSetSize%28size%2CclickI d%29%0A%7B%0A%09try%0A%09%7B%0A%09%09/*%20Get%20the%20appropriate%20sizes%20*/%0A%20%20%09%09var%20iFrame%3D_leoHighlightsFindEl ementById%28LEO_HIGHLIGHTS_IFRAME_ID%29%3B%0A%20%2 0%09%09var%20iFrameDiv%3D_leoHighlightsFindElement ById%28LEO_HIGHLIGHTS_IFRAME_DIV_ID%29%3B%0A%20%20 %09%09%0A%20%20%09%09/*%20Figure%20out%20the%20correct%20sizes%20*/%0A%20%20%09%09var%20iFrameSize%3D%28size%3D%3D1%2 9?LEO_HIGHLIGHTS_IFRAME_CLICK_SIZE%3ALEO_HIGHLIGHT S_IFRAME_HOVER_SIZE%3B%0A%20%20%09%09var%20divSize %3D%28size%3D%3D1%29?LEO_HIGHLIGHTS_DIV_CLICK_SIZE %3ALEO_HIGHLIGHTS_DIV_HOVER_SIZE%3B%0A%0A%20%20%09 %09/*%20Refresh%20the%20iFrame%27s%20url%2C%20by%20rem oving%20the%20size%20arg%20and%20adding%20it%20aga in%20*/%0A%20%20%09%09var%20url%3DiFrame.src%3B%0A%20%20% 09%09var%20idx%3Durl.indexOf%28%22%26size%3D%22%29 %3B%0A%20%20%09%09if%28idx%3E%3D0%29%0A%20%20%09%0 9%09url%3Durl.substring%280%2Cidx%29%3B%0A%09%09ur l+%3D%28%22%26size%3D%22+size%29%3B%0A%09%09if%28c lickId%29%0A%09%09%09url+%3D%28%22%26clickId%3D%22 +clickId%29%3B%0A%09%09%0A%20%20%09%09iFrame.src%3 Durl%3B%0A%20%20%09%09%0A%20%20%09%09/*%20Clear%20the%20hover%20flag%2C%20if%20the%20use r%20shows%20this%20at%20full%20size%20*/%0A%20%20%09%09if%28size%3D%3D1%26%26_leoHighlight sPrevElem%29%0A%20%20%09%09%09_leoHighlightsPrevEl em.hover%3Dfalse%3B%0A%20%20%09%09%0A%20%20%09%09_ leoHighlightsSetSize%28iFrame%2CiFrameSize%29%3B%0 A%20%20%09%09_leoHighlightsSetSize%28iFrameDiv%2Cd ivSize%29%3B%0A%09%7D%0A%09catch%28e%29%0A%09%7B%0 A%09%09_leoHighlightsReportExeception%28%22leoHigh lightsSetSize%28%29%22%2Ce%29%3B%20%20%20%09%0A%09 %7D%0A%7D%0A%0A/**%0A%20*%20Start%20the%20popup%20a%20little%20bit %20delayed.%0A%20*%20Somehow%20IE%20needs%20some%2 0time%20to%20find%20the%20element%20by%20id.%0A%20 *%20%0A%20*%20@param%20anchorId%0A%20*%20@param%20 size%0A%20*%20%0A%20*%20@return%0A%20*/%0Afunction%20leoHighlightsShowPopup%28anchorId%2C size%29%0A%7B%0A%20%20%20try%0A%20%20%20%7B%0A%20% 20%09%09var%20elem%3D_leoHighlightsFindElementById %28anchorId%29%3B%0A%20%20%09%09if%28_leoHighlight sPrevElem%26%26%28_leoHighlightsPrevElem%21%3Delem %29%29%0A%20%20%09%09%09_leoHighlightsPrevElem.sho wn%3Dfalse%3B%0A%20%20%09%09elem.shown%3Dtrue%3B%0 A%09%09_leoHighlightsPrevElem%3Delem%3B%0A%20%20%2 0%09%0A%20%20%20%09/*%20FF%20needs%20to%20find%20the%20element%20first %20*/%0A%20%20%20%09_leoHighlightsFindElementById%28anc horId%29%3B%0A%20%20%20%09%0A%20%20%20%09setTimeou t%28%22_leoHighlightsShowPopup%28%5C%27%22+anchorI d+%22%5C%27%2C%5C%27%22+size+%22%5C%27%29%3B%22%2C 10%29%3B%0A%20%20%20%7D%0A%20%20%20catch%28e%29%0A %20%20%20%7B%0A%20%20%20%09_leoHighlightsReportExe ception%28%22leoHighlightsShowPopup%28%29%22%2Ce%2 9%3B%20%20%20%09%0A%20%20%20%7D%09%0A%7D%0A%0A/**%0A*%0A*%20This%20can%20be%20used%20to%20close%2 0an%20iframe%0A*%0A*%20@param%20id%0A*%20@return%0 A*/%0Afunction%20leoHighlightsHideElem%28id%29%0A%7B% 0A%09try%0A%09%7B%0A%09%09/*%20Get%20the%20appropriate%20sizes%20*/%0A%20%20%09%09var%20elem%3D_leoHighlightsFindElem entById%28id%29%3B%0A%20%20%09%09if%28elem%29%0A%2 0%20%09%09%09elem.style.visibility%3D%22hidden%22% 3B%0A%20%20%09%09%0A%20%20%09%09/*%20Clear%20the%20page%20for%20the%20next%20run%20 through%20*/%0A%20%20%09%09var%20iFrame%3D_leoHighlightsFindEl ementById%28LEO_HIGHLIGHTS_IFRAME_ID%29%3B%0A%20%2 0%09%09if%28iFrame%29%0A%20%20%09%09%09iFrame.src% 3D%22about%3Ablank%22%3B%0A%20%20%09%09%0A%20%20%0 9%09%0A%20%20%09%09if%28_leoHighlightsPrevElem%29% 0A%20%20%09%09%7B%0A%20%20%09%09%09_leoHighlightsP revElem.shown%3Dfalse%3B%0A%20%20%09%09%09_leoHigh lightsPrevElem%3Dnull%3B%0A%20%20%09%09%7D%0A%09%7 D%0A%09catch%28e%29%0A%09%7B%0A%09%09_leoHighlight sReportExeception%28%22leoHighlightsHideElem%28%29 %22%2Ce%29%3B%20%20%20%09%0A%09%7D%0A%7D%0A%0A/**%0A*%0A*%20This%20can%20be%20used%20to%20close%2 0an%20iframe.%0A*%20Since%20the%20iFrame%20is%20re used%20the%20frame%20only%20gets%20hidden%0A*%0A*% 20@return%0A*/%0Afunction%20leoHighlightsIFrameClose%28%29%0A%7B %0A%20%20try%0A%20%20%7B%0A%09%20%20_leoHighlights SimpleGwCallBack%28%22LeoHighlightsHideIFrame%22%2 9%3B%0A%20%20%7D%0A%20%20catch%28e%29%0A%20%20%7B% 0A%09%20%20_leoHighlightsReportExeception%28%22leo HighlightsIFrameClose%28%29%22%2Ce%29%3B%20%20%20% 09%0A%20%20%7D%0A%7D%0A%0A/**%0A%20*%20This%20should%20handle%20the%20click%2 0events%0A%20*%20%0A%20*%20@param%20anchorId%0A%20 *%20@return%0A%20*/%0Afunction%20leoHighlightsHandleClick%28anchorId% 29%0A%7B%0A%20%20%20try%0A%20%20%20%7B%0A%20%20%09 %09var%20anchor%3D_leoHighlightsFindElementById%28 anchorId%29%3B%0A%20%20%09%09anchor.hover%3Dfalse% 3B%0A%20%20%09%09if%28anchor.startTimer%29%0A%20%2 0%09%09%09clearTimeout%28anchor.startTimer%29%3B%0 A%20%20%20%09%0A%20%20%09%09leoHighlightsEvent%28% 22clicked%22%29%3B%0A%20%20%20%09leoHighlightsShow Popup%28anchorId%2C1%29%3B%0A%20%20%20%09return%20 false%3B%0A%20%20%20%7D%0A%20%20%20catch%28e%29%0A %20%20%20%7B%0A%20%20%20%09_leoHighlightsReportExe ception%28%22leoHighlightsHandleClick%28%29%22%2Ce %29%3B%20%20%20%09%0A%20%20%20%7D%09%0A%7D%0A%0A/**%0A%20*%20This%20should%20handle%20the%20hover%2 0events%0A%20*%20%0A%20*%20@param%20anchorId%0A%20 *%20@return%0A%20*/%0Afunction%20leoHighlightsHandleHover%28anchorId% 29%0A%7B%0A%20%20%20try%0A%20%20%20%7B%0A%20%20%09 %09var%20anchor%3D_leoHighlightsFindElementById%28 anchorId%29%3B%0A%20%20%09%09anchor.hover%3Dtrue%3 B%0A%20%20%09%09%0A%20%20%09%09leoHighlightsEvent% 28%22hovered%22%29%3B%0A%20%20%20%09leoHighlightsS howPopup%28anchorId%2C0%29%3B%0A%20%20%20%09return %20false%3B%0A%20%20%20%7D%0A%20%20%20catch%28e%29 %0A%20%20%20%7B%0A%20%20%20%09_leoHighlightsReport Exeception%28%22leoHighlightsHandleHover%28%29%22% 2Ce%29%3B%20%20%20%09%0A%20%20%20%7D%09%0A%7D%0A%0 A/**%0A%20*%20This%20will%20handle%20the%20mouse%20o ver%20setup%20timers%20for%20the%20appropriate%20t imers%0A%20*%20%0A%20*%20@param%20id%0A%20*%20@ret urn%0A%20*/%0Afunction%20leoHighlightsHandleMouseOver%28id%29 %0A%7B%0A%09try%0A%09%7B%0A%09%09var%20anchor%3D_l eoHighlightsFindElementById%28id%29%3B%09%09%0A%0A %09%09/*%20Clear%20the%20end%20timer%20if%20required%20*/%0A%09%09if%28anchor.endTimer%29%0A%09%09%09clearT imeout%28anchor.endTimer%29%3B%0A%09%09anchor.endT imer%3Dnull%3B%0A%09%09%0A%09%09anchor.style.backg round%3DLEO_HIGHLIGHTS_BACKGROUND_STYLE_HOVER%3B%0 A%09%09%0A%09%09/*%20The%20element%20is%20already%20showing%20we%20 are%20done%20*/%0A%09%09if%28anchor.shown%29%0A%09%09%09return%3B %0A%09%09%0A%09%09/*%20Setup%20the%20start%20timer%20if%20required%20 */%0A%09%09anchor.startTimer%3DsetTimeout%28function %28%29%7B%0A%09%09%09leoHighlightsHandleHover%28an chor.id%29%3B%0A%09%09%09anchor.hover%3Dtrue%3B%0A %09%09%09%7D%2C%0A%09%09%09LEO_HIGHLIGHTS_SHOW_DEL AY_MS%29%3B%0A%09%7D%0A%09catch%28e%29%0A%09%7B%0A %09%09_leoHighlightsReportExeception%28%22leoHighl ightsHandleMouseOver%28%29%22%2Ce%29%3B%20%20%20%0 9%0A%09%7D%0A%7D%0A%0A/**%0A%20*%20This%20will%20handle%20the%20mouse%20o ver%20setup%20timers%20for%20the%20appropriate%20t imers%0A%20*%20%0A%20*%20@param%20id%0A%20*%20@ret urn%0A%20*/%0Afunction%20leoHighlightsHandleMouseOut%28id%29% 0A%7B%0A%09try%0A%09%7B%09%0A%09%09var%20anchor%3D _leoHighlightsFindElementById%28id%29%3B%0A%09%09% 0A%09%09/*%20Clear%20the%20start%20timer%20if%20required%20 */%0A%09%09if%28anchor.startTimer%29%0A%09%09%09clea rTimeout%28anchor.startTimer%29%3B%0A%09%09anchor. startTimer%3Dnull%3B%0A%09%09%0A%09%09anchor.style .background%3DLEO_HIGHLIGHTS_BACKGROUND_STYLE_DEFA ULT%3B%0A%09%09if%28%21anchor.shown||%21anchor.hov er%29%0A%09%09%09return%3B%0A%09%09%0A%09%09/*%20Setup%20the%20start%20timer%20if%20required%20 */%0A%09%09anchor.endTimer%3DsetTimeout%28function%2 8%29%7B%0A%09%09%09leoHighlightsHideElem%28LEO_HIG HLIGHTS_IFRAME_DIV_ID%29%3B%0A%09%09%09anchor.show n%3Dfalse%3B%0A%09%09%09_leoHighlightsPrevElem%3Dn ull%3B%0A%09%09%09%7D%2CLEO_HIGHLIGHTS_HIDE_DELAY_ MS%29%3B%0A%09%7D%0A%09catch%28e%29%0A%09%7B%0A%09 %09_leoHighlightsReportExeception%28%22leoHighligh tsHandleMouseOut%28%29%22%2Ce%29%3B%20%20%20%09%0A %09%7D%0A%7D%0A%0A/**%0A%20*%20This%20handles%20the%20mouse%20movemen t%20into%20the%20currently%20opened%20window.%0A%2 0*%20Just%20clear%20the%20close%20timer%0A%20*%20% 0A%20*%20@return%0A%20*/%0Afunction%20leoHighlightsHandleIFrameMouseOver%2 8%29%0A%7B%0A%09try%0A%09%7B%0A%09%09if%28_leoHigh lightsPrevElem%26%26_leoHighlightsPrevElem.endTime r%29%0A%09%09%09clearTimeout%28_leoHighlightsPrevE lem.endTimer%29%3B%0A%09%7D%0A%09catch%28e%29%0A%0 9%7B%0A%09%09_leoHighlightsReportExeception%28%22l eoHighlightsHandleIFrameMouseOver%28%29%22%2Ce%29% 3B%20%20%20%09%0A%09%7D%0A%7D%0A%0A/**%0A%20*%20This%20handles%20the%20mouse%20movemen t%20into%20the%20currently%20opened%20window.%0A%2 0*%20Just%20clear%20the%20close%20timer%0A%20*%20% 0A%20*%20@param%20id%0A%20*%20@return%0A%20*/%0Afunction%20leoHighlightsHandleIFrameMouseOut%28 %29%0A%7B%0A%09try%0A%09%7B%0A%09%09if%28_leoHighl ightsPrevElem%29%0A%09%09%09leoHighlightsHandleMou seOut%28_leoHighlightsPrevElem.id%29%3B%0A%09%7D%0 A%09catch%28e%29%0A%09%7B%0A%09%09_leoHighlightsRe portExeception%28%22leoHighlightsHandleIFrameMouse Out%28%29%22%2Ce%29%3B%20%20%20%09%0A%09%7D%0A%7D% 0A/**%0A%20*%20This%20is%20a%20method%20is%20used%20t o%20make%20the%20javascript%20within%20IE%20runnab le%0A%20*/%0Avar%20leoHighlightsRanUpdateDivs%3Dfalse%3B%0Af unction%20leoHighlightsUpdateDivs%28%29%0A%7B%0A%0 9try%0A%09%7B%0A%09%09/*%20Check%20if%20this%20is%20an%20IE%20browser%20a nd%20if%20divs%20have%20been%20updated%20already%2 0*/%0A%09%09if%28document.all%26%26%21leoHighlightsRa nUpdateDivs%29%0A%09%09%7B%0A%09%09%09leoHighlight sRanUpdateDivs%3Dtrue%3B%20//%20Set%20early%20to%20prevent%20running%20twice%0A %09%09%09for%28var%20i%3D0%3Bi%3CLEO_HIGHLIGHTS_MA X_HIGHLIGHTS%3Bi++%29%0A%09%09%09%7B%0A%09%09%09%0 9var%20id%3D%22leoHighlights_Underline_%22+i%3B%0A %09%09%09%09var%20elem%3D_leoHighlightsFindElement ById%28id%29%3B%0A%09%09%09%09if%28elem%3D%3Dnull% 29%0A%09%09%09%09%09break%3B%0A%09%09%09%09%0A%09% 09%09%09if%28%21elem.leoChanged%29%0A%09%09%09%09% 7B%0A%09%09%09%09%09elem.leoChanged%3Dtrue%3B%0A%0 9%09%09%09%0A%09%09%09%09%09/*%20This%20will%20make%20javaScript%20runnable%20*/%09%09%09%09%0A%09%09%09%09%09elem.outerHTML%3Dele m.outerHTML%3B%0A%09%09%09%09%7D%0A%09%09%09%7D%0A %09%09%7D%0A%09%7D%0A%09catch%28e%29%0A%09%7B%0A%0 9%09_leoHighlightsReportExeception%28%22leoHighlig htsUpdateDivs%28%29%22%2Ce%29%3B%20%20%20%09%0A%09 %7D%0A%7D%0A%0Aif%28document.all%29%0A%09setTimeou t%28leoHighlightsUpdateDivs%2C200%29%3B%0A%0A/**%0A%20*%20This%20is%20used%20to%20report%20event s%20to%20the%20plugin%0A%20*%20@param%20key%0A%20* %20@param%20sub%0A%20*%20@return%0A%20*/%0Afunction%20leoHighlightsEvent%28key%2C%20sub%29 %0A%7B%0A%20%20%20try%0A%20%20%20%7B%0A%20%20%20%2 0%20%20var%20gwObj%20%3D%20new%20Gateway%28%29%3B% 0A%20%20%20%20%20%20gwObj.addParam%28%22key%22%2C% 20key%29%3B%0A%20%20%20%20%20%20gwObj.addParam%28% 22sub%22%2C%20sub%29%3B%0A%20%20%20%20%20%20gwObj. callName%28%22LeoHighlightsEvent%22%29%3B%09%0A%20 %20%20%7D%0A%20%20%20catch%28e%29%0A%20%20%20%7B%0 A%20%20%20%09_leoHighlightsReportExeception%28%22l eoHighlights%28%29%22%2Ce%29%3B%20%20%20%09%0A%20% 20%20%7D%0A%7D%0A%0A/*----------------------------------------------------------------------*/%0A/*%20Methods%20provided%20to%20the%20highlight%20pr oviders...%20%20%20%20%20%20%20%20%20%20%20%20%20% 20%20%20%20%20%20%20%20%20%20*/%0A/*----------------------------------------------------------------------*/%0A%0A/**%0A%20*%20This%20will%20redirect%20the%20top%20w indow%20to%20the%20passed%20in%20url%0A%20*%20%0A% 20*%20@param%20url%0A%20*%20@param%20parentId%0A%2 0*%20@return%0A%20*/%0Afunction%20leoHL_RedirectTop%28url%2CparentId%2 9%0A%7B%0A%20%20%20try%0A%20%20%20%7B%0A%20%20%09% 09leoHighlightsEvent%28%22clicked.2eBay%22%29%3B%0 A%20%20%20%09_leoHighlightsRedirectTop%28url%29%3B %0A%20%20%20%7D%0A%20%20%20catch%28e%29%0A%20%20%2 0%7B%0A%20%20%20%09_leoHighlightsReportExeception% 28%22leoHL_RedirectTop%28%29%22%2Ce%29%3B%20%20%20 %09%0A%20%20%20%7D%0A%7D%0A%0A/**%0A%20*%20This%20will%20set%20the%20size%20of%20 the%20iframe%0A%20*%20%0A%20*%20@param%20url%0A%20 *%20@param%20parentId%0A%20*%20%0A%20*%20@return%0 A%20*/%0Afunction%20leoHl_setSize%28size%2Curl%29%0A%7B% 0A%20%20%20try%0A%20%20%20%7B%0A%20%20%20%09/*%20Get%20the%20clickId%20*/%0A%20%20%20%09var%20clickId%3D_leoHighlightsGetUr lArg%28%20url%2C%22clickId%22%29%0A%20%20%20%09%0A %20%20%20%20%20%20var%20gwObj%20%3D%20new%20Gatewa y%28%29%3B%0A%20%20%20%20%20%20gwObj.addParam%28%2 2size%22%2Csize%29%3B%0A%20%20%20%20%20%20if%28cli ckId%29%0A%20%20%20%20%20%20%20%20%20gwObj.addPara m%28%22clickId%22%2CclickId+%22_blah%22%29%3B%0A%2 0%20%20%20%20%20gwObj.callName%28%22LeoHighlightsS etSize%22%29%3B%0A%20%20%20%7D%0A%20%20%20catch%28 e%29%0A%20%20%20%7B%0A%20%20%20%09_leoHighlightsRe portExeception%28%22leoHl_setSize%28%29%22%2Ce%29% 3B%20%20%20%09%0A%20%20%20%7D%0A%7D%0A"); </script>

medved
04-06-10, 08:06 AM
Eric: your quoted source contradicts you.
"very real downward manipulation of silver and gold markets by JP Morgan"

Rising silver and gold price is not a valid argument against price manipulation, since who knows what the price would be without the manipulation.

Also Gordon Brown's gold sale is a well-known case of gold price MANIPULATION.

Rather, it is a well-known case of arrogance and stupidity synonymous with so-called central banking. If it was a "big money" manipulation, it failed completely.

The whole system of fractional banking supported by money-printing central bank is the biggest "manipulation" of all, and everybody accepts it as legal. As long as gold is treated as a commodity, there is nothing wrong with trading it in the futures market just like interest rate futures.

The *real* crime is treating gold as a commodity and turning the banking system into the speculative futures market "regulated" by the lender of last resort to the biggest losers.

slippery
04-06-10, 08:40 AM
xPat,

Thank you for the fantastic analysis. Lots to think about in your post.

metalman
04-06-10, 09:07 AM
xPat,

Thank you for the fantastic analysis. Lots to think about in your post.

bravo! another case of gold bugger scare mongering cracked by the itulip analysis posse...

ej + jtabeb, xpat, grg. ash, jimmy, jk, medved, etc, etc, etc = itulip

WDCRob
04-06-10, 09:47 AM
xPat,

Thank you for the fantastic analysis. Lots to think about in your post.

Second that thought xPat. Having a thoughtful counterargument provided is helpful.

Spartacus
04-06-10, 11:33 AM
Next McGuire asserts that he accurately predicted silver price movements on February 5, 2010, and that these price movements conclusively proved price manipulation, which proof a market regulator failed to fully appreciate.


Maguire's and GATA's claim is much stronger than this - they claim
1. he made multiple predictions that day, well in advance, of each significant move, both up and down
2. he made a before-the-fact prediction that "if the report is positive then overall it will go like this, if the report is negative it will go like this ..."
3. he told CFTC what to look for in actual market orders being placed
4. he emailed CFTC well in advance all the information, 1. 2. and 3. above.

Maguire/GATA have released some of the emails as well, plus at least one from CFTC in response, confirming they got his emails.

Time will tell if it's the complete, unvarnished truth.

Spartacus
04-06-10, 11:54 AM
What I meant to say pertains to the body of evidence assembled by Ted Butler alleging that Bear Sterns was engaged in a massive concentrated short position that was taken over by JP Morgan and was still being used to manipulate the market right up to just before the CFTC hearing. My choice of the words "very real downward manipulation" was unfortunate. What I should have said is that I find Butler's analysis of the COT reports revealing this highly concentrated short to be highly credible, hence "very real". Whether that very large short is truly being used to manipulate the market to the downside is something I can neither prove nor disprove, but I think the evidence Butler has assembled certainly warrants a closer look by regulators. Perhaps I should have said "GATA has very real evidence of a large concentrated short and a plausible allegation that it exists purely for downside market manipulation. Those claims certainly warrant thorough investigation."
This is the big problem I have with most of those who reply to Ted Butler: Ted
1. presents data collected and verified by the government - his opponents almost never do
2. consistently separates "this is the data" from "this is what I conclude", from which most of his opponents reply emotionally "conspiracy theorist idiot" .



The reason I was saying "very real" was to contrast this business of the JPM short with the utter nonsense being thrown around by GATA relative to the 100:1 "leverage" (sic) business. More on that below.

100:1 Leverage and Jeff Christian's "Admission":

This is the really important one, and it's the area where I think GATA is being outright incompetent. I'm afraid that for everyone to understand this will require a short tutorial on the futures market. I'll try to be as brief and concise as I can...


Yeah, it may be par for the course for COMEX, though I've been led to believe that historically, in the development of the commodity futures markets if you put on a large short, you're supposed to be "reasonably sure" you could deliver it if required (buy somewhere else or produce).

there is a reason for this:
http://www.cmegroup.com/market-regulation/position-limits/

How much leverage does anyone need before they reach their position limits?

But the industry seems to have come to see it as normal.

The leverage did seem to come as a shock to some - whether it was the fact that the leverage is on LBMA (not supposed to be leveraged at all), or just overall leverage I couldn't tell. In other words, it seems Christian claimed all the gold on LBMA has been sold 100 times over, when it's supposed to be that if everyone who can say " I have Gold in LBMA", went to get it, they could.

I don't know who's mis-understanding whom at this point - my understanding is that LBMA members have unallocated and allocated pools and if you buy unallocated you might never get your Gold. If a salesman sold you a receipt to unallocated Gold, guaranteed that you could go and get it, and when you went to collect it you were refused, you've been lied to, but that's not LBMA's fault.

Pascal
04-06-10, 02:24 PM
I do not know enough to have an opinion on whether the allegations are true or not, but Gata and Maguire's main arguments seem to be misstated here.

First, the 100:1 "revelation" relates to the LBMA, not Comex, according to the King World interview. As Spartacus said earlier, the LBMA is supposed to be unallocated physical, but physical nonetheless. Gata and Maguire clearly understand that Comex is generally paper.

Second, a major argument of Gata (and certainly Butler) is that the two big shorts are not hedging and therefore are in excess of existing position limits, and b) there is no way silver delivery could occur if required since the silver shorts are in excess of existing world inventories and/or (?) annual production.

I'm relatively new to this market, not a Gata member, and also relatively unburdened with the facts, so please correct me if I'm wrong on the above. If I'm not wrong, I would appreciate any counter arguments to Gata's allegations, particularly the allegation related to the LBMA.

Thanks.

Camtender
04-06-10, 03:22 PM
Thanks xPat for a well thought out response. I have no background in commodities futures market or any real knowledge, just learning more day to day.

However, does the following statement from the London Metal Exchange on August 16, 2006 contradict or support the following two statements?

1)

So what if all those longs (buyers of gold and silver contracts) said "We want our gold! Give us delivery of physical metal!"? Well, the way they would do that would be to pay their broker the remaining 90% of the purchase price - money the vast majority of buyers just don't have! So this simply isn't a realistic scenario.
As per http://www.lme.com/4670.asp (http://www.lme.com/4670.asp) on August 16, 2006,

“Nickel stocks are at historically low levels and we now have a genuine material shortage. Our first priority is to ensure that trading remains orderly and to prevent the risk of settlement defaults.”

2)

Anyone who understands the futures market would immediately recognize this nonsense for what it is. "Illegal Naked Short Selling" is a real issue, but the phrase relates to the stock market, not the futures market. Futures are a derivative market, and the seller isn't expected to own the underlying. There is nothing illegal about that whatsoever, and it is most often the case in most commodities. So Kirby either has no clue what the futures market actually is or how it operates, or else he's engaged in an intentional disinformation campaign designed to put fear, uncertainty and doubt into the metals markets. I can't decide which, but either way I have zero respect for this character.
As per http://www.lme.com/4670.asp (http://www.lme.com/4670.asp), on August 16, 2006,

"Backwardation limit
Those with short positions in nickel falling prompt on Friday 18 August 2006, and on subsequent prompt dates until further notice, who are unable to effect physical delivery and/or unable to borrow metal at a backwardation of no more than $300.00 per tonne per day, shall be able to defer delivery for a day at a penalty of $300.00 per tonne. Those with long positions for prompt on those days who are subject to deferred delivery shall be entitled to compensation of $300.00 per tonne per day."

ThePythonicCow
04-06-10, 04:05 PM
So something is rotten in Denmark.Not just Denmark.

Excellent post, xPat. Thanks.

My gut instinct on all this commotion is to reduce my precious metal positions a little, given that this seems like a (flawed/fraudulent/?) story to increase the precious metal holdings of goldbugs.

Pascal
04-06-10, 06:40 PM
C'mon guys. It's not cool to set up straw men. Too easy to beat and nobody improves their knowledge base.

Does anyone have any facts to counter Gata's arguments?

I presume they're there but I do not know what they are.

ThePythonicCow
04-06-10, 06:50 PM
C'mon guys. It's not cool to set up straw men.
Which comments are you calling "straw men" and to which posters are you responding? Without knowing the context to which you respond, I get lost trying to figure out the meaning of your reply - sorry.

metalman
04-06-10, 07:03 PM
C'mon guys. It's not cool to set up straw men. Too easy to beat and nobody improves their knowledge base.

Does anyone have any facts to counter Gata's arguments?

I presume they're there but I do not know what they are.

how about the fact that gold is up 330% since 1999? where's the evidence of downward price manipulation? gata claims gold 'should' have been higher. why is it up to gata's detractors to prove that claim is baseless?

gravity is produced by giant magnets spinning in the center of the earth. prove me wrong.

Camtender
04-06-10, 07:18 PM
I have to admit, at this point I am skeptical about some of the criticism(not all) that is being pointed at GATA right now.

If xPat and EJ are correct on the "no such thing as naked shorting in commodities", why didn't someone at the CFTC hearing simply say......... "there is no such thing as naked shorts in the commodities..............", "next person please..................."

After days of reading on commodities, Itulip is the one to break the big story days after the CFTC hearing that "naked short selling" is not in the commodities market?

Can anyone address the two comments I posted above that clearly indicates that the London Metal Exchange has physical delivery requirement on short positions, or is the London Metal Exchange full of crap too?

gorkypark
04-06-10, 08:19 PM
First, the 100:1 "revelation" relates to the LBMA, not Comex, according to the King World interview. As Spartacus said earlier, the LBMA is supposed to be unallocated physical, but physical nonetheless. Gata and Maguire clearly understand that Comex is generally paper.

Second, a major argument of Gata (and certainly Butler) is that the two big shorts are not hedging and therefore are in excess of existing position limits, and b) there is no way silver delivery could occur if required since the silver shorts are in excess of existing world inventories and/or (?) annual production.


BRAVO Pascal.....you have it...I'd like to see precisely those points rebutted..rest is just noise.....cheers

ThePythonicCow
04-06-10, 08:38 PM
First, the 100:1 "revelation" Does anyone have the exact wording of this 100:1 revelation (in text, not audio)?

When I heard it, the one time I listened, it sounded like some mealy mouthed, technically correct but of no great substance statement that I'd expect from a well-trained bureaucrat. I dismissed it as not being worth the mental effort to "decode."

Jesse
04-06-10, 08:42 PM
I have not taken the time to read all this thread, but it should be noted that the LBMA, the London Bullion Market Association, is most decidedly NOT a 'futures market' like the Comex or the Tocom.

The LBMA is a dealer's association that came to prominence after FDR confiscated the US gold. I went into some detail here in this post about how the 'spot price' that one sees at Kitco is derived, and what it really means.

http://jessescrossroadscafe.blogspot.com/2010/03/what-is-spot-price-of-gold-and-silver.html

I think xPat has a knowledge of the American futures and the Globex, but gets it a bit wrong when he extrapolates what he knows to the metals industry overall.

The LBMA is the BIG bullion dealer market, with an emphasis on physical, and not futures, or promises to pay at some point in the future. You go to the LBMA to buy bullion in 400 oz bars of 'London ready' gold. I don't know about their silver business anywhere near as well.

Now, there is a certain amount of 'arbitrage' in any market, and it was thought that there was some 'double selling' or more in the unallocated accounts. But Mr. Christian seemed to indicate that it was 100:1. Now that may not be a shocker in the futures (actually it would but I won't quibble that just yet.). At the LBMA it was mindblowing.

Now Jeff Christian made some real faux pas at this meeting including one that even Gary Gensler barfed on, when he intimated that when the guys at LBMA get caught short on delivery, they go to the Comex and SELL the futures. Gensler was pretty amused. What Mr. Christian seemed to be saying was that they were using the US futures market to depress price and clear up their logjam in London.

Now, I think we all know that 'futures' are used for many things including for speculation. But when you are a 'commercial' and a market maker, there are some niceties that one needs to observe, even in the bond markets for example, as Citi found out with their 'DR EVIL' strategy of price manipulation. http://jessescrossroadscafe.blogspot.com/2009/09/cftc-exposes-small-dutch-firms-use-of.html

You can't keep selling futures until the cows come home, and you press the price down to zero. Yes yes someone can stand for delivery IF they have pockets big enough to call you, but long before that even the lacksadaisical regulators at CFTC are doing to stop by and say, Oh by the way, just what do you think you are doing? We're getting complaints about this.

This is when the commercial must 'show their cards.' Oh, don't worry, we just hedging against mining. And we're just selling bullion we have at the LBMA.

this is why HSBC offered to sell a million oz on demand at the CFTC hearing. BTW and I cannot confirm this, someone took them up on it and they could not deliver and got a handslap. A rumour let say for now.

Why is all this important. BEcause the size of the shorts these jokers have are SO big, that as janet tavakoli the derivatives expert noted in her piece I also deal with, http://jessescrossroadscafe.blogspot.com/2010/03/extended-comment-on-how-to-corner-gold.html , someone is going to take these jokers down and hurt them badly. They can't deliver. Now she approaches it as though it is the 'evil bulls' who will scheme to do this. I view that like the 'evil bears' called the banks' bluff on their crap CDO's.

so, that's why this is important. My position on this is to keep educating myself, and looking into the facts. And my take is that if jeff Christian is going to make a fool out of anyone, then bring it. But bring some facts, and some transparency, and show us what you've got. and park the smears and ridicule and rhetoric at the curb, I'm not interested.

the whole point of this exercise is to get more transparency in the markets, in this case commodities. If a guy wants to take a position, let them, but it has to be 'legitimate' if it is of a certain category.

I mean come on. even in the futures markets, have we learned nothing from Enron? what they did in the oil markets was criminal, and on the surface it does not look all that different from what is being done in silver. It impacts the real world, and whole industries, and the output of some developing and resource intensive nations.

the merry pranksters seem to like to lever up, take their bonuses, and leave the mess for the public to clean up.

And to me, this looks like the way its coming down again.

Jesse
04-06-10, 08:48 PM
On the matter of Rob Kirby, I can't speak to what he is saying. He is not GATA, and not as forthcoming. I have exchanged some info and questions with him. He has some 'connections' but I cannot verify what he says.

the tungsten story is interesting. I cannot tell how much of that is speculation and so forth.

But where I can, I try and learn and then share what I learn. And I know enough now when a guy who is full of it is jiving us, as I did I think my post today responding to the Huffington piece by Warren Mosler.

http://jessescrossroadscafe.blogspot.com/2010/04/for-warren-mosler-primer-on-difference.html

There is WAY too much secrecy in the markets in the US, and in the financial dealings of the Treasury and the Fed. Again, secrecy has a place, but when it is overused it is generally to hide blatant abuses, like Timmy's taking on crap from Bear onto the Fed, and lying about the quality of it.

I understand the desire for a trader to 'mask' their positions. but the proposals to the CFTC for position limits would respect that. Its just that when you are holding more than 5 percent of the O/I you have to start playing by big boy rules because you start becoming a counterparty risk. And when someone is looking for an industrial metal, or an energy product, settlement in paper dollars for things you sold may not cut it in the real world.

As for gold and silver, there is little doubt in my mind the prices are being manipulated. I mean, come on. the central bankers have pretty much come out and said it, and justify it as a policy thing, like their currency 'actions.' The british press is on Gordon Brown's ass for his gold sale to bail out a couple bullion banks. The US press is owned, somnalescent, and I mean to a shocking degree, more than I even imagined.

As for the car accident of Maguire, I can't speak to it. But these guys are scared. when I talk with them, they are worried. And intimidated in little ways. It is exactly how Markopolos described it when he was trying to out Madoff. I told them be ready for smears and ridicule, don't cut corners and don't reach too far. But they are scared. And I would be too.

It was kind of funny. As I recall, when the Citi trader was caught rigging the Eurobond market, running the stops and disrupting the market, he was indignant that this was how 'they always do it in new york.' LOL

At some point this is going to blow up again, and you are going to be asked to pay for it. Well, actually you won't be asked, you will just be handed the tab.

I mean seriously, what is it going to take to wake people up?

xPat
04-06-10, 08:50 PM
After days of reading on commodities, Itulip is the one to break the big story days after the CFTC hearing that "naked short selling" is not in the commodities market?
Let's be careful not to confuse apples with oranges here. What I said is that there is nothing illegal about selling a futures contract without owning the underlying. The phrase "naked short" is slang, so it's hard to definitively say whether it exists or not. If you define "naked short" as meaning selling a contract without owning underlying, then it certainly exists, and is in fact commonplace. The point is that it's neither illegal nor improper. The illegal version of "naked short selling" is a completely unethical, illegal practice in the stock market where shares are sold short without first being borrowed from someone who actually owns them. BTW, that practice is commonplace also, and unfortunately SEC has not done very little to enforce the law, but that's a whole separate matter.



Can anyone address the two comments I posted above that clearly indicates that the London Metal Exchange has physical delivery requirement on short positions, or is the London Metal Exchange full of crap too?
I never said the London exchange was full of crap. I don't trade on that exchange and can't attest to its rules.

This was a CFTC hearing about the U.S. futures market, specifically about position limits on COMEX metals contracts, not about LBMA. I agree that GATA was making allegations about LBMA in the KWN interview, but don't see that as relevant. I watched Jeff Christian's testimony personally, and I interpreted his 100:1 comments as pertaining to the fact that the vast majority of gold contracts traded on the COMEX are never delivered against. How GATA got from that accurate and non-controversial statement to their wild allegations about 100:1 "leverage" and scandals in the London market is a mystery to me.

xPat

<input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden"><input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden">

Camtender
04-06-10, 09:03 PM
Thanks Jesse. Knowing what you know and knowing what you don’t is always a sign of competence.<O:p</O:p

Spartacus
04-06-10, 09:08 PM
Forget GATA for a moment. Here's the argument these guys are trying to make:
Take the case to its simplest form:

The price of Gold rose, YES.
So what were these guys doing:

The guy at the coin shop haggling for a 10 cent bargain

The father in India haggling over the price of bullion to be turned jewelry for a wedding

The guy "A" placing an order with a broker for COMEX gold, who when the price is $810, types in a limit of $800, hoping someone, call him "B" will place a sell order "at market", and "A" will get his Gold cheaper.

They were trying to reduce the price. Did they succeed? No, the price rose.

By your argument "price rose, so no manipulation" means these 3 guys who tired to reduce the price don't exist.

That's obviously wrong - just because the price ROSE, does not mean these 3 guys weren't trying to reduce (manipulate) the price.



how about the fact that gold is up 330% since 1999? where's the evidence of downward price manipulation? gata claims gold 'should' have been higher. why is it up to gata's detractors to prove that claim is baseless?

gravity is produced by giant magnets spinning in the center of the earth. prove me wrong.

If there was attempted manipulation (I don't know if there was), that manipulation failed to reduce the price. It doesn't mean there was no attempted manipulation.

A snail trying to stop a steamroller won't succeed. does that mean the snail never tried?

xPat
04-06-10, 09:10 PM
I think xPat has a knowledge of the American futures and the Globex, but gets it a bit wrong when he extrapolates what he knows to the metals industry overall.
Hold on there... Yes, you are absolutely correct that my knowledge is of the American futures market, and I while I know what the LBMA is, I know very little about its rules and have never traded there. I didn't mean to suggest that I was an expert of any kind in the global metals market.


Now, there is a certain amount of 'arbitrage' in any market, and it was thought that there was some 'double selling' or more in the unallocated accounts. But Mr. Christian seemed to indicate that it was 100:1. Now that may not be a shocker in the futures (actually it would but I won't quibble that just yet.). At the LBMA it was mindblowing.
I won't disagree that this would be mind-blowing on the LBMA, but I didn't interpret Christian's comments that way. I interpreted his 100:1 comment to pertain to contracts traded on the COMEX, where I see nothing unusual or extraordinary about it.


Now Jeff Christian made some real faux pas at this meeting including one that even Gary Gensler barfed on, when he intimated that when the guys at LBMA get caught short on delivery, they go to the Comex and SELL the futures. Gensler was pretty amused. What Mr. Christian seemed to be saying was that they were using the US futures market to depress price and clear up their logjam in London.
I certainly agree that Christian put his foot in his mouth with the short hedging a short thing, and I applaud Gensler for calling him out on it. I didn't mean to defend that aspect of what he said.


Why is all this important. BEcause the size of the shorts these jokers have are SO big, that as janet tavakoli the derivatives expert noted in her piece I also deal with, http://jessescrossroadscafe.blogspot.com/2010/03/extended-comment-on-how-to-corner-gold.html , someone is going to take these jokers down and hurt them badly. They can't deliver. Now she approaches it as though it is the 'evil bulls' who will scheme to do this. I view that like the 'evil bears' called the banks' bluff on their crap CDO's.
Now that's my whole point! This was a U.S. CFTC hearing about COMEX futures market position limits. GATA is (supposedly) in posession of damning evidence from Andrew Maguire proving that the concentrated short held by JPM that Ted Butler has written so much about is indeed being used in a conscious, pre-meditated agenda of price suppression. That's really big stuff, assuming it's true.

My point is that GATA should be focused on the hard evidence they have that a really BIG concentrated short is in fact being used for market manipulation, in U.S. futures markets. That's what the hearing was about, and that's what CFTC has authority to regulate. Extrapolating testimony from the CFTC hearing into a scandal hypothesis about the LBMA does not seem productive to me, since CFTC has no authority to regulate LBMA in the first place.

Bottom line, I think GATA should be focused on the Maguire evidence and the work Ted Butler has done and demand that CFTC take action to rectify an apparently extreme impropriety in the U.S. COMEX futures market. If they really think Christian's comments somehow reveal a great scandal on the LBMA, I humbly suggest that they would be better advised to pursue that matter separately and later on. Right now CFTC is reviewing COMEX position limits, and the JPM short should be the focus of GATA's efforts, IMHO.

-xPat
<input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden">

metalman
04-06-10, 09:12 PM
Forget GATA for a moment. Here's the argument these guys are trying to make:
Take the case to its simplest form:

The price of Gold rose, YES.
So what were these guys doing:

The guy at the coin shop haggling for a 10 cent bargain

The father in India haggling over the price of bullion to be turned jewelry for a wedding

The guy "A" placing an order with a broker for COMEX gold, who when the price is $810, types in a limit of $800, hoping someone, call him "B" will place a sell order "at market", and "A" will get his Gold cheaper.

They were trying to reduce the price. Did they succeed? No, the price rose.

By your argument "price rose, so no manipulation" means these 3 guys who tired to reduce the price don't exist.

That's obviously wrong - just because the price ROSE, does not mean these 3 guys weren't trying to reduce (manipulate) the price.




If there was attempted manipulation (I don't know if there was), that manipulation failed to reduce the price. It doesn't mean there was no attempted manipulation.

A snail trying to stop a steamroller won't succeed. does that mean the snail never tried?

ok, let's accept that... they tried & failed... then f&ck 'em. they're useless. move on.

Spartacus
04-06-10, 09:20 PM
I would if I could.

I've never been really interested in Gold so have not examined the Gold market or GATA's claims in detail.

All I have is the standard, generic "James Randi, John T Reed, Henry Blodgett[0] type skeptical-consumer" stance, which I apply to all hot tips & analyses - my own and Butler's and Eric's.


C'mon guys. It's not cool to set up straw men. Too easy to beat and nobody improves their knowledge base.

Does anyone have any facts to counter Gata's arguments?

I presume they're there but I do not know what they are.

[0] Henry Blodgett !!!!!!! skeptical !!!!!!!!!!! It is to laugh. Now, if Kramer(R)(TM) stops spewing KramerKrap(R)(TM) I'll be in heaven

Camtender
04-06-10, 09:22 PM
bravo! another case of gold bugger scare mongering cracked by the itulip analysis posse...



Will you ever learn....................:p

Read, brother, read. I suggest a site called zerohedge.

Independent thinking can go a long ways........................

Spartacus
04-06-10, 09:29 PM
ok, let's accept that... they tried & failed... then f&ck 'em. they're useless. move on.

That's good enough for you Eric & me.

But the person who can conclude with 100% certainty that some parties have expended billions of dollars trying to reduce the price, that person has good reason to load up on Gold investments - he's been handed a big buy signal[0]

It won't be me, though ... it will have to be someone who's heavily invested either in Gold already and would profit, or someone heavily invested in those ideas and needs to find the proof for personal reasons. Or a whistleblower with a conscience.


[0] And he could still lose, if the fundamentals turn against him at just the wrong time, it won't matter that billions have been spent to suppress the price

Ann
04-06-10, 09:30 PM
Will you ever learn....................:p

Read, brother, read. I suggest a site called zerohedge.

Independent thinking can go a long ways........................

Zerohedge? Independent? Quite amusing.

ThePythonicCow
04-06-10, 09:41 PM
I certainly agree that Christian put his foot in his mouth with the short hedging a short thing, and I applaud Gensler for calling him out on it. I didn't mean to defend that aspect of what he said.My take on what Christian meant was that when a client of the bank goes short gold, the bank (this part elided) goes long on the other side of that trade, so then (back to what was explicit) hedges their long to that customer with a short of their own.

Pascal
04-06-10, 09:45 PM
Which comments are you calling "straw men" and to which posters are you responding? Without knowing the context to which you respond, I get lost trying to figure out the meaning of your reply - sorry.


Sorry. I was referring to my post immediately above the one you responded to. Here are my concerns:

Itulip says: 1. "Illegal naked short selling is a phenomenon of the stock market, not the futures market. Most contracts sold in the futures market are "naked," that is, the seller doesn't own the underlying, and this is perfectly normal. It is the intended functioning of the market. There is nothing illegal going on. No conspiracy. No fraud." Itulip point #3 is similar.

Me: Straw man. I do not think this is the allegation. The Gata people clearly know that Comex is a paper market. I believe the allegation is that existing regulations are supposed to prevent very large concentrations unless those positions are hedging. If the LBMA allegations are true then at best the bullion banks are hedging paper with paper, and I doubt that meets the hedging exemption. Also, given the quantities of shorts Butler has cited, there may not be enough physical in existence for them to be hedging.


Itulip says: 2. Contrary to GATA's allegations, Jeff Christian's testimony to CFTC was not an admission of anything. He merely stated several obvious, well-known facts about the futures market. There is no fraud, no cover up, and no conspiracy revealed by his 100:1 comment.

Me: I've only listened to it once but I think Christian said that the LBMA was 100:1 metal sold vs. actual unallocated metal in the vault. Not the Comex, not futures. I know that is how Gata heard it from what Murphy and the other Gata guy said in the follow-up King World interview. If you buy metal on the LBMA you are supposed to be getting actual metal (even if unallocated), not a promise.


Points 4 and 5 simply question the integrity of Maguire based on what he's claimed. As to #6, I apologize, but I do not know who Kirby is or why he is even mentioned.

In any event the key issues seem to be a) whether the concentrated short position is manipulative (xPat seems to agree that it probably is) and a violation of commodity regs, and b) whether the LBMA has the goods or not.

These questions have not been credibly addressed here.


I am not trying to be a dipstick here (cough, cough Metalman). I am no expert on commodities law and I've never owned a future, so I do not know the facts. I also have tremendous respect for EJ as a macro analyst and would gladly vote for him as President or Fed Chairman if that were possible and in the highly unlikely event he would take it. EJ is absolutely the best macro guy I've found in many years of trying to understand the markets.

It just seems to me that Gata and Butler's arguments have been given the back of the hand here based on an incorrect statement of their positions. Given the quality of the minds here I was hoping for a proper knockdown if one is possible.

Thanks for asking.

Spartacus
04-06-10, 10:06 PM
If anyone's curious as to definitions and what's promised (or not)

http://www.lbma.org.uk/london/accounts
http://en.wikipedia.org/wiki/London_bullion_market

UNallocated: you own it on paper but if the company goes bankrupt you may not get "your" Gold

allocated: if it's allocated to you, they promise the Gold's YOURS, with no other claims or liens or anything. The Gold you own is documented by bar weight & serial #



Me: I've only listened to it once but I think Christian said that the LBMA was 100:1 metal sold vs. actual unallocated metal in the vault. Not the Comex, not futures. I know that is how Gata heard it from what Murphy and the other Gata guy said in the follow-up King World interview. If you buy metal on the LBMA you are supposed to be getting actual metal (even if unallocated), not a promise.

Rajiv
04-06-10, 10:16 PM
From the Wiki on LBMA (http://en.wikipedia.org/wiki/London_bullion_market)


Account Types

Allocated Accounts

Allocated Accounts are accounts held by dealers in clients’ names on which are maintained balances of uniquely identifiable bars, plates or ingots of metal ‘allocated’ to a specific customer and segregated from other metal held in the vault. The client has full title to this metal with the dealer holding it on the client’s behalf as custodian. To avoid any doubt, metal in an allocated account does not form part of a precious metal dealer’s assets. <sup id="cite_ref-lbmaguide_2-0" class="reference">[3] (http://en.wikipedia.org/wiki/London_bullion_market#cite_note-lbmaguide-2)</sup>.
Unallocated Accounts

Unallocated Accounts represent the most popular way of trading, settling and holding gold, silver, platinum and palladium. Transactions may be settled by credits or debits to the account while the balance represents the indebtedness between the two parties. Credit balances on the account do not entitle the creditor to specific bars of gold or silver or plates or ingots of platinum or palladium but are backed by the general stock of the precious metal dealer with whom the account is held. The client in this scenario is an unsecured creditor. <sup id="cite_ref-lbmaguide_2-1" class="reference">[3] (http://en.wikipedia.org/wiki/London_bullion_market#cite_note-lbmaguide-2)</sup>
Unallocated Risks

The total quantity of unallocated gold is estimated to be 15,000 tonnes at the end of 2008<sup id="cite_ref-Mylchreest1_3-0" class="reference">[4] (http://en.wikipedia.org/wiki/London_bullion_market#cite_note-Mylchreest1-3)</sup> which supports the 2,134 tonnes on average of spot gold trade through London every day representing 14.2% of the pool. This compares to average daily turnover in UK equities of between 0.34% and 0.63% for the 12 months ending September 2009 <sup id="cite_ref-Mylchreest1_3-1" class="reference">[4] (http://en.wikipedia.org/wiki/London_bullion_market#cite_note-Mylchreest1-3)</sup>. While members of the LBMA provide no information on the backing for unallocated gold the improbably high turnover is suggestive they are operating a fractional reserve system where unallocated accounts are only partially backed by physical gold. Similarly to a bank run this makes LBMA unallocated gold accounts susceptible to loss if a sufficient number of market participants request delivery of physical bullion.
I hope that this leads to some clarity -- to me at least what this says is "If you don't have physical you could face problems" but more importantly, it artificially increases the supply, and allows speculators (players that only want to make money on the volatility of the prices, with no real intent to own the gold) to enter the market, and this makes a mockery of price discovery of a commodity that is limited in supply, where quite possibly the demand could outstrip the supply.

At some point, the market for paper gold and physical gold my well diverge.

jpatter666
04-06-10, 10:26 PM
From the Wiki on LBMA (http://en.wikipedia.org/wiki/London_bullion_market)

I hope that this leads to some clarity -- to me at least what this says is "If you don't have physical you could face problems" but more importantly, it artificially increases the supply, and allows speculators (players that only want to make money on the volatility of the prices, with no real intent to own the gold) to enter the market, and this makes a mockery of price discovery of a commodity that is limited in supply, where quite possibly the demand could outstrip the supply.

At some point, the market for paper gold and physical gold my well diverge.

Kind of raises some questions regarding GoldMoney and BullionVault.....

Pascal
04-06-10, 10:51 PM
Thanks Rajiv. I know Wiki isn't necessarily authoritative but I find it interesting that "members of the LBMA provide no information on the backing for unallocated gold".

The LBMA tells its customers that when they buy unallocated, the physical is in the vault. It is not legally in the customer's name, but it is there and if delivery is requested then it will be converted to allocated. So yes, it is legally paper, but customers are told the stuff is there. The LBMA is generally described as a physical market.

This is from the LBMA (emphasis added):

"Unallocated Accounts
This is an account where specific bars are not set aside and the customer has a general entitlement to the metal. It is the most convenient, cheapest and most commonly used method of holding metal.
The units of these accounts are one fine ounce of gold and one ounce of silver based upon a 995 LGD (London Good Delivery) gold bar and a 999 fine LGD silver bar respectively. Transactions may be settled by credits or debits to the account while the balance represents the indebtedness between the two parties.
Credit balances on the account do not entitle the creditor to specific bars of gold or silver, but are backed by the general stock of the bullion dealer with whom the account is held. The client is an unsecured creditor.
Should the client wish to receive actual metal, this is done by ‘allocating’ specific bars or equivalent bullion product, the fine gold content of which is then debited from the allocated account."

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


I also find it interesting that Wiki speculates that the LBMA members are selling more than they have. Obviously,that is exactly the allegation at question here.

Pascal
04-06-10, 10:56 PM
jpatter,

I have done a fair bit of diligence on BullionVault. Their holdings are allocated and audited. They also provide bar numbers. Seems pretty solid as far as I can tell.

Nothing is crime-proof but they seem to be very different from a paper claim seller.

ThePythonicCow
04-06-10, 11:07 PM
Thanks for asking.And thank-you for the careful response. While I was reading it, I agreed with what you said (which isn't to deny that I have taken a contrary position three posts earlier or that I will do so again three posts later ;).)

ThePythonicCow
04-06-10, 11:12 PM
jpatter,

I have done a fair bit of diligence on BullionVault. Their holdings are allocated and audited. They also provide bar numbers. Seems pretty solid as far as I can tell.

Nothing is crime-proof but they seem to be very different from a paper claim seller.
The main risks I see with BullionVault are with the bank where I have my BV linked checking account (failure there is more likely to delay access than lose it permanently), and with my government (if they can see it or if they can see my transactions to access it, they can more easily take it.)

If general security in the area of BV's vaults fails, as in time of general war, then there are more risks.

Rajiv
04-06-10, 11:16 PM
In a real sense, they are acting no differently than the Goldsmiths of yore. See Money as Debt (http://itulip.com/forums/showthread.php?t=1139&highlight=money+debt)

xPat
04-07-10, 12:03 AM
Sorry. I was referring to my post immediately above the one you responded to. Here are my concerns:

Itulip says: 1....Pascal,

Thanks for clarifying what you meant by a "straw man". But in my own defense, I think it's worthwhile to revisit the history of how this came about:


EJ wrote an excellent piece debunking the "Capital Controls" hype that has been circulating in the blogosphere.
I thought to myself "Boy, I wish someone would do a similar piece on the hype in the wake of the CFTC hearing, much of which I believe to be sensationalist and factually incorrect."
I suggested to EJ that he might pen such an article, and then while rushing to get out the door to make a dinner appointment, I very quickly outlined the major points that were on my mind. I had no idea that EJ would quote those points in his article! Had I known he would, I would have taken more time, chosen my words more carefully, and researched my statements more thoroughly.
To my own surprise, EJ quoted my bullet list of gripes almost verbatim, which was a little embarrassing, since they were more sharply worded than they might have been if I knew they would be quoted that way in a "main blog" post.

Also, for sake of context, my suggestion was to do a piece on the hype in the blogosphere about precious metals in general, of which GATA is only a small part. I think the Kirby stuff is by far more outlandish and I was thinking more about the need to debunk that than GATA's part.



"Illegal naked short selling is a phenomenon of the stock market, not the futures market. Most contracts sold in the futures market are "naked," that is, the seller doesn't own the underlying, and this is perfectly normal. It is the intended functioning of the market. There is nothing illegal going on. No conspiracy. No fraud." Itulip point #3 is similar.

Me: Straw man. I do not think this is the allegation. The Gata people clearly know that Comex is a paper market. I believe the allegation is that existing regulations are supposed to prevent very large concentrations unless those positions are hedging. If the LBMA allegations are true then at best the bullion banks are hedging paper with paper, and I doubt that meets the hedging exemption. Also, given the quantities of shorts Butler has cited, there may not be enough physical in existence for them to be hedging.

I never meant to imply that this was GATA's allegation. Remember, my original suggestion to EJ was to do a piece on hype on the 'net, not specific to GATA. The description of selling a futures contract without owning the underlying as "an illegal act" was Kirby's error, not GATA's. I brought that up hoping that EJ would debunk Kirby's article. It has nothing to do with GATA.



Itulip says: 2. Contrary to GATA's allegations, Jeff Christian's testimony to CFTC was not an admission of anything. He merely stated several obvious, well-known facts about the futures market. There is no fraud, no cover up, and no conspiracy revealed by his 100:1 comment.

Me: I've only listened to it once but I think Christian said that the LBMA was 100:1 metal sold vs. actual unallocated metal in the vault. Not the Comex, not futures. I know that is how Gata heard it from what Murphy and the other Gata guy said in the follow-up King World interview. If you buy metal on the LBMA you are supposed to be getting actual metal (even if unallocated), not a promise.

While I do understand that part of GATA's argument has pertained to LBMA, I have not focused on that because I don't think it's what's relevant right now. CFTC has no jurisdiction over LBMA. My interpretation of GATA's statements in the KWN interview was that they are also alleging that Christian's statements reveal a great injustice in the COMEX futures markets. I focus on that because it's what's relevant to the CFTC hearing. I freely admit that I know very little about LBMA and am not even qualified to have an opinion on GATA's allegations there. But I think they are full of it with regard to COMEX.

Perhaps I should have said "I am not qualified to judge the veracity of any claims about LBMA, but there is no fraud, no cover up, and no conspiracy relevant to the COMEX market revealed by [Christian's] 100:1 comment." Apologies if I was less than perfectly clear, but again please remember I had no idea I would be quoted in EJ's article and was only offering a few points I hoped EJ would consider.


Points 4 and 5 simply question the integrity of Maguire based on what he's claimed.
I regret that those comments came across as questioning Maguire's integrity. My point was not about Maguire's integrity, but about how the blogosphere seems to have jumped to the conclusion that all this is "clear proof" of a JPM manipulation and a murder attempt associated therewith. My intent was to point out that there could be lots of explanations, and one possibility could even be that Maguire himself had an ulterior motive. Again, the point was to try to debunk the stuff floating around the blogosphere represented as fact that is really just speculation.


As to #6, I apologize, but I do not know who Kirby is or why he is even mentioned.
Kirby was mentioned because the scope of my original suggestion to EJ was not to debunk GATA specifically, but to debunk the false information in the blogosphere. IMHO Kirby is behind the most irresponsible "reporting", and I was hoping EJ would debunk some of his writings.


In any event the key issues seem to be a) whether the concentrated short position is manipulative (xPat seems to agree that it probably is) and a violation of commodity regs...
Up to that point, I agree that these are the key issues for GATA. I still think the other nonsense in the blogosphere (especially Kirby) is having a very real adverse affect on the markets by putting fear in everyone's heads.

For the record, I am convinced based on Ted Butler's work that the JPM concentrated short exists. I also agree that it probably is manipulative, but that needs to be proven conclusively. Maguire's evidence, if it is authentic, would appear to provide that proof. My hesitation about whether to believe Maguire's evidence comes from being shocked by what I felt were gross misrepresentations about the COMEX market in the KWN interviews. Yes, I understand GATA was also talking about LBMA, which frankly I think was a mistake given what's on the table at the moment is that which CFTC has jurisdiction to regulate. But I interpreted their commentary to mean that the fact that there's way more paper than real gold on the COMEX was some sort of scandal, and I think that's nonsense.


and b) whether the LBMA has the goods or not.
I agree that in the big picture, that's relevant. But honestly I don't think GATA should be focused on that right now. What's before them is an opportunity to persuade CFTC to take action to correct injustices that appear to exist on the COMEX markets CFTC has jurisdiction over. I think they need to be squarely focused on two specific issues:



Ted Butler's work credibly reveals that JPM has a VERY big concentrated short on COMEX Silver.
Maguire's evidence proves that JPM is intentionally using that concentrated short to illegally manipulate the market.

I'm not saying the LBMA issue isn't important, just that CFTC has no jurisdiction over LBMA and this really isn't the time to be diluting focus away from the key issues that CFTC could take action to correct. Save LBMA for the next fight.


It just seems to me that Gata and Butler's arguments have been given the back of the hand here based on an incorrect statement of their positions. Given the quality of the minds here I was hoping for a proper knockdown if one is possible.

Thanks for asking.
I for one don't find any fault in Butler's work to reveal the JPM short. I find it entirely credible. I certainly have criticized GATA sharply, but honestly I still think they deserve it. The market desperately needs a watchdog to pressure CFTC to clean up the COMEX. I'm not saying GATA's allegations about the LBMA are unjustified - I'm not even qualified to have an opinion on that. But I think they could be doing a much better job of staying focused on the available evidence that proves wrongdoing on the COMEX, where CFTC has jurisdiction.

All the best,
xPat


<input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden">
<input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden"><input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden"><input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden"><input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden"><input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden">

Pascal
04-07-10, 12:30 AM
xPat wrote:

"This was a CFTC hearing about the U.S. futures market, specifically about position limits on COMEX metals contracts, not about LBMA. I agree that GATA was making allegations about LBMA in the KWN interview, but don't see that as relevant. I watched Jeff Christian's testimony personally, and I interpreted his 100:1 comments as pertaining to the fact that the vast majority of gold contracts traded on the COMEX are never delivered against. How GATA got from that accurate and non-controversial statement to their wild allegations about 100:1 'leverage' and scandals in the London market is a mystery to me."

Thank you for pointing me to this. I went to the CFTC and watched that portion of Christian's testimony. I think he pretty clearly said not once, but twice, that the LBMA was largely a paper market. Here's the link:

http://www.capitolconnection.net/capcon/cftc/032510/cftc-archive-wmv.htm

The first time Christian said it was when he responded to the Gata fellow's assertion that if Comex shorts were hedging positions on the LBMA then they were hedging paper with paper. Christian agreed with that, defended it, and expanded on it. Take a look at the testimony between the 5:17 and 5:28 marks.

Then later Christian said that the term "physical market" was really a misnomer. He said it includes options and a lot of things besides physical, adding that "there's not that much physical out there". He repeated the 100 to 1 estimate. Take a look at around the 5:32 mark.

I also found it interesting that the CFTC head of Market Oversight testified that two large banks were manipulating the market and setting the prices (pretty close to his words). See Sherrod's testimony around the 5:23 mark.

I haven't listened to the whole thing. It's over 5 and a half hours long. Hope to finish it tomorrow night.

Pascal
04-07-10, 12:36 AM
I do not have a transcript but I did go to the CFTC website and found a video of the testimony. It's good quality and pretty easy to understand what they're saying. I thought parts of it were very interesting. I also think Christian pretty clearly says that the London market is mostly paper. He may have misspoke, but he said it twice. Here is a comment I posted a little earlier with a link and sections you might find interesting:


http://www.capitolconnection.net/cap...rchive-wmv.htm (http://www.capitolconnection.net/capcon/cftc/032510/cftc-archive-wmv.htm)

The first time Christian said it was when he responded to the Gata fellow's assertion that if Comex shorts were hedging positions on the LBMA then they were hedging paper with paper. Christian agreed with that, defended it, and expanded on it. Take a look at the testimony between the 5:17 and 5:28 marks.

Then later Christian said that the term "physical market" was really a misnomer. He said it includes options and a lot of things besides physical, adding that "there's not that much physical out there". He repeated the 100 to 1 estimate. Take a look at around the 5:32 mark.

I also found it interesting that the CFTC head of Market Oversight testified that two large banks were manipulating the market and setting the prices (pretty close to his words). See Sherrod's testimony around the 5:23 mark.

I haven't listened to the whole thing. It's over 5 and a half hours long. Hope to finish it tomorrow night.<!-- / message -->

<!-- controls -->http://www.itulip.com/forums/images/misc/progress.gif

ThePythonicCow
04-07-10, 01:24 AM
Thank-you for your clarifications, xPat and Pascal. In my view, xPat, EJ owes you a bit of an apology, but that's not really my business.

When I read both of you, xPat and Pascal, I tend to nod my head in agreement with just about everything.

Are you two largely in agreement (despite perhaps having started the dance out of phase) or are there still some key disagreement(s) that my quick and novice reading is missing?

xPat
04-07-10, 02:06 AM
Hi again Pascal,

Thanks for continuing the discussion! If I'm wrong here I certainly want to get to the bottom of it and correct my own understanding. So I welcome the criticism. But having said that, I went back and watched the video again, and I still don't think Jeff Christian said anything extraordinary or scandalous about the markets. Specifics below...

The first time Christian said it was when he responded to the Gata fellow's assertion that if Comex shorts were hedging positions on the LBMA then they were hedging paper with paper. Christian agreed with that, defended it, and expanded on it. Take a look at the testimony between the 5:17 and 5:28 marks.
The first time I heard the "trade in multiples of a hundred" comment to which you refer, I interpreted it completely differently. I took this to be a reference to the fact that a standard futures contract is for 100 ounces of gold, in other words, gold is traded in multiples of 100 [ounces per contract].

But it was ambiguously worded and I certainly concede that he could have been referring to a 100:1 paper to real metal ratio in this reference. But even if he was, I didn't find it to reveal anything controversial. He most certainly did not say anything like "The LBMA is 100 to 1 paper over real metal". He made a reference to metal being traded in multiples of 100, without any specific reference to what market he was talking about. In other words, I don't think this statement in any way indicated that physical gold markets are 100:1 paper to reality. GATA does seem to be trying to imply he said that, but he sure didn't say it at this point. The next reference you pointed out seems to be slightly more germane:



Then later Christian said that the term "physical market" was really a misnomer. He said it includes options and a lot of things besides physical, adding that "there's not that much physical out there". He repeated the 100 to 1 estimate. Take a look at around the 5:32 mark.

This is the specific comment by Jeff Christian that I have been assuming all the "100:1" hype has been based upon, and I stand by my argument that GATA has completely missed the boat here by trying to make an issue out of absolutely nothing. What Christian actually says here makes perfect sense, and isn't an "admission" of anything.

What he actually says is that it's unfortunate that people use the term "Physical market" imprecisely. He describes how people use the words "Physcial market" to incorrectly refer to a collection of several things, including the OTC derivatives market, and he describes the common use of the term "physical market" as "a misnomer".

I agree with him completely! Using the words "physical market" to refer to not only the LBMA and other true physical markets but also to the OTC derivatives market is entirely misleading and the world would be a better place if the industry on whole were more precise in their language.

Christian goes on to say very clearly that because the term "physical market" is mis-used to include OTC derivatives and a bunch of other things, there is probably 100 times as much paper as there is real gold. That should surprise nobody. It's not a revelation, it's not a scandal, and frankly it's not particularly important. Everyone knows there's more paper in the derivatives markets than there is physical gold, and Christian makes it very clear that he's referring to the collection of both real physical markets and also the OTC market and other non-physical markets. He was crystal clear on that point!

Now if Christian had said something like "With regard to the true physical markets like LBMA, there is 100 times as much paper as real gold there too", well then certainly that would be a scandalous revelation. And that's exactly what GATA seems to be trying to persuade everyone that Christian said. But he didn't say anything like that. All he said was that a lot of people in the industry use the words "physical market" loosely to also include OTC and other non-physical markets, and collectively all those things together are probably 100x larger than the real physical market. Nothing new there, and nothing contentious or newsworthy.

Again, I find zero evidence of scandal, revelation or intrigue. Just a perfectly reasonable statement about the market that seems to me to be correct and no cause for contention or drama.

Assuming that this statement at approximately 5:32 is what GATA is making a fuss over, I stand by my contention that they are full of hot air. But more importantly, they do seem to be in posession of damning evidence of a real manipulation (Butler+Maguire). The fact that they are making a big fuss over the 100:1 thing and not focusing on the far more relevant information they have in hand is what led me to my allegations of incompetence on the part of GATA.

Now, if there is some other 100:1 information elsewhere in the testimony that I've missed, then maybe I'll end up with egg all over my face. But if what GATA is talking about is the stuff at 5:32, I stand by my earlier criticisms.

xPat

<input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden"><input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden"><input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden">

xPat
04-07-10, 02:18 AM
Thank-you for your clarifications, xPat and Pascal. In my view, xPat, EJ owes you a bit of an apology, but that's not really my business.
Thanks for the concern, Cow, but for the record I don't feel that way at all.

I posted a comment in the Capital Controls thread saying "Hey EJ, how'bout doing another debunking article on the gold/silver hype?". Less than 12 hours later, EJ posted the article I requested (the base post of this thread). I count that as damn good customer service when a subscriber request gets translated to an article in a few hours' time.

It's true that my bullet list was rushed and that I never expected it to be quoted, and for that reason the language and tone was a little stronger than I might have preferred to choose for making a first impression on this community. Frankly, I do believe everything I wrote about the competence of certain individuals, but had I known it would be quoted in an article I would have phrased my statements in more processional language. But hey, s**t happens.

I think the real disconnect in terms of how people took it is that EJ decided to write his article principally about GATA, which is certainly his prerogative. So everyone's mental frame of reference was around GATA. Then he quoted my bullet list, and most of it wasn't even about GATA-related issues. It was about "illegal" naked futures shorts (sic), Ron Kirby, tungsten salted gold, etc. So when people read my comments after they had a mental picture of a GATA-related discussion, it understandably raised a few eyebrows.

Bottom line, I'm honored that EJ thought enough of my views to quote me. EJ, next time you feel inclined to do that, please let me know first, and I'll send you something a little more professional and "suitable for framing", so to speak... :)


When I read both of you, xPat and Pascal, I tend to nod my head in agreement with just about everything.

Are you two largely in agreement (despite perhaps having started the dance out of phase) or are there still some key disagreement(s) that my quick and novice reading is missing?

I'd love to hear Pascal's take on that. I certainly don't think we started in agreement. Pascal has done an outstanding job of challenging the basis of my various criticisms, and I welcome that sort of polite intellectual discourse. I think I satisfied the last of his challenges in a post elsewhere in this thread just a few minutes ago, but if not I'd like to know what's still outstanding so I can either straighten him out or straighen myself out, i.e. get to the bottom of any disagreement and let the facts decide the case.

xPat
<input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden">

xPat
04-07-10, 09:14 AM
I implore everyone to read the following from Ted Butler (a subscriber-only communication resposted with Ted's permission). More to the point, I want to emphasize Ted's comments about sticking to facts, not fiction. I had nothing to do with him going out of his way to emphasize that the GATA 100:1 hype is counter-productive, but I sure do agree!


I only wish GATA would do the same, get off this 100:1 rhetoric campaign, and focus on the pertinent and factual evidence they have in hand about the JPM short and Maguire's evidence it's being used for manipulation.


-xPat
---
A Time to Act


by Ted Butler

The reaction to the CFTC meeting on March 25 continues to be great in precious metals circles. More commentary has been generated by this meeting than even I expected. The hearing brought to the forefront the most important issues in silver, namely, position limits, concentration and the allegations of manipulation on the short side. This is great news for silver and gold investors, as it promises to finally expose and remedy the 20-year downward manipulation in silver.

The hearing and the attendant commentary bring us to an important juncture - what to do now? To properly address this question it is important to understand what brought us this far. What precipitated the CFTC hearing was the simple fact that many hundreds of you wrote to the Commission over the past year or so about the specific issues discussed at the meeting. Without you writing to the Commission, there would have been no public meeting. Therefore, the answer to what to do now is obvious – you must write to them again. This time, the Commission is actively seeking your comments for inclusion in the public record.

I can’t emphasize how important it is that you write to the CFTC. I will provide you with instructions for how to do so, and even a sample letter. First, I will remind you that our success wasn’t just due to the fact that so many of you had written to the Commission. More importantly, you wrote to them about the substantive issues concerning position limits and concentration in COMEX silver and gold. These are the issues that the Commission has indicated it is interested in, and these are the issues we must stick to now. I promise you that if legitimate speculative position limits are established in COMEX silver futures and the big shorts are not allowed to circumvent those limits, the silver manipulation will be terminated.

It is important that you not wander too far afield in what you are asking the Commission to address, either because it is out of their jurisdiction or by making comments on unsubstantiated allegations. This will lessen the impact of what must be done. For example, many have recently written to me concerning allegations that there are 100 ounces of paper gold issued for every ounce of real gold that exists. The evidence indicates this is simply not true. There are many times more ounces of real gold than paper gold. The entire gold open interest at the COMEX, one of the largest markets in the world (I think the largest), equals 50 million ounces, and that includes all sorts of spreads that overstate the total amount of this paper gold. There are 2 billion ounces of gold bullion in the world, perhaps 3 billion ounces (out of a total of 5 billion gold ounces in all forms), so there are 40 to 60 times more ounces of gold bullion than the gross open interest on the COMEX. It is true, however, that there are more paper ounces of silver in the world than silver bullion; but not by 100 times, maybe by 1 to 3 times. This includes pool accounts and silver bank certificates. No other commodity has paper obligations greater than what exists in the world. But neither would I raise this issue with the Commission in your comments at this time.

My advice is not to bring up unproven assertions and matters outside the Commission’s jurisdiction. Stick to the bedrock issues that brought about the hearing in the first place; silver position limits, exemptions to those limits and concentration. Ask the Commission to do what is within their power to do. Keep it simple and direct. By all means be professional and courteous. You are asking the CFTC to do something that is vital for the markets and in the interest of the American public. But above everything else, write to them. Do not think for a moment that your voice will not be heard. Your voice has already been heard and acted on; it will be heard and acted on again, but only if you write to them. This is not complaining; this is about doing something important. It will take a few moments, won’t cost you anything, and promises to make a profound difference. How many better proposals have you been offered today?

The last time there was a public comment period, unfortunately, I gave you only one day’s notice. Still, hundreds of you took the time to write and have your comments published on the public record. This time, you have until April 26. But please don’t procrastinate; get your comments in now. You will make a difference.

Here’s the sample letter, followed by the mailing instructions, both email, postal and fax. Feel free to copy it as is, or customize it as you see fit.

Dear Sir;

Thank for the opportunity to comment on the issue of position limits for precious metals. Please establish a speculative position limit in COMEX silver of no more than 1500 contracts. Please restrict any hedging exemptions from those limits to legitimate hedgers. Please stop the levels of concentration in COMEX silver futures that have been experienced over the past few years on the short side of the market.

Sincerely,

Email – secretary@cftc.gov (secretary@cftc.gov)
Postal – Secretary of the Commission
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21<sup>st</sup> Street NW
Washington, DC 20581

Fax - 202-418-5521

Ted Butler
April 7, 2010

<input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden"><input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden">

LargoWinch
04-07-10, 09:23 AM
Does anyone on iTulip has a contact at GATA?

I would love to have them review and comment. Wouldn't that be great?

xPat
04-07-10, 09:27 AM
Does anyone on iTulip has a contact at GATA?

I would love to have them review and comment. Wouldn't that be great?
Largo,

I obtained an e-mail address for the senior GATA staff through my contacts, and have forwarded my [unedited] criticisms to them. If I receive any meaningful reply, I'll post it here.

xPat
<input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden">

Pascal
04-07-10, 10:00 AM
xPat,

Excellent. Now we're getting somewhere maybe.

I hope you post any response you get from them.

Thanks

Pascal
04-07-10, 10:26 AM
Thanks for the polite and thoughtful posts xPat. To respond properly I need to watch the hearing again and, unfortunately, I won't be able to do that until tonight at the earliest. Day-job keeps interfering. I do have a couple of quick points below subject to re-watching.

It seemed pretty clear to me that Christian indicated that the LBMA was mostly paper. You are correct, he did not say the words "the LBMA is paper" but taken in context that was the substance of it. He also did not say the words you offer as his possible meaning, that the 100:1 comment was only to inform the commissioners that there are 100 ounces per each contract. That seems to be at least as big of a reach as any Gata has made since it's not what he said.

I hope others watch and offer their view as to what Christian said.

In any event, I greatly admire Ted Butler's work and defer to his knowledge. I also think he's correct, regardless of whether there's any truth to the LBMA allegations, that the only hope of effective action from the CFTC is to focus on the issue of the concentrated shorts on Comex. The LBMA issue, if it is one, perhaps can be an issue for another day.

Pascal

Camtender
04-07-10, 12:39 PM
The Latest Gold Fraud Bombshell: Canada's Only Bullion Bank Gold Vault Is Practically Empty, Is The Central Fund Of Canada Insolvent?

http://www.zerohedge.com/article/latest-gold-fraud-bombshell-canadas-only-bullion-bank-gold-vault-practically-empty

Continuing on the trail of exposing what is rapidly becoming one of the largest frauds in commodity markets history is the most recent interview by Eric King with GATA's Adrian Douglas, Harvey Orgen (who recently testified before the CFTC hearing) and his son, Lenny, in which the two discuss their visit to the only bullion bank vault in Canada, that of ScotiaMocatta, (http://www.scotiamocatta.com/global/solutions.htm)located at 40 King Street West in Toronto, and find the vault is practically empty. This is a relevant segue to a class action lawsuit filed against Morgan Stanley, which was settled out of court, in which it was alleged that Morgan Stanley (http://www.reuters.com/article/idUSN1228014520070612)told clients (http://www.reuters.com/article/idUSN1228014520070612)it was selling them precious metals that they would own in full and that the company would store, yet even despite charging storage fees was not in actual possession of the bullion. It appears that this kind of lack of physical holdings by all who claim to have gold in storage, is pervasive as the actual gold globally is held primarily in paper or electronic form. Lenny Organ who was the person to enter the vault of ScotiaMocatta, says "What shocked me was how little gold and silver they actually had." Lenny describes exactly how much (or little as the case may be) silver was available - roughly 60,000 ounces. As for gold - 210 400 oz bars, 4,000 maples, 500 eagles, 10 kilo bars, 10 one kilogram pieces of gold nugget form, which Adrian Douglas calculates as being $100 million worth, which is just one tenth of what the Royal Mint of Canada sold in 2008, or over $1 billion worth of gold. As Orgen concludes: "The game ends when the people who own all these paper obligations say enough and take physical delivery, and that's when the mess will occur."
Also note the interesting detour into what Stephan Spicer, a VP of a major bank and a friend of the proprietor of the Central Fund Of Canada (http://www.centralfund.com/), has said in regard to these observations: he wanted access to his 15,000 oz of silver, and had to wait 6-8 weeks for its to be flown in from Hong Kong. What this may imply for the CFC itself is rather critical - the CFC notes on its website (http://www.centralfund.com/Nav%20Form.htm)it is in possession of 1.3 million and 67.3 million ounces of gold and silver, respectively. One wonders just how much actual gold is really backing these claims.

It is funny that central bankers thought they could take the ponzi mentality of infinite dilution of all assets coupled with infinite debt issuance, as they have done to fiat money, and apply it to gold, in essence piling leverage upon leverage. They underestimated gold holders' willingness to be diluted into perpetuity - when the realization that gold owned is just 1% of what is physically deliverable, you will see the biggest bank run in history.

Link to full Eric King interview (http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/4/7_Andrew_Maguire_%26_Adrian_Douglas.html).

Pascal
04-07-10, 01:02 PM
Ugh. I might feel better about all of this if, as I type, the price wasn't rocketing up in a possible short covering panic.

Drives home that this isn't an academic discussion.

Camtender
04-07-10, 01:17 PM
Ugh. I might feel better about all of this if, as I type, the price wasn't rocketing up in a possible short covering panic.

Drives home that this isn't an academic discussion.


I know how you feel right now.........

Spartacus
04-07-10, 01:28 PM
Ugh. I might feel better about all of this if, as I type, the price wasn't rocketing up in a possible short covering panic.

Drives home that this isn't an academic discussion.

This is SILVER. Be prepared for 30% or more occasional dips.

Camtender
04-07-10, 01:38 PM
This is SILVER. Be prepared for 30% or more occasional dips.


30% dip would place silver around $12.60 an ounce at today spot. I would love to buy into that dip, but I don't know if we will see that price again - at least under the current currency system.

Bruno T
04-07-10, 04:57 PM
In the column one of the points is:

5. The attempted assassination story is also highly suspect. JPM would only be adding credibility to his futures manipulation story by trying something so stupid. I have to wonder if he himself staged it as a way to generate media attention.


Care to back this up with anything besides super spidey senses? While we prattle on on the internet anonymously with our suspicions, publishing what might be considered by some as libelous accusations sans any proof seems wreckless enough to make me wonder about the motivations. I don't know anything about this GATA or any of these people or if they're insane or diabolical or even correct. But when you write a column desparaging someone as silly conspiracy theorists, should you really be making up your own conspiracy theory about their behaviors to prove they're conspiracy quacks?

And as for the logic that it would only add credibility to one's accuser to attempt to murder them, that's subject to debate.

All of this sure seems like selective reading of the "facts" that seems to have started with a conclusion and worked backwards to create arguments supporting that conclusion. Edit out the pure speculation and you might have a better column.

cakins
04-07-10, 07:05 PM
Huff Po publishes Bill Murphy (GATA):

http://www.huffingtonpost.com/bill-murphy/our-response-to-warren-mo_b_528552.html

icm63
04-07-10, 08:25 PM
I dont know if this has been posted.

KingWorldNews have another interview to add more fuel to the fire..

NO METAL IN THE VAULT ....:confused::confused:


BOMBSHELL RELEASE - Harvey & Lenny Organ & Adrian Douglas: (http://kingworldnews.com/kingworldnews/Broadcast/Broadcast.html) Drop Another Bombshell In What Could End Up Being The Largest Fraud In History - King World News was contacted again by Adrian Douglas, Board of Director for Gata with stunning new information involving the man he testified with at the CFTC meeting Harvey Organ. Harvey, who was invited by the CFTC to testify and his son Lenny describe another piece of the puzzle in what could turn out to be the largest fraud in history. This time a large international bank with almost 15 million customers in 50 countries around the world becomes part of this unfolding saga.

I dont own paper gold anymore..

EJ
04-07-10, 08:25 PM
Looks to me that all sides of the story are getting a fair airing here.

Personally, I find the whole subject tiresome and irritating.

Since 2001 I've tried to talk many friends and family members into buying gold. After giving them my arguments they'd go off and start to research gold. They'd immediately find themselves confronted with a wall of mysticism, romanticism, sentimental diatribe, ideologically jaded misinterpretations of history, conspiracy theories, and garden variety craziness. Not only did they then decide against investing in gold, to their detriment, but they'd look at me funny.

Off the Avenue of Viable Investments for Sound Minded People, gold is an alley where you can buy flaming snake shooters. Hookers mingle with drug dealers in front of the tattoo parlor, next to the Checks Cashed store. If you wind up there once because you took the wrong turn off the 5 on your way to LAX in your rented Jaguar, then okay. Maybe you got lost. But if you hang out there... well.

Writing about gold as an investment, rather than as an expression of ideology and a lifestyle, has for many years gotten me labeled a gold bug in mainstream economics and finance circles. Guilt by association.

Of course I like the goldbugs. They are thoughtful economics punk rockers. They are far more creative and imaginative than the buy-and-hold-until-you-lose-all-your-money 401K stock investor, so it should be no suprise that some of the crowd that is attracted to gold is a bit too imaginative, bordering on nuts.

My admiration for the intellects of goldbugs aside, my primary interest in gold--and silver and platinum--is in the long-term price. Sorry to be so callous but, hey, I'm a capitalist.

I don't think it makes sense to be a "friend of gold." I figure gold cares as little about me, my family and my friends as Walmart stock does. So why get all wrapped up in the mystique?

The expression "friends of gold" really means "members of the community of people who have shared beliefs that led them to buy gold." The gold bug belief system is a distinct liability to everyone, and their family and friends. Just ask the poor bastards that hung on to gold from 1980 to 2001. The gold bug belief system is no more constructive than the New Economy nonsense of the 1990s tech stock bubble. The principles that I share with the gold bugs I divorce from the metal itself.

I don't see how all of this tortured gold price manipulation analysis helps us figure out the one thing we care about, the thing that matters to us, our families and friends who own gold: When do we sell it?

For us, time spent on answering any other question is a waste of time.

icm63
04-07-10, 08:29 PM
I don't see how all of this tortured gold price manipulation analysis helps us figure out the one thing we care about, the thing that matters to us, our families and friends who own gold: When do we sell it?

For us, time spent on answering any other question is a waste of time.

EJ,

The issue for me I feel is to own paper gold ( ie GLD , or paper certificates etc) or to pyhsical gold under the bed. I have learnt the latter is the better.

EJ
04-07-10, 08:58 PM
EJ,

The issue for me I feel is to own paper gold ( ie GLD , or paper certificates etc) or to physical gold under the bed. I have learned the latter is the better.

You will not find a single recommendation here to buy gold ETFs versus physical gold. We were glad GLD opened in Jan. 2005, four years after we bought, because the ETFs made gold available to your average investor who'd never buy gold from a dealer but would gladly buy gold "shares" of an ETF for their brokerage account. That was the marketing argument for GLD. It produced incremental gold sales.

Our argument against owning gold ETFs has always been that gold, The Fourth Currency (http://fourthcurrency.com/Home_Page.html), is insurance against currency depreciation. We do not know how gold ETFs will behave in the extreme case.

I own only physical, albeit not "under the bed." Keeping gold in your home is a bad idea.

phinolerun
04-07-10, 10:18 PM
I don't see how all of this tortured gold price manipulation analysis helps us figure out the one thing we care about, the thing that matters to us, our families and friends who own gold: When do we sell it?

For us, time spent on answering any other question is a waste of time.

I've been trying to understand this rationale since you first posted the "Gold Adopter's" chart. Towards the end in the 2012 - 2014 area you show only the gold bugs still buying and owning gold. Based on your outlook of there being several world currencies in the next 5 - 10 years and an increasingly diminished role of the US dollar in world affairs as time goes on, how can an argument be made to sell non dollar denominated assets? If anything, I would expect the trust in paper currencies to continue to wane.

But then again, as you have pointed out before, this was precisely the mentality in 1981. Everyone wanted precious metals, and no one wanted government debt. Truly amazing since it was at this time that both asset classes were at their top and bottom respectively for the next 20 - 25 years.

Do you think the signs that the time to sell gold will be similar to those of the previous bubbles?

jtabeb
04-07-10, 10:52 PM
I've been trying to understand this rationale since you first posted the "Gold Adopter's" chart. Towards the end in the 2012 - 2014 area you show only the gold bugs still buying and owning gold. Based on your outlook of there being several world currencies in the next 5 - 10 years and an increasingly diminished role of the US dollar in world affairs as time goes on, how can an argument be made to sell non dollar denominated assets? If anything, I would expect the trust in paper currencies to continue to wane.

But then again, as you have pointed out before, this was precisely the mentality in 1981. Everyone wanted precious metals, and no one wanted government debt. Truly amazing since it was at this time that both asset classes were at their top and bottom respectively for the next 20 - 25 years.

Do you think the signs that the time to sell gold will be similar to those of the previous bubbles?

Simple answer is:
gold will go up until there is a viable new international monetary system. (EJ can correct me if he disagrees)

jtabeb
04-07-10, 10:55 PM
EJ,

The issue for me I feel is to own paper gold ( ie GLD , or paper certificates etc) or to pyhsical gold under the bed. I have learnt the latter is the better.

And it is MUCH more fun to roll around on the bed with while being naked than paper. (Trust me on that one, Ok?):D

jtabeb
04-07-10, 10:57 PM
Keeping gold in your home is a bad idea.

But it DOES make for great conversation over cocktails when you have guests.

(But in general I agree with you, for those that don't live in an armed compound.)

LargoWinch
04-07-10, 11:00 PM
Simple answer is:
gold will go up until there is a viable new international monetary system. (EJ can correct me if he disagrees)

or until CBs set real interest rates, which is not for a long time.

Pascal
04-07-10, 11:14 PM
EJ, I fully understand and appreciate your reluctance to be labeled a nutcase goldbug. If I owned a website and had worked for a decade building its credibility, I too would probably steer well clear of anything that might generate the crackpot tin-foil hat label. Even with much less of a reputation - such as it is - to be concerned about, I tend to be careful to only discuss this topic with friends who I know will continue to like me even if I've gone "eccentric".

Nonetheless, IF in fact there is an 800 pound gorilla rolling around in this particular sandbox, then that is most definitely one of the many "fundamental" facts that investors playing in that sandbox are better off knowing about and taking into account. It is also appropriate to call the game warden to come and cage the gorilla if possible.

Personally, I find most of the attacks on "goldbugs" to be irritating, insulting and unfettered by supporting facts. People like Gata have a cause that they appear to whole-heartedly believe in and that they have pursued doggedly for years despite continuous ridicule. To some extent, regardless of whether they are right or wrong, there's something noble and courageous in that. It beats the heck out of most of my fellow citizens' biggest concern of who's getting kicked off the island next.

The fact that Gata and Butler's positions on manipulation are endorsed by experienced and highly knowledgeable people in this field like Sinclair, Sprott, Embry, and even some within the CFTC, tells me that they deserve fair consideration rather than ridicule.

Anyway, thanks for allowing the topic to be discussed. Like all here I very much look forward to your future articles.

jtabeb
04-07-10, 11:15 PM
or until CBs set real interest rates, which is not for a long time.

Yes, if never is included in your definition of "long". ;)

EJ
04-07-10, 11:16 PM
I've been trying to understand this rationale since you first posted the "Gold Adopter's" chart. Towards the end in the 2012 - 2014 area you show only the gold bugs still buying and owning gold.

That's right. Gold bugs are the first in and the last out because to gold bugs "now" is always the right time to buy. Go gold.


Based on your outlook of there being several world currencies in the next 5 - 10 years and an increasingly diminished role of the US dollar in world affairs as time goes on, how can an argument be made to sell non dollar denominated assets? If anything, I would expect the trust in paper currencies to continue to wane. Yes, I have argued that continued debt deflation via dollar depreciation is the long term policy. I can see another 40% devaluation of the dollar as it is decommissioned as a leading reserve currency.For the UK and the pound the process took decades.


http://www.itulip.com/images2/BritishPound1791-2004NOTES.gif



But then again, as you have pointed out before, this was precisely the mentality in 1981. Everyone wanted precious metals, and no one wanted government debt. Truly amazing since it was at this time that both asset classes were at their top and bottom respectively for the next 20 - 25 years.
You are recalling Everyone is wrong, again – 1981 in Reverse Part I: The Great Divide (http://www.itulip.com/forums/showthread.php?p=95409#post95409). It was the time that I noted the end of the so-called "deflation" on April 30, 2009. I compared that moment to the expectation in 1981, irrational in retrospect, was that the US government didn't have the political mandate to end inflation.
It’s October 1981, the year IBM launched personal computer, air traffic controllers went on strike and were fired by President Reagan, and Israeli jets destroyed a nuclear plant in Iraq. The annual inflation rate in September was over 12%, a 30 year Treasury bond carried a constant maturity rate of 14.68%, and the Effective Fed Funds Rate hit 15.5% as the Paul Volcker Fed stood on the brake pedal, determined to crash the economy to cut off multiple simultaneous inflation channels -- energy cost-push, supply shock, and the reckless monetary policy of the previous administration.
Conversely, in April 2009, deflation expectations were so strong that the government could sell a near infinite Treasury bond issuance at near zero rates.

Gold bugs in 1980 didn't believe the Volcker Fed had the political chops to end the inflation crisis. Worse, gold bugs didn't want the Fed to do it because if it did the right thing the gold price was certain to collapse.

I wish the gold price would collapse again because the government stopped pursuing bad policies, this time perpetuating debt financed asset price inflation rather than commodity price inflation. Of course, I'd like to know when the government planned to mend its ways so that I and readers have a chance to exit our gold as insurance against currency depreciation positions.


Do you think the signs that the time to sell gold will be similar to those of the previous bubbles?No, not at all. The preconditions could not be more different.

For example, I warned in an article a few months ago that the government was going to adopt a VAT as a "solution" to excessive debt. I'd heard through my contacts that this was coming. I hope the irony of it coming from Volcker today is not lost on readers. A VAT is inflation dialed into an economy. A number readers argued with me that a consumption tax is more fair than an income tax, as if the government planned to replace the income tax with a VAT. Of course it will be additive. And one tax deserves another. A VAT is regressive, so yet another tax will be needed to redistribute the burden. This will be sold as fiscal prudence, but it's really intended to make sure that debts are repaid.

I'm doing my best to influence these policies directly in a more constructive direction. Wish me luck.

I almost forgot to mention, look for Michael Hudson's latest in the Financial Times tomorrow. I'm interviewing him Friday. The sovereign debt crisis in Europe may be off the front pages but it's only just begun. He says the ratings agencies are running a kind of extortion racket there. "Pay or we'll downgrade you and you'll have to pay more." Greece is a special case. It's public debt comes from not collecting taxes not like the post-Soviet private mortgage debt that came from public borrowing only to support the currency, "a self-destructive guaranteed loss."

swannmex
04-07-10, 11:32 PM
EJ, I fully understand and appreciate your reluctance to be labeled a nutcase goldbug. If I owned a website and had worked for a decade building its credibility, I too would probably steer well clear of anything that might generate the crackpot tin-foil hat label. Even with much less of a reputation - such as it is - to be concerned about, I tend to be careful to only discuss this topic with friends who I know will continue to like me even if I've gone "eccentric".

Nonetheless, IF in fact there is an 800 pound gorilla rolling around in this particular sandbox, then that is most definitely one of the many "fundamental" facts that investors playing in that sandbox are better off knowing about and taking into account. It is also appropriate to call the game warden to come and cage the gorilla if possible.

Personally, I find most of the attacks on "goldbugs" to be irritating, insulting and unfettered by supporting facts. People like Gata have a cause that they appear to whole-heartedly believe in and that they have pursued doggedly for years despite continuous ridicule. To some extent, regardless of whether they are right or wrong, there's something noble and courageous in that. It beats the heck out of most of my fellow citizens' biggest concern of who's getting kicked off the island next.

The fact that Gata and Butler's positions on manipulation are endorsed by experienced and highly knowledgeable people in this field like Sinclair, Sprott, Embry, and even some within the CFTC, tells me that they deserve fair consideration rather than ridicule.

Anyway, thanks for allowing the topic to be discussed. Like all here I very much look forward to your future articles.

Amen and thank you.

Adeptus
04-08-10, 12:08 AM
The Latest Gold Fraud Bombshell: Canada's Only Bullion Bank Gold Vault Is Practically Empty, Is The Central Fund Of Canada Insolvent?

http://www.zerohedge.com/article/latest-gold-fraud-bombshell-canadas-only-bullion-bank-gold-vault-practically-empty

Continuing on the trail of exposing what is rapidly becoming one of the largest frauds in commodity markets history

....[SNIP]

Link to full Eric King interview (http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/4/7_Andrew_Maguire_%26_Adrian_Douglas.html) [22 minute audio MP3].

While I can't personnaly attest as to how much physical gold/silver is in ScotiaBank's vaults, I happened to have bought from ScotiaBank physical gold AND silver right around Sept 2008 when the guy in the MP3 interview claims he walked into their vaults and saw them mostly bare.

My personal experience was as follows:
- SILVER: I asked what denominations of silver I could buy and get physical delivery on, and I'm on the West coast of Canada at one of the 1000+ ScotiaBank branches across the country, and the bullion vault is in Toronto (Central/Eastern Canada), so the lady at the branch had to call the Toronto central office to inquire with them. The answer was "we only have 1000 oz bars and nothing in smaller denominations". A week earlier I had tried to buy Silver from the Royal Bank of Canada (our #1 largest bank), and they said they had ZERO silver to sell me, and that they hadn't had physical silver to sell on the West Coast of Canada for *** several months ***!. So going back to my day at ScotiaBank, I proceeded to ask to buy 5x 1000 oz Silver bars. The lady asked the Toronto guy if they could deliver on that and to my surprise, the answer was NO, that they only had 2x 1000 oz Silver bars in stock that they could deliver on (note the guy in the MP3 interview was shocked that they only had 60 bars... my experience was they only had 2 bars! Unless they really had several dozen but were imposing quotas for delivery for some reason). So I ordered 2 bars, and got them some 2 weeks later... the MP3 guy's experience was a 6-8 week delivery, mine was 2; however, the cost of delivery was absolutely RIDICULOUS! They charged me $1,500 Canadian to deliver 2x 1000 oz Silver bars!! (over 5% of the total value of the Silver I was buying at the time!). Note: A two-way flight to Toronto and back costs around $600 !! Unfortunately, I thought the world was about to end (read: this was Q3/Q4 2008) and I didn't want to take any chances of me flying there and then the last 2 bars are gone.

GOLD - I also bought some physical gold that day, and when I inquired as to the denominations, they basically had almost everything (I forget now which ones they didn't have, but it was nearly every denomination). I ordered some gold, and it arrived at the same time as the silver. The delivery costs were reasonable for the gold since they added up to less than 1% of the total I was purchasing.

On a side note, when I first did walked into the branch to buy the PMs, two different ladies (manager & teller) tried several times to convince me to buy the paper certificates instead... They looked at me really oddly when I said I wanted physical delivery, and I looked at them really oddly when they suggested I should buy paper certificates... we'll see who laughs last.

Adeptus

icm63
04-08-10, 01:13 AM
For example, I warned in an article a few months ago that the government was going to adopt a VAT as a "solution" to excessive debt. I'd heard through my contacts that this was coming. I hope the irony of it coming from Volcker today is not lost on readers. A VAT is inflation dialed into an economy. A number readers argued with me that a consumption tax is more fair than an income tax, as if the government planned to replace the income tax with a VAT. Of course it will be additive. And one tax deserves another. A VAT is regressive, so yet another tax will be needed to redistribute the burden. This will be sold as fiscal prudence, but it's really intended to make sure that debts are repaid.

The VAT tax or GST (Good and services tax) or whatever.

I am in New Zealand.

Here is a a little bed time story for USA on NZ experience.

In 1982, we (NZ) had massive debts as a country. After the 1970s 'think big' spend up (Dams, power plants, roads, railways, Govt waste), and I believe after the International lending community said pay us back or else. Just after the 1982 election a rightish wing labour govt got in power. This is what happened

1) Privatisation of govt departments: Sold off to public via stock exchange (Telecom, Power plants, govt energy assets, govt forests, govt land, etc)
2) NZ dollar devalued, and floated (was pegged to USD I think)
3) I think income tax (personal and coy) was reduced slightly 45c to 33c
4) GST/VAT introduced on all transactions except financial at 10%. ( Sold to public as USER PAYS)

YES we paid back the monies owed as a country, yes Debt to GDP reduced to 22% or there abouts.

Thats was 1990s..

Ok now its 2010

GST is going to 15% from 12.5% this year. The Govt is borrowing $250m a week as our deficit cant fund the govt social policy.

Our Govt debt is soaring, last I checked it was forecast to be 44% of GDP. Up from 22% in 2008. (NO bad, USA is forecast to be 100% of GDP)

The TAX take used to be 85% income tax and payee, NOW its 40% income and payee and 55% GST (or there abouts).

POINT: Any new tax just gives govt more money to spend on policies to get them into power. One would have hoped for GST/VAT to be removed after we settled up our govt debts in the 1990s, BUT no we still have GST and we having a rising govt debt, GO FIGURE !

In NZ we are quite a RICH country, plenty of GDP per person, BUT the govt takes it all in tax for social policies or entitlements as you say in the USA...How do I know we are rich, buy the massive tax bill.

USA you are going to join NZ and UK ...not a smart plan.

I suggest you cut spending, rather than raise taxes.:) As you never get rid of them !!!!

UPDATE: Any kiwi historians out there wanna add or subtract be my quest.

kartius919
04-08-10, 01:49 AM
Love the backhanded compliment. Way to woo a girl ej. Of course anyone who believes that the gold market is manipulated is a gold bug. Its just silly hogwash based on fairies and gnomes and those rascally rabbits. And all gold bugs are too stupid to realize when to jump ship and will all be so so miserable and bankrupt. And of course anyone who thinks the gold market is manipulated is a miserable, foul smelling, ill tempered troll! Oh yeah, poor too cause they are so foolish because they are so desperate to catch a little girl or boy skipping merrily over his bridge that he'll never know when too late is too late. Sad pathetic existence. You hear that Jessie? I'm talking about chu! Chu smalz lit' tro'z thoz.

jtabeb
04-08-10, 07:21 AM
That's right. Gold bugs are the first in and the last out because to gold bugs "now" is always the right time to buy. Go gold.

Yes, I have argued that continued debt deflation via dollar depreciation is the long term policy. I can see another 40% devaluation of the dollar as it is decommissioned as a leading reserve currency.For the UK and the pound the process took decades.


http://www.itulip.com/images2/BritishPound1791-2004NOTES.gif


You are recalling Everyone is wrong, again – 1981 in Reverse Part I: The Great Divide (http://www.itulip.com/forums/showthread.php?p=95409#post95409). It was the time that I noted the end of the so-called "deflation" on April 30, 2009. I compared that moment to the expectation in 1981, irrational in retrospect, was that the US government didn't have the political mandate to end inflation.
It’s October 1981, the year IBM launched personal computer, air traffic controllers went on strike and were fired by President Reagan, and Israeli jets destroyed a nuclear plant in Iraq. The annual inflation rate in September was over 12%, a 30 year Treasury bond carried a constant maturity rate of 14.68%, and the Effective Fed Funds Rate hit 15.5% as the Paul Volcker Fed stood on the brake pedal, determined to crash the economy to cut off multiple simultaneous inflation channels -- energy cost-push, supply shock, and the reckless monetary policy of the previous administration.
Conversely, in April 2009, deflation expectations were so strong that the government could sell a near infinite Treasury bond issuance at near zero rates.

Gold bugs in 1980 didn't believe the Volcker Fed had the political chops to end the inflation crisis. Worse, gold bugs didn't want the Fed to do it because if it did the right thing the gold price was certain to collapse.

I wish the gold price would collapse again because the government stopped pursuing bad policies, this time perpetuating debt financed asset price inflation rather than commodity price inflation. Of course, I'd like to know when the government planned to mend its ways so that I and readers have a chance to exit our gold as insurance against currency depreciation positions.

No, not at all. The preconditions could not be more different.

For example, I warned in an article a few months ago that the government was going to adopt a VAT as a "solution" to excessive debt. I'd heard through my contacts that this was coming. I hope the irony of it coming from Volcker today is not lost on readers. A VAT is inflation dialed into an economy. A number readers argued with me that a consumption tax is more fair than an income tax, as if the government planned to replace the income tax with a VAT. Of course it will be additive. And one tax deserves another. A VAT is regressive, so yet another tax will be needed to redistribute the burden. This will be sold as fiscal prudence, but it's really intended to make sure that debts are repaid.

I'm doing my best to influence these policies directly in a more constructive direction. Wish me luck.

I almost forgot to mention, look for Michael Hudson's latest in the Financial Times tomorrow. I'm interviewing him Friday. The sovereign debt crisis in Europe may be off the front pages but it's only just begun. He says the ratings agencies are running a kind of extortion racket there. "Pay or we'll downgrade you and you'll have to pay more." Greece is a special case. It's public debt comes from not collecting taxes not like the post-Soviet private mortgage debt that came from public borrowing only to support the currency, "a self-destructive guaranteed loss."

IF we get VAT Plus the income tax and the same policy on deficits and bailouts then they truly don't give a shit on fixing everything and just want to blow everything up so as to hide all the wrong doing over the past thirty years.

If your suppositions are correct, then Max Keiser is essentially correct too, and washington and wall street are nothing more than a bunch of "Financial Terrorists" and the dollar WILL break before there is any reform. I hope they do not follow that path (for obvious reasons).

There are two maybe three economists that actually make any sense. Hudson is at the top of the list. Fade him at your own peril.

Which is why I say we VOTE with our funds.

See this:
(If you REALLY want to fix things)
http://www.itulip.com/forums/showthread.php?t=15075

labasta
04-08-10, 08:19 AM
Certificate owners miss the whole point of gold and silver. It's protection against banks and bankers, and inflation as well. If you don't hold it, you don't own it. It's like trying to defend your home with a firearms certificate.

Brilliant.

swannmex
04-08-10, 09:30 AM
Love the backhanded compliment. Way to woo a girl ej. Of course anyone who believes that the gold market is manipulated is a gold bug. Its just silly hogwash based on fairies and gnomes and those rascally rabbits. And all gold bugs are too stupid to realize when to jump ship and will all be so so miserable and bankrupt. And of course anyone who thinks the gold market is manipulated is a miserable, foul smelling, ill tempered troll! Oh yeah, poor too cause they are so foolish because they are so desperate to catch a little girl or boy skipping merrily over his bridge that he'll never know when too late is too late. Sad pathetic existence. You hear that Jessie? I'm talking about chu! Chu smalz lit' tro'z thoz.

I agree. This whole thing has been really low level analysis and I have come to expect much better from EJ. The chief "goldbug" Jim Sinclair sold out at the top of the last big bull run. This is documented. He bought back in and resurfaced in 2001 before the start of this big bull run. It is documented.

I consider myself a "goldbug" I had about 5% in gold during the 1990's. I went 100% into gold ( and gold stocks ) and oil and gas on Jan. 1st , 2003. Tons of volatility and a real ass whippin' in 2008 BUT I have outperformed 30% bullion 70% T-bills by a VERY wide margin. I fully realize there will be a time to sell most of my gold holdings. I fully realize that time is not now.

My guess is anyone in the mainstream dealing with the public is so afraid of appearing "unsophisticated" that they have to preface every utterance with "while I am bullish on gold, I AM NOT A GOLDBUG" ?? Dennis Gartmen does not let 5 min. go by without saying that at least twice. He is a shill.

The main thrust of GATA's argument is exactly correct and will be proved correct before this is all over.

The gold price has been "managed" and there is a HUGE fraud going on in the paper gold market.

What is it about this statement that is not crystal clear???

“Central banks stand ready to lease gold in increasing quantities should the price rise.”

Please tell me what about that statement is confusing and why anyone would not come to the conclusion that the gold price is being actively managed.

AND please do not trot out, "the price has steadily gone up so that proves the price has not been managed". Good grief that is worse than first grade analysis.

have a nice day and buy some physical gold today.

metalman
04-08-10, 09:46 AM
I agree. This whole thing has been really low level analysis and I have come to expect much better from EJ. The chief "goldbug" Jim Sinclair sold out at the top of the last big bull run. This is documented. He bought back in and resurfaced in 2001 before the start of this big bull run. It is documented.

I consider myself a "goldbug" I had about 5% in gold during the 1990's. I went 100% into gold ( and gold stocks ) and oil and gas on Jan. 1st , 2003. Tons of volatility and a real ass whippin' in 2008 BUT I have outperformed 30% bullion 70% T-bills by a VERY wide margin. I fully realize there will be a time to sell most of my gold holdings. I fully realize that time is not now.

My guess is anyone in the mainstream dealing with the public is so afraid of appearing "unsophisticated" that they have to preface every utterance with "while I am bullish on gold, I AM NOT A GOLDBUG" ?? Dennis Gartmen does not let 5 min. go by without saying that at least twice. He is a shill.

The main thrust of GATA's argument is exactly correct and will be proved correct before this is all over.

The gold price has been "managed" and there is a HUGE fraud going on in the paper gold market.

What is it about this statement that is not crystal clear???

“Central banks stand ready to lease gold in increasing quantities should the price rise.”

Please tell me what about that statement is confusing and why anyone would not come to the conclusion that the gold price is being actively managed.

AND please do not trot out, "the price has steadily gone up so that proves the price has not been managed". Good grief that is worse than first grade analysis.

have a nice day and buy some physical gold today.

no group on god's green earth has done more to ruin the gold market than goldbugs.

sinclair is great, if you don't mind wading thru dozens of hysterical 'THIS IS IT!!!' type posts on his site.

if you got into gold in 2003 you were 2 yrs late. shoulda read ej.

you'll be 2 yrs late getting out, too. you're bought into the ideologogy & magic. you won't sell.

swannmex
04-08-10, 10:06 AM
no group on god's green earth has done more to ruin the gold market than goldbugs.

sinclair is great, if you don't mind wading thru dozens of hysterical 'THIS IS IT!!!' type posts on his site.

if you got into gold in 2003 you were 2 yrs late. shoulda read ej.

you'll be 2 yrs late getting out, too. you're bought into the ideologogy & magic. you won't sell.


Fact is you have no idea what I wii or will not do but you can rest assured I will not ever be an ass kiss.

metalman
04-08-10, 10:30 AM
Fact is you have no idea what I wii or will not do but you can rest assured I will not ever be an ass kiss.

puckered up for gata, sinciar, etc, tho... eh?

jtabeb
04-08-10, 11:16 AM
no group on god's green earth has done more to ruin the gold market than goldbugs.

.


Really? You've made some VERY INTERESTING COMMENTS AS OF LATE.

If you replace "Gold Bugs" with "Central Banks", THEN your statement would ACTUALLY be CORRECT.


Goldbugs, people who arguments are later proven substantially correct (after the fact).

Or

Goldbugs, the only people who, when seeing an elephant in the room shout "ELEPHANT!", while everyone else just looks around trying to figure out what they are talking about.

metalman
04-08-10, 11:44 AM
Really? You've made some VERY INTERESTING COMMENTS AS OF LATE.

If you replace "Gold Bugs" with "Central Banks", THEN your statement would ACTUALLY be CORRECT.


Goldbugs, people who arguments are later proven substantially correct (after the fact).

Or

Goldbugs, the only people who, when seeing an elephant in the room shout "ELEPHANT!", while everyone else just looks around trying to figure out what they are talking about.

goldbugs see elephants before the reality show addicted j6p's do, true nuff. but goldbugs also see elephants where their ain't none. ruins their credibility... & the cred of every gold investor. on the plus side... by scaring away the ave. investor, the goldbugs are making more cheap gold for you & me. :D

jtabeb
04-08-10, 12:17 PM
goldbugs see elephants before the reality show addicted j6p's do, true nuff. but goldbugs also see elephants where their ain't none. ruins their credibility... & the cred of every gold investor. on the plus side... by scaring away the ave. investor, the goldbugs are making more cheap gold for you & me. :D

I agree, too much of the fanciful. But at the same time, the stuff we've witnessed (esp since 2008) makes the fanciful appear MUCH closer to reality than fiction. (If that's not a sad commentary on the state of this country, I don't know what is).

How bad is it when ACTUAL events make the wildest conspiracy theory look utterly pedestrian? (me thinks pretty bad)

Spartacus
04-08-10, 02:03 PM
Hudson's supposed to be a historian, so he must know of a past period where Canadian mortgages were not full recourse.

This is NOT the situation today though

http://www.google.ca/search?q=canada+mortgages+%22full+recourse%22&ie=utf-8&oe=utf-8&aq=t&rls=com.ubuntu:en-US:unofficial&client=firefox-a

I wonder who changed it back, if it was as Hudson says? Or is "common knowledge" wrong here? I've found no posts or articles by lawyers so far on this issue.


by-product of the Great Depression in the US and Canada was to free mortgage debtors from personal liability, making it possible to recover from bankruptcy. Foreclosing banks can take possession of collateral property, but do not have any further claim on the mortgagees.

Rajiv
04-08-10, 04:20 PM
I am presuming that Hudson is not talking about recourse/non recourse loans, but rather the ability of individuals to file for bankruptcy so that they can get out of an unsustainable debt load. Credit card companies lobbied for a bill that greatly reduced this ability for credit card debt in the US in 2005

President signs bankruptcy bill - What you should know about a new law that will make it tougher for consumers to clear their debts. (http://money.cnn.com/2005/04/20/pf/bankruptcy_bill/)

Pascal
04-08-10, 04:24 PM
Thanks Jessie. Great posts.

ThePythonicCow
04-08-10, 05:16 PM
I almost forgot to mention, look for Michael Hudson's latest in the Financial Times tomorrow. I'm interviewing him Friday.I notice that Hudson advocates using property tax rather than income or sales or various other taxes. This seems to be in the tradition of Henry George (http://www.econlib.org/library/Enc/bios/George.html).

I like the idea of a "single tax" (not that there's any chance the current VAT or other such proposals will remove the income tax), but I don't see why the Fair Tax (sales tax with prebate to counter the regressive bias) wouldn't be just as good.

Can you ask Hudson why he prefers property tax over sales tax (with prebate)?

phinolerun
04-08-10, 08:01 PM
Thank you EJ for your response.

ViC78
04-08-10, 08:35 PM
I almost forgot to mention, look for Michael Hudson's latest in the Financial Times tomorrow. I'm interviewing him Friday.

Looking forward to reading the interview. When will it be posted? :)

Eastern Europe won’t pay what it can’t pay

By Michael Hudson
Published: April 7 2010 23:06 | Last updated: April 7 2010 23:06

<script type="text/javascript" language="javascript"> function floatContent(){var paraNum = "3" paraNum = paraNum - 1;var tb = document.getElementById('floating-con');var nl = document.getElementById('floating-target');if(tb.getElementsByTagName("div").length> 0){if (nl.getElementsByTagName("p").length>= paraNum){nl.insertBefore(tb,nl.getElementsByTagNam e("p")[paraNum]);}else {if (nl.getElementsByTagName("p").length == 3){nl.insertBefore(tb,nl.getElementsByTagName("p")[2]);}else {nl.insertBefore(tb,nl.getElementsByTagName("p")[0]);}}}}</script>Greece (http://www.ft.com/indepth/greece-debt-crisis) is just the first in a series of European debt bombs about to go off. Mortgage debts in the post-communist economies (http://www.ft.com/cms/s/0/dc8a04ac-2c71-11df-be45-00144feabdc0.html) and Iceland (http://www.ft.com/indepth/icelandiceconomy) are more explosive. Although most of these countries are not in the eurozone, their debts are largely denominated in euros. Some 87 per cent of Latvia’s debts are in euros or other foreign currencies, and are owed mainly to Swedish banks (http://www.ft.com/cms/s/0/2eb15a02-2d60-11df-a262-00144feabdc0,s01=1.html), while Hungary and Romania owe euro-debts mainly to Austrian banks. These governments have been borrowing not to finance a budget deficit, as in Greece, but to support their exchange rates and thereby prevent a private-sector default to foreign banks.
All these debts are unpayably high because most of these countries are running deepening trade deficits and are sinking into depression. Now that property prices are plunging, trade deficits are no longer financed by an inflow of foreign-currency mortgage lending. For the past year, these countries have supported their exchange rates by borrowing from the European Union and the International Monetary Fund. The terms of this borrowing are politically unsustainable: sharp public sector budget cuts, higher tax rates on already over-taxed labour, and austerity plans that shrink economies and drive more workers to emigrate.
Bankers (http://www.ft.com/cms/s/0/7688b8b4-038c-11df-a601-00144feabdc0.html) in Sweden and Austria, Germany and Britain are about to discover that extending credit to nations that cannot (or will not) pay may be their problem, not that of their debtors. No one wants to accept the fact that debts that cannot be paid, will not be. Someone must bear the cost as debts go into default or are written down, to be paid in sharply depreciated currencies, and many legal experts find debt agreements calling for repayment in euros unenforceable. Every sovereign nation has the right to legislate its own debt terms, and the coming currency re-alignments and debt write-downs will be much more than mere “haircuts”.
There is no point in devaluing, unless “to excess” – that is, by enough to actually change trade and production patterns. That is why Franklin Roosevelt devalued the US dollar by 75 per cent against gold in 1933, raising the metal’s official price from $20 to $35 an ounce. To avoid raising the US debt burden proportionally, he annulled the “gold clause” indexing payment of bank loans to the price of gold. This is where the political fight will occur today – over the payment of debt in currencies that are devalued.
Another by-product of the Great Depression in the US and Canada was to free mortgage debtors from personal liability, making it possible to recover from bankruptcy. Foreclosing banks can take possession of collateral property, but do not have any further claim on the mortgagees. This practice – grounded in common law – shows how North America has freed itself from the legacy of feudal-style creditor power and the debtors’ prisons that made earlier European debt laws so harsh.
The question is, who will bear the loss? Keeping debts denominated in euros would bankrupt much local business. Conversely, re-denominating these debts in local depreciated currency would wipe out the capital of many euro-based banks. But these banks are foreigners, after all – and in the end, governments must represent their own home electorates. Foreign banks do not vote.
There is growing recognition that the post-communist economies were structured from the start to benefit foreign interests, not local economies. For example, Latvian labour is taxed at more than 50 per cent (labour, employer, and social tax) – so high as to make it non-competitive, while property taxes are less than 1 per cent, providing an incentive towards speculation. This skewed tax philosophy made the “Baltic tigers” and central Europe prime loan markets for Swedish and Austrian banks, even as domestic labour struggled to find well-paying work. Nothing like this (or their abysmal workplace protection laws) is found in western Europe or North America.
It seems unreasonable and unrealistic to expect that large sectors of the new European population can be made subject to salary garnishment throughout their lives, reducing them to a lifetime of debt peonage. Future relations between Old and New Europe will depend on the eurozone’s willingness to redesign the post-communist economies on more solvent lines – with more productive credit and a less rentier-biased tax system that promotes employment rather than asset-price inflation. In addition to currency realignments to deal with unaffordable debt, the solution for these countries is a major shift of taxes from labour to land. There is no just alternative. Otherwise, the age-old conflict between creditors and debtors threatens to split Europe into opposing camps, with Iceland the dress rehearsal.
The writer is professor of economics at the University of Missouri and chief economic adviser to the Reform Task Force Latvia, an opposition think-tank

Adeptus
04-09-10, 03:54 AM
And in today's silver news...

Jason Hommel is a guy who owns a mom & pop shop (and yes his mom is actually involved) silver operation online. But it looks like he's gotten a little bigger lately, apparently he can now handle "7 figure silver orders" since he's opened his own mint (http://www.youtube.com/watch?v=9-ocXNbdEeU&feature=player_embedded) in California. ( His official website here (http://silverstockreport.com/)).

Anyway, Jason has filed a complaint with the DoJ against JP Morgan for Silver Market Manipulation (http://www.zerohedge.com/article/first-official-complaint-filed-doj-anti-trust-over-jpms-role-silver-manipulation-case#comments) (ZeroHedge article). Apparently, he's the first to do so, so this is news. Of course JP is billions of times bigger than this little guy... but hey, at least he's trying.

Warning: I've read some of Jason's free online weekly email distribution letters between 2008 and 2009 with news about silver, and his perspective has a "bit" of a biased slant (not to mention a sprinkle of totally unecessary Christian evangelical commentary now and then), but still; I do like that he's doing something he believes in, and I do like his sense of humour... check out his "New World Order" Silver coins (can you find it in the picture below?). One of his specialties is Melting 1000 oz Silver bars and minting coins with whatever design he feels like that week, and then auctioning them online.


http://www.jhmint.com/coins-redux_500.jpg

Adeptus

xPat
04-09-10, 04:56 AM
My (2) replies on the ZH thread in case anyone's interested:

http://www.zerohedge.com/sites/default/files/pictures/picture-12209.png
by xPat (http://www.zerohedge.com/users/xpat)
on Fri, 04/09/2010 - 14:54
#292743 (http://www.zerohedge.com/article/first-official-complaint-filed-doj-anti-trust-over-jpms-role-silver-manipulation-case#comment-292743)


GATA's incompetence has been mind-boggling, and it's frustrating to see yet another well-meaning but completely mis-placed effort to do the right thing that will only distract attention from what's important.

Folks, here's what's important:


CFTC has a comment period on COMEX position limits open right now, and they appear (just maybe) to actually be listening.
JPM has a massive concentrated short in silver futures (Ted Butler's research)
Andrew Maguire claims to have compelling evidence that JPM is consciously and intentionally using that short to manipulate the market.

That's really big stuff. What the investment community needs to do is stay focused on what's important. But instead GATA insists on taking Jeff Christian's testimony completely out of context, and using it to form largely baseless allegations of "the fraud of the century" on the LBMA.

What's important is to stay focused on how to effect real change.

CFTC has no regulatory jurisdiction over LBMA. They do have jurisdiction over COMEX. We need to pressure CFTC to take meaningful action within the scope of their authority. That's the opportunity before us right now (comment period still open) and that's where we need to focus our energy.
I'm not saying there's no scandal on the LBMA. There very well may be, although Jeff Christian's testimony in the CFTC hearing certainly doesn't "admit" any such thing in the way the incompetents at GATA keep alleging. But my point is, save LBMA for another day. Thanks to GATA and Eric King, way too many people are confusing way too many issues and writing in to CFTC about "fractional reserve scandals" and "fraud in the London market". Those are not within the scope of CFTC's jurisdiction, and are therefore irrelevant even if true.

All this nonsense about "illegally selling contracts on the COMEX when they don't own the metal" is nonsense. The COMEX is a derivative market and there's nothing wrong with selling what you don't own there. It's legal. But we have strong and compelling evidence that something very illegal is going on, and that CFTC should act to correct (JPM concentrated short being used for price manipulation before major economic data releases). We need to stay focused on that and keep the LBMA conspiracy theories and related GATA rhetoric out of the process.

Please, google "ted butler a time to act" and read Ted's excellent piece also emphasizing the importance of staying focused on what CFTC actually has authority to regulate. That piece also contains instructions on adding your own comments to the public comment process, and a sample letter for reference.

IMHO, Eric King and yes, even Tyler Durden should be ashamed of themselves for their role in helping GATA's incompetent leadership to distract everyone's attention from the solid, irrefutable evidence in favor of theory, which although it might eventually be proven true, isn't relevant to the regulatory opportunity now before us.

xPat


http://www.zerohedge.com/sites/default/files/pictures/picture-12209.png
by xPat (http://www.zerohedge.com/users/xpat)
on Fri, 04/09/2010 - 15:08
#292751 (http://www.zerohedge.com/article/first-official-complaint-filed-doj-anti-trust-over-jpms-role-silver-manipulation-case#comment-292751)


Forgot to mention...

GATA keeps trying to make a big deal about how Jeff Christian "admitted" in his testimony that the LBMA (that's the PHYSICAL market in London) is "leveraged" 100:1 by paper over real gold. GATA and Eric King would like you to believe that this is "the biggest fraud in history" and that selling something you don't have - as they allege Jeff Christian to have admitted is the case 99% of the time on the LBMA - is fraudulent default.
Wow! Them's some pretty darned incriminating words, and anyone who listened to the GATA round table interview by Eric King would certainly be expected to come away outraged that 99% of what's being sold on the physical market really has no physical gold behind it. And Jeff Christian even admitted it! That Bastard!!!

Unless, that is, you listened to what Jeff Chritian actually said, as opposed to the nonsense GATA is claiming he said. You don't have to take my word for it. Go to the CFTC website, bring up the official video of the hearing, and go to the 5:32 mark, where Christian makes the now-infamous "100 to 1 statement".

All he really says is that the term "physical market" is something of a mis-nomer, because a lot of people in the industry use the words "physical market" to refer not only to the real physical market (LBMA), but collectively to LBMA plus OTC derivatives, and other stuff. He goes on to say that when you consider that collection of markets including both the actual physical market and the derivative markets, perhaps as much as 100 times as much gold is traded than really exists in physical metal.

There's no scandal or great revelation in Christian's testimony, folks. I'm not saying there is no fraud on LBMA - there probably is. But as noted in my earlier post, this is not the time to make a case about LBMA. It's time to focus on what CFTC has authority to regulate, and that's position limits on COMEX Gold and Silver contracts.

xPat<input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden">
<input id="gwProxy" type="hidden"><!--Session data--><input onclick="jsCall();" id="jsProxy" type="hidden">

neeraj19
04-09-10, 05:08 AM
EJ, thanks for posting your thoughts on this topic. I am a very skeptical person when it comes to conspiracy theories, my views are summed up by the line, "Never ascribe to malice that which is adequately explained by incompetence". Good to know that you and most of the iTulip community are basically on the same page.

neeraj19
04-09-10, 05:15 AM
EJ, thanks for posting your thoughts on this topic. I am a very skeptical person when it comes to conspiracy theories, my views are summed up by the line, "Never ascribe to malice that which is adequately explained by incompetence". Good to know that you and most of the iTulip community are basically on the same page.

And xpat, thanks for your clear-headed follow-up. As a (relatively new) member, this is exactly the kind of civil discourse I'm looking for.

cobben
04-09-10, 09:36 AM
The LBMA is not a pure physical market, though it often called that - they do options, swaps & forwards apparently (but not futures), and all OTC.

Now I am no expert, just learning, so dyodd.

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.

Adeptus
04-09-10, 11:19 AM
Thanks for your informative updates xPAT, they've added significant clarity to the article and this thread.
-Adeptus

doom&gloom
04-09-10, 01:59 PM
You will not find a single recommendation here to buy gold ETFs versus physical gold. We were glad GLD opened in Jan. 2005, four years after we bought, because the ETFs made gold available to your average investor who'd never buy gold from a dealer but would gladly buy gold "shares" of an ETF for their brokerage account. That was the marketing argument for GLD. It produced incremental gold sales.

Our argument against owning gold ETFs has always been that gold, The Fourth Currency (http://fourthcurrency.com/Home_Page.html), is insurance against currency depreciation. We do not know how gold ETFs will behave in the extreme case.

I own only physical, albeit not "under the bed." Keeping gold in your home is a bad idea.

I keep a hundred oz silver bar at home just for shits and grins. Pull it out sometimes at parties. Amusing to watch the faces of people who have never seen nor held one. :D

bart
04-09-10, 06:02 PM
My opinions are well known about silver & gold and the manipulation/control issue. There are only two things I can add.


From experience and talking to other traders over the decades, the LBMA is not a 100:1 game.



LBMA charts:

http://www.nowandfutures.com/images/lbma_clearing_silver.png


http://www.nowandfutures.com/images/lbma_clearing_gold.png

Adeptus
04-09-10, 09:50 PM
Interesting 5 min video (http://www.youtube.com/watch?v=DNSakO8Z11o)on Youtube today about how the Bank of Nova Scotia (ScotiaBank) and the COMEX had hundreds of millions of gold stolen from the WTC back in 2001, and that's why in Sep 2008, when Lenny had a tour of the ScotiaBank vault, it was practically empty. Fact or Fiction? You decide.

Again, all I can tell you is that when I asked for delivery on 1000 oz silver bars in Q3 2008 from ScotiaBank, they claimed they could only deliver on 2 out of 5 bars that I requested to purchase.

If we see another dip in Silver in the next few months down into the $16 zone, I will try to buy some more and will consider reporting my experience here.


Cheers,
Adeptus

santafe2
04-10-10, 12:37 AM
Looks to me that all sides of the story are getting a fair airing here.

Personally, I find the whole subject tiresome and irritating.

My admiration for the intellects of goldbugs aside, my primary interest in gold--and silver and platinum--is in the long-term price. Sorry to be so callous but, hey, I'm a capitalist.

I don't see how all of this tortured gold price manipulation analysis helps us figure out the one thing we care about, the thing that matters to us, our families and friends who own gold: When do we sell it?

For us, time spent on answering any other question is a waste of time.

Thanks for the clarification EJ. I was surprised to see you take the time to refute ideas associated with GATA. During my early investigation of PM, I was a paying member of GATA in 2000-2001. The nonsense that passed for journalism on their site was extraordinary. Apparently, not much has changed in the past 10 years.

Gold and silver were interesting in 2000 because they were under valued. They are more fairly valued today but should still offer value as a hedge against more traditional currencies over the next decade.

I too am a capitalist, no apologies. My interest in PM doesn't go much farther than that. I prefer to invest in ideas. My own when I have a decent one, but we all find ourselves in a time where investing is not as sure as it was 20 years ago.

Metals are a fairly priced store of value. Nothing more or less. It is not possible to conspire to drive a fairly priced investment too low. Not all people are that dumb.

Those here that see a conspiracy see only the limits of their own imagination. If there are conspirators, they are small thinkers. Take advantage of them. If they exist and drive prices down, buy. Ten years from now, you'll be happy with your profits. If you believe in a conspiracy, you'll be happy you kicked some butt. Either way, PM is still going to move up. The details are just that...details.

Spartacus
04-10-10, 02:12 AM
Agreed on all points, and an observation

Ted Butler reported some time ago that a group of CFTC commissioners think (along with COMEX/CME Group) that if CFTC disallows excessive naked shorting and obscene short concentration on COMEX those parties will move offshore for their excessive naked shorting and obscene short concentration needs.

I'm finding myself wondering if Christian was invited by this coterie (commissioners plus COMEX/CME plus representatives, acknowledged or not, of the shorts) to get his leverage testimony on the record in support of voting "yes" to excessive naked shorting and immense. obscene short concentration on COMEX. The reasoning being, If LBMA allows it, why not COMEX?

Christian was there, IOW to reify their position. In blaring this from the rooftops, GATA plays into their hands.

Please preface all of the above with "playing the hypothetical scenarios and conspiracies game, remain skeptical of all of this".


My (2) replies on the ZH thread in case anyone's interested:

http://www.zerohedge.com/sites/default/files/pictures/picture-12209.png
by xPat (http://www.zerohedge.com/users/xpat)
on Fri, 04/09/2010 - 14:54
#292743 (http://www.zerohedge.com/article/first-official-complaint-filed-doj-anti-trust-over-jpms-role-silver-manipulation-case#comment-292743)

GATA's incompetence has been mind-boggling, and it's frustrating to see yet another well-meaning but completely mis-placed effort to do the right thing that will only distract attention from what's important.

Spartacus
04-10-10, 02:23 AM
There were also allegations (uproven AFAICT) that Silver supply was so tight at the time that Mocatta looked for their Silver from their WTC offices/vaults in the rubble, and didn't bother to look for the Gold.


Interesting 5 min video (http://www.youtube.com/watch?v=DNSakO8Z11o)on Youtube today about how the Bank of Nova Scotia (ScotiaBank) and the COMEX had hundreds of millions of gold stolen from the WTC back in 2001, and that's why in Sep 2008, when Lenny had a tour of the ScotiaBank vault, it was practically empty. Fact or Fiction? You decide.

Cheers,
Adeptus

Spartacus
04-10-10, 02:25 AM
30% dip would place silver around $12.60 an ounce at today spot. I would love to buy into that dip, but I don't know if we will see that price again - at least under the current currency system.

You can claim that NOW, and convince yourself it's true.

but I'm 99.9 % sure if it goes to $12.60 you WILL convince yourself it's the WRONG TIME TO BUY.

People buy on the way up, and they buy the most at the highest price. Some sell on the downside, but most don't sell until it's way, WAY over the hump on the downside.

And some do buy dips, thinking they're getting a bargain, but almost no one buys after a large dip.

Spartacus
04-10-10, 02:35 AM
While I can't personnaly attest as to how much physical gold/silver is in ScotiaBank's vaults, I happened to have bought from ScotiaBank physical gold AND silver right around Sept 2008 when the guy in the MP3 interview claims he walked into their vaults and saw them mostly bare.

My personal experience was as follows:

Adeptus

Not a new situation AT ALL

When I took delivery of mine (2002), in Toronto, sales office is right above the vaults, they had one bar. One extremely dirty & mis-shapen bar. so bad you couldn't tell it was Silver.


It took several weeks to get the rest of my shipment in. I forget exact time frames (it was 8 years ago).

things that stood out:

several tried to tell me not to buy,

no one working there (sales, clerks, managers, security people) could remember when anyone had taken delivery, EVER.

they tried to sell me certificates (storing them would cost almost the same as a safety deposit box) which I did buy until the physical came in & I could trade.

hayekvindicated
04-10-10, 04:31 AM
Eric


I would love to hear you thoughts on Gordon Brown's rather sudden & strange sale of 50% of the UK Gold @ an all time low prices?


Mike


Thats easy to explain Mike. Gordon Brown is an ignorant, self assured, self righteous, cocky MORON. For the record, he actually sold a lot more than 50 percent.

xPat
04-10-10, 05:28 AM
For anyone interested in this subject, this week's FSN first hour is an absolute must-listen.


Jim Puplava has done an outstanding job of debunking the nonsense promulgated by GATA and KWN recently. He interviews Jeff Christian who reiterates what he really said in the CFTC hearing and elaborates on the real issues in play here.


Jim goes on to interview Nick Barisheff (Bullion Management Group) who debunks the most recent KWN interviews pertaining to bullion banks in Canada.


Incidentally, I e-mailed all of my concerns to Eric King and asked him to reconsider the path he's on, but have yet to receive the courtesy of a reply.


Contrary to Eric King's rhetoric, we're not seeing "the biggest fraud in history", but rather instead, perhaps, one of the most egregious shortcomings of journalism (KWN) and a supposed watchdog organization (GATA) in recent memory.


xPat

ThePythonicCow
04-10-10, 06:52 AM
For anyone interested in this subject, this week's FSN first hour is an absolute must-listen.Here's a link to the Financial Sense Newshour (http://www.financialsense.com/fsn/main.php). Go to Saturday, April 10, 2010 for this interview.

Adeptus
04-10-10, 02:25 PM
Here's a link to the Financial Sense Newshour (http://www.financialsense.com/fsn/main.php). Go to Saturday, April 10, 2010 for this interview.

That was exceptionally illuminating! Thanks xPAT!

BuckarooBanzai
04-10-10, 02:42 PM
I notice that Hudson advocates using property tax rather than income or sales or various other taxes. This seems to be in the tradition of Henry George (http://www.econlib.org/library/Enc/bios/George.html).

I like the idea of a "single tax" (not that there's any chance the current VAT or other such proposals will remove the income tax), but I don't see why the Fair Tax (sales tax with prebate to counter the regressive bias) wouldn't be just as good.

Can you ask Hudson why he prefers property tax over sales tax (with prebate)?

Check the iTulip archives, there is plenty of stuff that Hudson has written posted here, and EJ has interviewed Hudson at least once before IIRC. From what I remember, Hudson believes that property taxes are necessary to transfer wealth away from evil rentiers, for the good of society. Hmmmmm. Hudson uses a lot of Marxist code-words, which makes sense because if you bother to peel back the surface, he's seems to be a thinly-reconstructed Marxist. Which, unfortunately, cripples his credibility substantially.

Spartacus
04-10-10, 03:13 PM
All you need about Hudson (or anyone, actually) is one label, then you don't need to read or think about the content of his words

hahahahahahahahaha. I slay myself.


I notice that Hudson advocates using property tax rather than income or sales or various other taxes. This seems to be in the tradition of Henry George (http://www.econlib.org/library/Enc/bios/George.html).

I like the idea of a "single tax" (not that there's any chance the current VAT or other such proposals will remove the income tax), but I don't see why the Fair Tax (sales tax with prebate to counter the regressive bias) wouldn't be just as good.

Can you ask Hudson why he prefers property tax over sales tax (with prebate)?

BuckarooBanzai
04-10-10, 03:23 PM
The remaining assertion that banks are manipulating gold and silver to manipulate the dollar makes no sense. The exchange rate value of the dollar can be manipulated by setting gold prices and was back when the dollar was backed by gold. This was the primary mechanism of dollar devaluation by FDR in 1933. But the US is not on a gold standard. If it's on any commodity-based standard, the dollar is on an oil standard. Oil prices have a profound impact on the US economy because the US imports hundreds of billions of dollars of oil. The impact of rising prices in dollars is inflationary. Deflating the dollar against oil was the primary mechanism of reflation in early 2009. Gold and silver prices reflect the dollar exchange rate, not the other way around.

EJ you are right on when you say that the dollar is on an oil standard. The switch from gold to oil was cleverly made by the Nixon administration, working with the Saudis. But it is MUCH more difficult to back a currency with a commodity that gets consumed (oil), rather than with a commodity that persists (gold). Now you have a money supply that can vary as a function of multiple inputs (production and consumption) and furthermore, oil in particular has some very peculiar factors affecting its production function (cartel inefficiencies, widely varying production cost regimes, geopolitics, etc). Thus, gold has remained in the picture as an influencer, if not a determinant, on the dollar-- an influencer whose meaningfulness, I would postulate, has varied over the last 30 years in inverse to how effectively the oil backing is being managed. Otherwise how can you explain the Federal Reserve's publicly stated interest in the price of gold, as expressed by many Fed Governors and Chairmen over the years? (one example here: http://goldnews.bullionvault.com/gold_central_banks_control_price_100120062)

Fundamentally, our global fiat economy has turned into a game of managing appearances, and the price of gold (and silver, to a secondary extent) is one of the appearances that must be managed. Rightly or wrongly, it seems to me that a big part of GATA's mission is to attack the general issue that our financial system is a charade. Like getting into a swordfight with a fog bank, this is an almost pointless endeavor, but you can't blame them for getting worked up about it, and they certainly attract much needed attention to the fundamental problem. But thank heavens for people like Ted Butler, who is actually trying to unplug one of the fog machines.

ThePythonicCow
04-10-10, 05:30 PM
All you need about Hudson (or anyone, actually) is one label, then you don't need to read or think about the content of his words

hahahahahahahahaha. I slay myself.
I don't recall labeling Hudson with a single label. Were you responding to BuckarooBanzai's "Marxist" label, but quoting my reply instead of his?

ThePythonicCow
04-10-10, 05:31 PM
Fundamentally, our global fiat economy has turned into a game of managing appearances, Bingo !

Adeptus
04-11-10, 07:31 AM
Here's a link to the Financial Sense Newshour (http://www.financialsense.com/fsn/main.php). Go to Saturday, April 10, 2010 for this interview.

And now for ZeroHedge's rebuttle to this interview (http://www.zerohedge.com/article/jeffrey-christian-and-nick-barisheff-bullion-management-group-seek-disprove-gold-ponzi-schem).

He does raise a couple of good points.

Adeptus

Spartacus
04-11-10, 02:32 PM
Listening to Puplava/JC I had a couple of the same reactions as TD

And I've been thinking the same things JC says every time I read Butler; JC is a far, FAR better foil to Butler than Fekete & Szabo.

Talk about schizophrenic ....


And now for ZeroHedge's rebuttle to this interview (http://www.zerohedge.com/article/jeffrey-christian-and-nick-barisheff-bullion-management-group-seek-disprove-gold-ponzi-schem).

Adeptus

More of a disagreeing rant than a rebuttal.

ThePythonicCow
04-11-10, 03:13 PM
And now for ZeroHedge's rebuttle to this interview (http://www.zerohedge.com/article/jeffrey-christian-and-nick-barisheff-bullion-management-group-seek-disprove-gold-ponzi-schem).

He does raise a couple of good points.

Adeptus
Thanks for linking that. Good read.

My money is mostly with Tyler on this one. I'll grant that perhaps this is not a pure, classic reserve ratio leveraging, such as when a bullion bank issues certificates for ten (or a hundred) times as much gold as its reserves.

Rather this looks to be a fine example of "modern" derivative and contract leveraging, spread across multiple counter-parties in a more complex fashion. Bank A (or G or M) claims not to be naked short because they have some (unauditable) contract with Party B to receive some product in the "near" future that Party C will be able to have Party D refine into good delivery product ... or some such. The variations seem (deliberately) endless.

This works until it doesn't. One might have thought that we would have learned a lesson in the last couple of years that such schemes can blow up really good.

When the SHTF, and (1) one of the parties fails, (2) the government of another party confiscates their product, and (3) a government of the third party declares war on a government of the fourth party, then not only will we see who was swimming naked, but we will also see that the flimsy excuse for a proper covering that some others were wearing gets washed away in the rip tide.

The only answer that works is to understand (and have history confirm that understanding) both (1) what risks you face with your holdings, including both physical security and counter-party risks, and (2) what failures the future will impose on those risks. Who or what are you depending on, and will they or it fail?

Minimize and diversify your risks, and be mentally prepared to have to fall back to Plan B or C when Plan A turns to muck.

Pascal
04-11-10, 09:05 PM
I'm also with Tyler on this.

There is something troubling about a paper market controlling the price for the physical market when the paper (of whatever form) is 100:1 to the physical. It allows the big banks, the governments, or whoever has the most money to move the price up or down irrespective of fundamentals. Since the banks seldom have to deliver the goods there is little restraint on manipulation. Such manipulation, to the extent it may occur, is done at the expense of smaller investors, producing companies, and the often very poor countries where the metals are mined.

CFTC position limits are supposed to prevent this type of manipulation. The big banks have been able to get around the size of position rules by claiming that they are "hedgers" who have long positions in the physical. Based in part on Christian's garbled original testimony and his attempt to fix it, it appears likely that the banks do not have the physical. Therefore they should not be deemed "commercials" who are exempt from position limits.

If they can prove that they have either physical or an over the counter contract that will deliver physical to them within an appropriate time, then fine, they can short up to that amount on the Comex. If not, then position limits should be enforced. The failure of the CFTC up to now appears to be that they have not verified that the bullion banks in fact have physical or contracts that will deliver physical.

Christian is almost comical in his defense of the banks and is really a bit of a troglodyte himself. I think he does confirm, BTW, that the LBMA is largely paper.

I also find it interesting that he is all for position limits on the longs.

Hopefully the CFTC will begin properly enforcing position limits on the purported "commercials" as a result of the current hearings and investigation. I do agree with xPat and with Butler that the communications to the CFTC need to focus exclusively on the COMEX concentrated shorts issue. The LBMA for now is probably an unwelcome distraction that the opposition can use to distract, delay and divert proper CFTC enforcement.

santafe2
04-12-10, 01:42 AM
There is something troubling about a paper market controlling the price for the physical market when the paper (of whatever form) is 100:1 to the physical.

Your premise is incorrect. The paper market was created to take advantage of the long term physical market. If you are correct about this market and it's 100:1, so what? Is gold currently over valued? I don't think so. If you disagree, put a fair value on gold and wait for it to return to that value before you buy. There are no conspirators smarter than the general group of folks on iTulip. We almost never agree on everything but the BS gets eliminated quickly and I think the manipulation of the gold market is complete BS.

Pascal
04-12-10, 09:03 PM
Sorry, but I believe you are wrong. We will probably see eventually.

cakins
04-13-10, 09:22 PM
NY Post tells the story!


Metal$ are in the pits (http://www.nypost.com/p/news/business/metal_are_in_the_pits_2arTlGNbMK7mb1uJeVHb0O)

Trader blows whistle on gold & silver price manipulation (http://www.nypost.com/p/news/business/metal_are_in_the_pits_2arTlGNbMK7mb1uJeVHb0O)

By MICHAEL GRAY
Last Updated: 4:33 AM, April 11, 2010
Posted: 2:10 AM, April 11, 2010
Comments: 36 <!-- AddThis Button BEGIN --> | More (http://www.addthis.com/bookmark.php?v=250&username=nypost) http://www.nypost.com/rw/SysConfig/WebPortal/nypost/images/icon_print.gif Print (http://www.nypost.com/f/print/news/business/metal_are_in_the_pits_2arTlGNbMK7mb1uJeVHb0O)
<script type="text/javascript"> // Call the API, customizing the Twitter share comment var addthis_share = { templates: { twitter: 'READ THIS @newyorkpost Report: ' + $('#story h1 a').text() + ' - {{url}}' } } var addthis_config = { services_exclude: 'print', ui_508_compliant: true, data_track_linkback: true } $(document).ready(function() { $('.gallery_share a').each(function() { // Add Get Vars if($(this).attr('addthis:url') != '') { var setUrl = $(this).attr('addthis:url'); setUrl = setUrl + document.location.search; if(setUrl.indexOf("http://www.nypost.com") == -1) { setUrl = "http://www.nypost.com" + setUrl; } $(this).attr('addthis:url', setUrl); } }); }); </script> <script type="text/javascript" src="http://s7.addthis.com/js/250/addthis_widget.js#username=nypost"></script> <!-- AddThis Button END --> <!-- context: top --> <!-- pass --> EXCLUSIVE

There is no silver lining to the activities of JPMorgan Chase and HSBC in the precious-metals market here and in London, says a 40-year veteran of the metal pits.
The banks, which do the Federal Reserve's bidding in the metals markets, have long been the government's lead actors in keeping down the prices of gold and silver, according to a former Goldman Sachs trader working at the London Bullion Market Association.
Maguire was scheduled to testify last week before the Commodities Futures Trade Commission, which is looking into the activities of large banks in the metals market, but was knocked off the list at the last moment. So, he went public.
<!-- context: middle --> Maguire -- in an exclusive interview with The Post -- explained JPMorgan's role in the metals pits in both London and here, and how they can generate a profit either way the market moves.
"JPMorgan acts as an agent for the Federal Reserve; they act to halt the rise of gold and silver against the US dollar. JPMorgan is insulated from potential losses [on their short positions] by the Fed and/or the US taxpayer," Maguire said.
In the gold pits, Maguire sees HSBC betting against the precious metal's price without having any skin in the game in the form of a naked short.
"HSBC conducts an ongoing manipulative concentrated naked short position in gold. Silver is much easier to manipulate due to its much smaller [market] size," Maguire added.
"No one at JPMorgan is familiar with Andrew Maguire," said Brian Marchiony, a company spokesman. HSBC declined to comment.
Also during the CFTC hearing, Jeff Christian, founder of the commodities firm CPM Group, said that the LBMA, the physical delivery market for gold and silver in the UK, has been using leverage, which is another way to depress the price of gold and silver.
Christian said that the LBMA -- the same market Maguire trades in -- has leverage of about 100-1 on the gold bars settled on the exchange. In layman's terms, that means if 100 clients requested their bullion bars be delivered, the exchange could only give one client the precious metal.
The remaining requests would have to be settled for cash equivalent. "That is tantamount to a default on the trade," says Bill Murphy, chairman of the Gold Antitrust Action committee.
Maguire goes further and calls it a fraud: "If you sell something you do not own, then that is fraud."
Back in 2007, Morgan Stanley agreed to settle a $4.4-million lawsuit brought by precious-metal clients, who alleged that Morgan offered to buy gold and silver and store it for the investors, but never purchased any metal and still charged them storage fees.

Morgan Stanley denied the charges at the time, but "settled the case to avoid the cost and distractions of continued litigation," the firm said.
Despite gold's rise each of the last 10 years, Murphy believes the price of gold today would be closer to $2,300 an ounce if the price just moved with inflation.
Maguire believes the price should be even higher given the fear trade that would have sent prices spiking during the financial crisis in 2008-09.
Both precious metals have seen a recent spike since Maguire's e-mails became public. Gold has gained 6.5 percent to close at $1,161.55, while silver has spiked 10 percent to $18.38.
<!-- context: middle --> According to the e-mails Maguire sent to CFTC regulators, he was spot-on in his expectations of how the precious metals would trade on release of the January jobs report.
This message is to "confirm that the silver manipulation was a great success and played out exactly to plan as predicted yesterday. How would this be possible if the silver market was not in the full control of the parties we discussed in our phone interview," Maguire wrote to a staff investigator after the trading day.
CFTC commissioner Bart Chilton said, "I'm appreciative of the information Mr. Maguire provided and I'm glad it was introduced into the investigation."
High, low silver
The prices of gold and silver have been allegedly suppressed by JPMorgan Chase and HSBC, according to a London whistleblower.
Andrew Maguire, who laid out the banks’ plan in e-mails to the CFTC prior to trading on the Comex on Feb. 5.
1.) From: Andrew Maguire
To: Ramirez, Eliud [CFTC]
Cc: BChilton [CFTC]
Sent: Wednesday, February 03, 2010 3:18 PM
Subject: Re: Silver today
Thought it may be helpful to your investigation if I gave you the heads up for a manipulative event signaled for Friday, 5th Feb. Scenario 1. The news is bad (employment is worse). This will have a bullish effect on gold and silver as the US dollar weakens and the precious metals draw bids, spiking them higher. This will be sold into within a very short time (1-5 mins) with thousands of new short contracts being added.
Scenario 2. The news is good (employment is better than expected). This will result in a massive short position being instigated almost immediately with no move up. This will not initially be liquidation of long positions but will result in stops being triggered, again targeting key support levels. Kind regards,
2.) From: Andrew Maguire
To: Ramirez, Eliud [CFTC]
Cc: BChilton [CFTC]; GGensler [CFTC]
Sent: Friday, February 05, 2010 3:37 PM
Subject: Fw: Silver today A final e-mail to confirm that the silver manipulation was a great success and played out EXACTLY to plan as predicted yesterday. How would this be possible if the silver market was not in the full control of the parties we discussed in our phone interview? Kind regards,
3.) Andrew T. Maguire
From: Ramirez, Eliud
To: Andrew Maguire
Sent: Tuesday, February 09, 2010 1:29 PM
Subject: RE: Silver today Good afternoon, Mr. Maguire, I have received and reviewed your email communications. Thank you so very much for your observations.


Read more: http://www.nypost.com/p/news/business/metal_are_in_the_pits_2arTlGNbMK7mb1uJeVHb0O/1#ixzz0l27YrjwA



Read more: http://www.nypost.com/p/news/business/metal_are_in_the_pits_2arTlGNbMK7mb1uJeVHb0O#ixzz0 l27PrZiU

thisandthat.nowandth
05-01-10, 01:22 PM
Possible DOJ investigation of JP Morgan

Purported email from the Dept of Justice Antitrust Division (audio transcription):

"Generally the Commodity Futures Trading Commission investigates these types of market manipulations, however, the suggestion that JP Morgan Chase may be signaling other traders warrants further analysis. The Department of Justice will carefully consider the issues you raised, and you can be assured that if we conclude that silver traders have engaged in anti-competitive conduct, we will take appropriate enforcement action."

King World News (http://kingworldnews.com/kingworldnews/King_World_News.html): Ted Butler, and analysis by Jim Rickards

C. Powell (http://www.gata.org/node/8596)

jiimbergin
05-08-10, 09:22 PM
from Jesse - looks like someone in the Dept. of Justice thinks there may have been manipuation

http://jessescrossroadscafe.blogspot.com/2010/05/ny-post-feds-launch-criminal-and-civil.html
08 May 2010

NY Post: Feds Launch Criminal and Civil Probes Into JP Morgan’s Silver Trades (http://jessescrossroadscafe.blogspot.com/2010/05/ny-post-feds-launch-criminal-and-civil.html)





Fiat justitia ruat caelum.

Let justice be done, though the heaven's fall.


Gray's Economy (http://mgray12.wordpress.com/2010/05/07/feds-probe-jp-morgans-silver-trades/)
Feds Probe JP Morgan’s Silver Trades
By Michael Gray
Deputy Sunday Business Editor, NY Post

Federal regulators have launched both a criminal and civil investigation against JP Morgan Chase for its trading activity in precious metals market.

The Commodities Futures Trade Commission is looking into civil charges and the Department of Justice’s Antitrust Division are handling the criminal probe, according to sources who did not wish to be identified due to the sensitive nature of the information.

See More information in tomorrow's New York Post Sunday Business section (http://www.nypost.com/news/business)

metalman
05-08-10, 09:34 PM
from Jesse - looks like someone in the Dept. of Justice thinks there may have been manipuation

http://jessescrossroadscafe.blogspot.com/2010/05/ny-post-feds-launch-criminal-and-civil.html
08 May 2010

NY Post: Feds Launch Criminal and Civil Probes Into JP Morgan’s Silver Trades (http://jessescrossroadscafe.blogspot.com/2010/05/ny-post-feds-launch-criminal-and-civil.html)





Fiat justitia ruat caelum.

Let justice be done, though the heaven's fall.


Gray's Economy (http://mgray12.wordpress.com/2010/05/07/feds-probe-jp-morgans-silver-trades/)
Feds Probe JP Morgan’s Silver Trades
By Michael Gray
Deputy Sunday Business Editor, NY Post

Federal regulators have launched both a criminal and civil investigation against JP Morgan Chase for its trading activity in precious metals market.

The Commodities Futures Trade Commission is looking into civil charges and the Department of Justice’s Antitrust Division are handling the criminal probe, according to sources who did not wish to be identified due to the sensitive nature of the information.

See More information in tomorrow's New York Post Sunday Business section (http://www.nypost.com/news/business)

we got a winner! gata got 1 right out of 23,756 conspiracy theories in 11 yrs... goooood job!

bart
05-08-10, 10:06 PM
Behind the scenes manipulation has existed for decades and more. It's fact - end of story.



"Anybody who plays the stock market not as an insider is like a man buying cows in the moonlight."
-- Daniel Drew, 19th century speculator

metalman
05-08-10, 10:15 PM
Behind the scenes manipulation has existed for decades and more. It's fact - end of story.



"Anybody who plays the stock market not as an insider is like a man buying cows in the moonlight."
-- Daniel Drew, 19th century speculator

yep... business as usual.

Anon21456
05-09-10, 11:55 AM
How does one become an insider ? I'd love to finally make money on the stock market :)

jiimbergin
05-11-10, 10:09 AM
yep... business as usual.

I guess this is what happens when your business as usual is huge naked shorts!

http://jessescrossroadscafe.blogspot.com/2010/05/silver-s-q-u-z-would-you-like-to-buy.html

11 May 2010

Silver S Q U _ _ Z _ : Would You Like to Buy a Vowel? (http://jessescrossroadscafe.blogspot.com/2010/05/silver-s-q-u-z-would-you-like-to-buy.html)




Another vertical move in silver from the New York open, as the bullion bears who are heavily short silver attempt to cover their paper shorts, which is a trick considering how tight the physical market is, and how vulnerable they are to discovery now that their attempt to suppress the price is falling apart. It is like watching the Hunt Brothers silver gambit in reverse.

If you like your markets opaque, imbalanced, and dangerous, the NYMEX is your Bartertown.

If this turns into a serious short panic the price of silver could reach its all time high. Markets that are allowed to become this out of sync with legitimate price discovery are inefficient and disruptive to the real economy.

But now we will see the bullion banks who have sowed the wind, reap the whirlwind.

http://4.bp.blogspot.com/_H2DePAZe2gA/S-lch6uxN0I/AAAAAAAAMwg/WdIUjeeyt3Y/s400/silver.gif (http://4.bp.blogspot.com/_H2DePAZe2gA/S-lch6uxN0I/AAAAAAAAMwg/WdIUjeeyt3Y/s1600/silver.gif)

Spartacus
05-11-10, 05:19 PM
and Gold followed a couple of hours later...
with no concomitant USD index move?

He's too eager to declare victory though ... nose held high is a good time to trip.

I'll wait to assign cause until there's proof that the short's being unwound

medved
05-11-10, 05:28 PM
He's too eager to declare victory though ... nose held high is a good time to trip.

I'll wait to assign cause until there's proof that the short's being unwound

Agreed. I saw these celebrations too many times over the last 10 years. In my book it is a good reason to do some selling.

metalman
05-11-10, 07:47 PM
Markets that are allowed to become this out of sync with legitimate price discovery are inefficient and disruptive to the real economy.

puleeeease. the silver market is too small to matter to the economy. gold also.

medved
05-11-10, 09:12 PM
puleeeease. the silver market is too small to matter to the economy. gold also.

This is what I like about them. Gold/silver are not oil, nobody will pay attention to them and speculators/manipulators/naked shorts will be ignored. Volatility will continue.

Honestly, I am so used to it, I just cannot imagine selling my mining shares and SLV calls and not being able to buy them back cheaper. If that happens, I will be stuck with iTulip allocation gold/cash without any extra cash flow. Poor me, little Teddy Bear :(.

jiimbergin
05-11-10, 09:37 PM
This is what I like about them. Gold/silver are not oil, nobody will pay attention to them and speculators/manipulators/naked shorts will be ignored. Volatility will continue.

Honestly, I am so used to it, I just cannot imagine selling my mining shares and SLV calls and not being able to buy them back cheaper. If that happens, I will be stuck with iTulip allocation gold/cash without any extra cash flow. Poor me, little Teddy Bear :(.

I am doing the opposite. I sell covered call options on GLD when GLD seems to be up and buy them back when GLD drops a lot. Otherwise I let them expire. However this is the first time most of them may end up being exercised. But I will buy more GLD and sell more options since I do not have an immediate concern about GLD. I also have done this on SLV and GDX.

swannmex
11-04-10, 08:10 AM
"As a long time gold and silver investor, not a trader, I’m probably the wrong guy to ask, because I’ve never been a fan of GATA and price manipulation theories. I think it's a lot of nonsense, and this story strikes me as no more credible than any previous one. "

EJ, in light of recent admissions by the CFTC that the silver market has indeed been manipulated by the big banks. Have you seen fit to re-think your stance that "price manipulation theories" are a lot of nonsense ??

“There have been fraudulent efforts to persuade and deviously control that price,” said Commissioner Bart Chilton at a hearing today in Washington, alleging there have been violations of the Commodity Exchange Act. “Any such violation of the law in this regard should be prosecuted,” he said.

http://www.bloomberg.com/news/2010-10-26/silver-market-faced-fraudulent-efforts-to-control-price-chilton-says.html

xPat
11-04-10, 08:32 AM
"...in light of recent admissions by the CFTC that the silver market has indeed been manipulated by the big banks...
There hasn't been any admission by the CFTC that the silver market is "indeed" manipulated by the big banks. Rather, than has been one statement by one CFTC commissioner, whose views are his own and are in direct conflict with his staff, that he thinks that there may be manipulation of the silver market by the big banks.

xPat

swannmex
11-04-10, 08:39 AM
OK fair enough. In light of what Bart Chilton has said ( and I assume he has access to the files from the on going investigation ) and the fact that he is saying these things in public,and the 2 recently filed RICO lawsuits, do you think , ""price manipulation theories" are a lot of nonsense ??"

swannmex
11-04-10, 10:30 AM
Jesse weighs in over at the cafe. http://jessescrossroadscafe.blogspot.com/

27 OCTOBER 2010

Full Text of CFTC Commissioner Bart Chilton's Statement on Market Manipulation

Has the US financial media mentioned or even discussed this? Today the Bloomberg television news people are busy discussing the World Wrestling Federation, a caricature of sport analagous to the Comex and NYSE as financial markets.

Statement of Commissioner Bart Chilton
U.S. Commodity Futures Trading Commission
Public Hearing on Anti-Manipulation and Disruptive Trading Practices
Washington, D.C.
Tuesday, October 26, 2010

I take this opportunity to comment on the precious metals markets and in particular the silver markets.

More than two years ago the agency began an investigation into silver markets. I have been urging the agency to say something on the matter for months. The public deserves some answers to their concerns that silver markets are being, and have been, manipulated.

The legal definition of manipulation under the law is a high bar to prove. It is a much different test than what the average person might consider as manipulation. Under existing law, to prove manipulation, the government is required to demonstrate not only specific intent; we also need to prove that as a result of the intent and market control, that activity caused an artificial price -- a point that can certainly be debated by economists.

Attempted manipulation is less difficult to prove -- requiring an intent to manipulate and some overt act in furtherance of that intent. There are also other violations of law that could contort markets and distort prices.

I believe that there have been repeated attempts to influence prices in the silver markets. There have been fraudulent efforts to persuade and deviously control that price. Based on what I have been told by members of the public and reviewed in publicly available documents, I believe violations to the Commodity Exchange Act have taken place in silver markets and that any such violation of the law in this regard should be prosecuted.

In saying this, I am fully aware of the prohibition from divulging trader names or information about their positions I am extremely careful not to violate the law in this, or any, regard. I also cannot pre-judge anything the agency may do with regard to our silver investigation, or any other matter.

The Wall Street Reform and Consumer Protection Act, which I strongly supported, contains new manipulation provisions as well as anti-disruptive trading rules. These new authorities, along with the implementation of thoughtful position limits in metals, will go a long way toward ensuring more efficient and effective metals markets devoid of fraud, abuse, and manipulation.

Thoughtful investigations take time. The CFTC staff has worked extremely hard on the silver investigation. That said, there is a point at which it is our responsibility to say something. Within the law, I have done so. I am hopeful that the agency will speak publicly about the investigation in the very near future and when they do so that it will be in a more granular fashion than I am permitted from doing at this time.

New COMEX Related Silver Manipulation Lawsuit Includes Charges of 'Racketeering'


Self-regulation and efficient markets hypothesis. Feh!

It will be interesting to see if this makes it into the discovery process and if any government officials will assist in the investigation process. This looks like a job for hairy knuckled prosecutors armed with subpoenas and wiretaps.

The mainstream media will most likely ignore this and the usual suspects from the demimonde of the financial media will dismiss it as nonsense.

One has to wonder if this is what CFTC commissioner Bart Chilton was alluding to in his recent statement.


NEW YORK, Nov. 3, 2010 /PRNewswire/ -- JP Morgan Chase & Co. (NYSE: JPM) and HSBC Securities Inc. (NYSE: HBC) face charges of manipulating the market for silver futures and options in violation of federal commodities and racketeering laws, according to a new lawsuit filed Tuesday in the U.S. District Court for the Southern District of New York


The suit – which alleges violation of the Commmodity Exchange Act and the Racketeering Influenced and Corrupt Organizations (RICO) Act – alleges that the two banks colluded to manipulate thhe market for silver futures starting in the first half of 2008 by amassing huge short positions in silver futures contracts they had no intent to fill, but did so to force silver prices down to their benefit.

The suit was filed on behalf of Carl Loeb, an independent investor in silver futures and options, by Seattle-based Hagens Berman Sobol Shapiro LLP, a class-action and complex litigation firm. "The practice of naked short selling has long been a serious issue on Wall Street," said Steve Berman, co-counsel and managing partner at Hagens Berman. "What we know about the scope and intent of JP Morgan and HSBC's actions in this short-selling scheme dwarfs any other similar attempt to manipulate a commodities market."

According to the complaint, JP Morgan amassed a sizeable short position in silver futures and options in part through its March 2008 acquisition of investment bank Bear Stearns. By August 2008, JP Morgan and London-based HSBC controlled more than 85 percent of the commercial net short position in silver futures contracts.

The suit alleges that, starting in early 2008, the two banks began manipulating the silver futures market by accumulating unusually large "short" positions and then secretly coordinating enormous sales of silver futures contracts on the Commodity Exchange, which is known as "COMEX" and is part of the New York Mercantile Exchange.

According to the lawsuit, JP Morgan and HSBC used a variety of methods to coordinate their manipulation of the market for silver futures contracts, signaling when to flood the COMEX market with short positions, which caused the price of silver futures and options contracts to crash.

The suit describes two "crash" events that were set in motion by JP Morgan and HSBC, one in March 2008, and the other in February 2010, after defendants had amassed large short positions. In the wake of both events, the suit alleges, COMEX silver futures prices collapsed.

"We believe that JP Morgan and HSBC's scheme was carefully conceived and coordinated to maximize their profits at the expense of innocent investors who believed that they were trading in a market free from manipulation," Berman said.

The complaint also contains allegations that in September 2008, the U.S. Commodity Futures Trading Commission launched an investigation that would eventually consider allegations made by a London-based independent metals trader named Andrew Maguire that the silver futures market was being manipulated.

The complaint alleges that Maguire disclosed to the CFTC on Feb. 3, 2010 that he received a signal from the two banks of their intent to drive down the prices of silver futures two days later, on Feb. 5, 2010. Maguire's information was correct and the price of silver dropped dramatically between Feb. 3, 2010 and Feb. 5, 2010.

In addition, the lawsuit states that both JP Morgan and HSBC still maintain highly concentrated holdings in short positions in silver futures and options, giving both banks the ability to continue manipulating the price of silver.

Plaintiffs' attorneys have asked the court to certify the case as a class action and enjoin JP Morgan and HSBC from continuing their alleged conspiracy and manipulation of the silver futures and options contracts market.

Attorneys also ask the court to award damages and attorneys' fees to the class.

Just remember that Blythe said Don't Panic. She's got your backs. Or is busy cutting a deal. You will have to decide which is more likely.

I also hear that high flyer Steve Black, who was promoted up at the beginning of the year, will be leaving JP Morgan.

Spartacus
11-04-10, 12:19 PM
one CFTC commissioner, whose views are his own and are in direct conflict with his staff
xPat

I believe Jeffrey Christian claimed (without proof in the interview I heard) and AFAICT Chilton did not explicate, that the staff disagrees on the existence of manipulation.

Spartacus
11-04-10, 12:22 PM
OK fair enough. In light of what Bart Chilton has said ( and I assume he has access to the files from the on going investigation ) and the fact that he is saying these things in public,and the 2 recently filed RICO lawsuits, do you think , ""price manipulation theories" are a lot of nonsense ??"

I believe one suit of the 3 explicitly mentions RICO. the 1st 2 only allege collusion. I don't know if it amounts to the same thing or not.

Jeffrey Christian claimed Chilton does not have access to the investigation's results.

He also claimed CFTC staff disagree with Chilton on whether there is manipulation.

So ... either Chilton knows & disagrees, or Chilton has no access (doesn't know what the staff knows, doesn't know the investigation's results), in which case what can the staff & commissioner disagree about?

Christian seems to be playing both sides of some issue, trying to have it both (contradictory) ways ... taking his statements taken as a whole, it's quite fishy.

Spartacus
11-04-10, 12:26 PM
All that's happened is lawsuits have been filed. It may mean next to nothing. the US court system is eminently game-able. Especially the rules for discovery in the hands of a permissive judge.

IMHO You folks south of the 49th really should rewrite your FRCP and hold lawyers from all sides to stricter rules.

There may be lawyers looking for a quick and easy settlement payoff.
Ditto for plaintiffs.

HOWEVER, This is much less likely than I thought when I first heard of the suits, since all 3 plaintiffs are seeking class action status, multiple law firms are likely to get involved - a quick payout & going quietly into the night is not as likely as with the average suit (IMHO)




OK fair enough. In light of what Bart Chilton has said ( and I assume he has access to the files from the on going investigation ) and the fact that he is saying these things in public,and the 2 recently filed RICO lawsuits, do you think , ""price manipulation theories" are a lot of nonsense ??"

xPat
03-09-11, 09:29 PM
The "Silver Bears" have an alter ego!

<object width="480" height="390"><param name="movie" value="http://www.xtranormal.com/site_media/players/jwplayer.swf"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><param name="flashvars"value="height=301&width=499&file=http://newvideos.xtranormal.com/web_final_lo/97020a92-49f8-11e0-b3f3-003048d6740d_86.mp4&image=http://newvideos.xtranormal.com/web_final_lo/97020a92-49f8-11e0-b3f3-003048d6740d_86.jpg&link=http://www.xtranormal.com/watch/11349832&searchbar=false&autostart=false"/><embed src="http://www.xtranormal.com/site_media/players/jwplayer.swf" width="499" height="301" allowscriptaccess="always" allowfullscreen="true" flashvars="height=301&width=499&file=http://newvideos.xtranormal.com/web_final_lo/97020a92-49f8-11e0-b3f3-003048d6740d_86.mp4&image=http://newvideos.xtranormal.com/web_final_lo/97020a92-49f8-11e0-b3f3-003048d6740d_86.jpg&link=http://www.xtranormal.com/watch/11349832&searchbar=false&autostart=false"></embed></object><object width="480" height="390"><param name="movie" value="http://www.xtranormal.com/site_media/players/embedded-xnl-stats.swf"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.xtranormal.com/site_media/players/embedded-xnl-stats.swf" width="1" height="1" allowscriptaccess="always"></embed></object>