- We've had a string of amazing revelations recently regarding
the world's precious metals market. This is important stuff for anyone
(like me) who holds gold as a means to avoid currency turmoil and counterparty
risk.
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- This news has been actively suppressed in the mainstream
media.
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- The Commodity Futures Trading Commission, a U.S. government
regulatory agency, held hearings in Washington D.C. in late March regarding
position limits in the futures market.
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- People involved in the markets have known/suspected for
years that they have been manipulated by certain large entities, notably
JP Morgan and Goldman Sachs.
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- Analysts like silver maven, Ted Butler, hedge fund giant,
Eric Sprott, and the Gold Anti-Trust Action Committee (GATA) have been
collecting evidence of this manipulation for years.
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- These hearings were supposed to be a non-event. However,
despite the media lock-down, the word is getting out.
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- The CFTC, like the SEC, is a conflicted agency. Some
people, notably Chairman Gary Gensler and Commissioner Bart Chilton, seem
to want to clean up the sleaze, fraud and corruption.
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- The CFTC even invited GATA's Bill Murphy and Adrian Douglas
to make statements. Would you be surprised to learn that the cameras had
a "technical malfunction" during Bill Murphy's statement, which
magically righted itself immediately after he finished?
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- After the hearing, according to Douglas, Murphy was contacted
by several major media outlets for more interviews. Within 24 hours, all
the interviews were canceled. All of them.
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- You can follow the links above to see the research that
Butler, Sprott and GATA have done over the years. That was only one part
of the emerging story.
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- The second part is the appearance of London metals trader
and now whistleblower Andrew Maguire, who understands JP Morgan's manipulation
scheme inside and out.
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- Maguire understands the process so well that he was able
to describe it to the CFTC's Bart Chilton on the phone in real time. As
in: "in a few minutes, they are going to do this, and then they will
do that."
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- Listen to an extended interview with Maguire and GATA's
Adrian Douglas on King World News here.
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- Maguire has taken some personal risks to tell all this
in public. In fact, almost immediately after his initial statements, he
was run over by a car while walking down the street. The driver sped away,
nearly running over some other pedestrians in his haste to escape. Fortunately,
Maguire survived the hit-and-run "accident" with minor injuries.
What a coincidence.
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- The third item was during the question-and-answer session
at the CFTC hearings. GATA's Adrian Douglas.
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- For many years, people assumed that the London Bullion
Market Association (LBMA), the world's largest gold market, was a simple
bullion market. Cash for gold. However, just in the past few months, more
people are realizing that there is actually very little gold within the
LBMA system.
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- Even long-time gold specialists like Maguire have been
amazed to learn that there is no gold corresponding to the vast "gold
deposits" at the major LBMA banks.
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- During the CFTC hearings, Jeffrey Christian of CPM Group
apparently informed us that the LBMA banks actually have about a hundred
times more gold deposits than actual gold bullion.
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- (GATA on CFTC hearing revelations, including video clips.
- ZeroHedge on the LBMA "paper gold ponzi")
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- This means that there are thousands of clients -- Asian
and Middle Eastern governments and sovereign wealth funds among them --
who think they own hundreds of billions and perhaps trillions of dollars
of gold bullion, and are being charged storage fees on that fantasy bullion,
but they really own unsecured gold loans to the banks at a negative interest
rate.
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- There is nothing new about this. Morgan Stanley paid
several million dollars in 2007 to settle claims that it had charged 22,000
clients for storage fees on silver bullion that didn't exist.
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- Imagine now that you are one of these people who think
they own billions of dollars of gold in an LBMA bank depository. Now you
find out that this gold doesn't really exist.
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- You would ask for delivery of your gold immediately.
It would be a "run on the bank."
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- What about things like ETFs linked to gold? Most of them
also claim, as assets, these "deposits" at the LBMA banks.
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- The entire gold market is complete "ponzimonium,"
a word popularized by the CFTC's Bart Chilton.
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- This does not even take into account the tungsten gold
bar counterfeit issue, which has emerged over the past year or so.
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- Imagine that you are an LBMA gold bank -- like JP Morgan,
Goldman Sachs or HSBC. Your clients start asking for their gold, which
you have been telling them is safely stored in your super-safe depository,
but the gold doesn't actually exist. It's not so easy to buy it either,
because none of the other LBMA members actually have any gold. Can you
see the incentive to deliver a phony tungsten counterfeit instead? You
might even ask your buddies in the U.S. government whether there is any
gold left in Fort Knox that they could use -- this being an issue of National
Security and all.
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- Four 400 oz. LBMA standard bars were discovered to be
tungsten counterfeits in Hong Kong. This set off a wave of investigations,
turning up more such phony bars worldwide.
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- These were very high quality counterfeits. According
to some investigators, it appears that the original source and creator
of these counterfeits was the U.S. government itself. Some people put the
possible number of counterfeit bars out there in the hundreds of thousands!
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- Let's say you are an Asian or Middle Eastern sovereign
wealth fund taking delivery on a few billion dollars' worth of gold bullion.
You find out that you were given a bunch of phony tungsten by an LBMA bank,
whose original source was the U.S. government itself.
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- Heck, I'd be pissed. I might even want to do something
about it.
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- There is an easy way to sidestep all the scams, frauds,
and phony nonsense. Take delivery on your bullion, whether a 1 oz. Kruggerand
or a truckload of 400 oz. institutional bars. Put it in an independent,
insured depository that is not affiliated with any bank. Assay all the
holdings for tungsten counterfeits. Then audit it periodically, for exact
serial numbers and specified weights.
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- When will the music stop on this merry-go-round of lies
and corruption? Who knows. But you can take your seat now, while they are
still easy to come by.
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- I suspect those who do not act in advance will eventually
find that they are victims of the Ponzimonium.
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- What if you don't have any gold, and have no interest
in owning any? This could affect you too.
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- Ultimately, a lot of these "gold suppression"
schemes amount to dollar-support schemes. Many of the same games were played
in the late 1960s, the days of the London Gold Pool.
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- The London Gold Pool was an agreement among world central
banks to stabilize the gold market at $35/oz. This was really an attempt
to stabilize the dollar, which tended to decline in value due to the Keynesian
"easy money" policies popular in those days (and today as well).
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- These Keynesian "easy money" policies have
consequences. You can't "easy money" your way to prosperity.
Prosperity is built on "hard money" -- money that is unchanging
in value.
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- The London Gold Pool eventually blew up, of course, and
the dollar fell to about 1/24th of its original value, hitting $850/oz.
in 1980. This dollar decline produced a horrible decade of inflation, during
the 1970s. We spent most of the 1980s and 1990s just recovering from that
disaster.
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- Graph of U.S. Treasury interest rates from 1955
to 2005
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- Thus, when the "New London Gold Pool" blows
up, we might find that the dollar decline that has been going on since
2001 could accelerate dramatically.
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- You would be surprised how little most big hedge funds
know about gold. But they do know the scent of blood in the water. And
they learn quick.
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